Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
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Case Study SWOT Analysis Solution
Case Study Description of Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation
Orchid Chemicals & Pharmaceuticals Limited (Orchid) is an Indian pharmaceutical company which began operations in 1994. Over a span of 10 years, the turnover of this company has increased from US$11 million to US$153 million. The company's profit after tax registered a five-fold increase, from US$1.3 million to US$6.8 million, in the corresponding period. Early success was a combination of pricing flexibility, lower production cost, and business opportunities in unregulated markets. Orchid decided to explore opportunities for the manufacture of generic drugs in the regulated markets and formulations in the domestic market. Diversification to basic research was also considered. Cooperation and joint ventures were the primary route to expand and explore new molecule discovery. By 2005, Orchid was no longer a single-product company, its business had widened to multiple products in bulk, formulations, and generics, in both regulated and unregulated markets. Orchid was making its presence felt in its novel drug delivery systems and new drug development processes. In 2005, Orchid faced several challenges related to financial leverage and risks, leadership, managerial challenges associated with joint ventures, balancing the new business model, setting global trends in being a pioneer in the industry, addressing shareholders' concerns, and evolving an appropriate organization culture and process.
Swot Analysis of "Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation" written by Ravi Ravichandran, Ankur Roy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Orchid Formulations facing as an external strategic factors. Some of the topics covered in Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation case study are - Strategic Management Strategies, Supply chain and Organizational Development.
Some of the macro environment factors that can be used to understand the Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation casestudy better are - – increasing household debt because of falling income levels, there is backlash against globalization, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies,
geopolitical disruptions, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Orchid Formulations, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Orchid Formulations operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation can be done for the following purposes –
1. Strategic planning using facts provided in Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation case study
2. Improving business portfolio management of Orchid Formulations
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Orchid Formulations
Strengths Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Orchid Formulations in Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation Harvard Business Review case study are -
Highly skilled collaborators
– Orchid Formulations has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Orchid Formulations
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Orchid Formulations does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Orchid Formulations are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Successful track record of launching new products
– Orchid Formulations has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Orchid Formulations has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Analytics focus
– Orchid Formulations is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Ravi Ravichandran, Ankur Roy can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– Orchid Formulations is one of the leading recruiters in the industry. Managers in the Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Orchid Formulations is one of the most innovative firm in sector. Manager in Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Orchid Formulations has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Organizational Development industry
– Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation firm has clearly differentiated products in the market place. This has enabled Orchid Formulations to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Orchid Formulations to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Orchid Formulations has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Organizational Development field
– Orchid Formulations is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Orchid Formulations in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Orchid Formulations is present in almost all the verticals within the industry. This has provided firm in Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation are -
High cash cycle compare to competitors
Orchid Formulations has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Low market penetration in new markets
– Outside its home market of Orchid Formulations, firm in the HBR case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Orchid Formulations needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Skills based hiring
– The stress on hiring functional specialists at Orchid Formulations has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation can leverage the sales team experience to cultivate customer relationships as Orchid Formulations is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Orchid Formulations has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Orchid Formulations has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation, it seems that the employees of Orchid Formulations don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Lack of clear differentiation of Orchid Formulations products
– To increase the profitability and margins on the products, Orchid Formulations needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation, is just above the industry average. Orchid Formulations needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Interest costs
– Compare to the competition, Orchid Formulations has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Orchid Formulations can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Orchid Formulations can use these opportunities to build new business models that can help the communities that Orchid Formulations operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Manufacturing automation
– Orchid Formulations can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Orchid Formulations is facing challenges because of the dominance of functional experts in the organization. Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Orchid Formulations to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Orchid Formulations to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Orchid Formulations can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Orchid Formulations can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Leveraging digital technologies
– Orchid Formulations can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Buying journey improvements
– Orchid Formulations can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Using analytics as competitive advantage
– Orchid Formulations has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Orchid Formulations to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Orchid Formulations can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Orchid Formulations can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Orchid Formulations in the consumer business. Now Orchid Formulations can target international markets with far fewer capital restrictions requirements than the existing system.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Orchid Formulations can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Orchid Formulations will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Orchid Formulations needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Orchid Formulations business can come under increasing regulations regarding data privacy, data security, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Orchid Formulations
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Orchid Formulations.
Technology acceleration in Forth Industrial Revolution
– Orchid Formulations has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Orchid Formulations needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Orchid Formulations in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation, Orchid Formulations may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Consumer confidence and its impact on Orchid Formulations demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High dependence on third party suppliers
– Orchid Formulations high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Orchid Formulations can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation .
Environmental challenges
– Orchid Formulations needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Orchid Formulations can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Weighted SWOT Analysis of Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Orchid Formulations needs to make to build a sustainable competitive advantage.
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