Aventis SA (A): Planning for a Merger SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Aventis SA (A): Planning for a Merger
Eight executives at Hoechst and Rhone-Poulenc must make four crucial decisions on the eve of merging their companies to become Aventis--what would become the world's third largest pharmaceutical firm. In addition to formulating a vision and strategy, the two firms must plot their intensified efforts in the U.S. market, pick a leader, and choose between two approaches to research and development. The merger represents the ongoing efforts of the two predecessor companies to remake themselves into life science companies. They face a range of pressures, from falling prices and intensifying demands on R&D for blockbuster pharmaceuticals to union opposition to the merger, skepticism from research analysts, and regulatory scrutiny. Amid these pressures, they must combine national and corporate cultures, merge into a single entity, and deliver the promised synergies. Concludes with a surprising development, when one of Hoechst's major shareholders objects to the merger.
Swot Analysis of "Aventis SA (A): Planning for a Merger" written by Joshua D. Margolis, Carin-Isabel Knoop includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merger Aventis facing as an external strategic factors. Some of the topics covered in Aventis SA (A): Planning for a Merger case study are - Strategic Management Strategies, Organizational culture, Organizational structure and Organizational Development.
Some of the macro environment factors that can be used to understand the Aventis SA (A): Planning for a Merger casestudy better are - – digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, there is backlash against globalization, increasing energy prices, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%,
technology disruption, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Aventis SA (A): Planning for a Merger
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Aventis SA (A): Planning for a Merger case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merger Aventis, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merger Aventis 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 Aventis SA (A): Planning for a Merger can be done for the following purposes –
1. Strategic planning using facts provided in Aventis SA (A): Planning for a Merger case study
2. Improving business portfolio management of Merger Aventis
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 Merger Aventis
Strengths Aventis SA (A): Planning for a Merger | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merger Aventis in Aventis SA (A): Planning for a Merger Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Merger Aventis in the sector have low bargaining power. Aventis SA (A): Planning for a Merger has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Merger Aventis to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Merger Aventis is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Merger Aventis is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Merger Aventis is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Aventis SA (A): Planning for a Merger Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Merger Aventis
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Merger Aventis does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Merger Aventis 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.
Diverse revenue streams
– Merger Aventis is present in almost all the verticals within the industry. This has provided firm in Aventis SA (A): Planning for a Merger 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.
Innovation driven organization
– Merger Aventis is one of the most innovative firm in sector. Manager in Aventis SA (A): Planning for a Merger Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Merger Aventis has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Merger Aventis 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.
Superior customer experience
– The customer experience strategy of Merger Aventis in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Merger Aventis has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Merger Aventis to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Merger Aventis 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 Aventis SA (A): Planning for a Merger - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Merger Aventis digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Merger Aventis has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses Aventis SA (A): Planning for a Merger | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Aventis SA (A): Planning for a Merger are -
Slow to strategic competitive environment developments
– As Aventis SA (A): Planning for a Merger HBR case study mentions - Merger Aventis takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Merger Aventis is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Aventis SA (A): Planning for a Merger can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Aventis SA (A): Planning for a Merger, is just above the industry average. Merger Aventis 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.
Aligning sales with marketing
– It come across in the case study Aventis SA (A): Planning for a Merger 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 Aventis SA (A): Planning for a Merger can leverage the sales team experience to cultivate customer relationships as Merger Aventis is planning to shift buying processes online.
Lack of clear differentiation of Merger Aventis products
– To increase the profitability and margins on the products, Merger Aventis needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Merger Aventis has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Aventis SA (A): Planning for a Merger, it seems that the employees of Merger Aventis 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Merger Aventis 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.
Interest costs
– Compare to the competition, Merger Aventis 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Aventis SA (A): Planning for a Merger 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 Merger Aventis has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Aventis SA (A): Planning for a Merger, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Aventis SA (A): Planning for a Merger | 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 Aventis SA (A): Planning for a Merger are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Merger Aventis is facing challenges because of the dominance of functional experts in the organization. Aventis SA (A): Planning for a Merger 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Merger Aventis to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Merger Aventis can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Aventis SA (A): Planning for a Merger, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Merger Aventis to increase its market reach. Merger Aventis will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Creating value in data economy
– The success of analytics program of Merger Aventis has opened avenues for new revenue streams for the organization in the industry. This can help Merger Aventis to build a more holistic ecosystem as suggested in the Aventis SA (A): Planning for a Merger case study. Merger Aventis can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Merger Aventis 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.
Learning at scale
– Online learning technologies has now opened space for Merger Aventis to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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 Merger Aventis in the consumer business. Now Merger Aventis can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Merger Aventis has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Merger Aventis in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
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. Merger Aventis 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. Merger Aventis 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.
Building a culture of innovation
– managers at Merger Aventis can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Manufacturing automation
– Merger Aventis 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.
Threats Aventis SA (A): Planning for a Merger External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Aventis SA (A): Planning for a Merger are -
Environmental challenges
– Merger Aventis 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. Merger Aventis can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Stagnating economy with rate increase
– Merger Aventis can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Merger Aventis can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Merger Aventis needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
Technology acceleration in Forth Industrial Revolution
– Merger Aventis has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Merger Aventis 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merger Aventis with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Consumer confidence and its impact on Merger Aventis 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
– Merger Aventis 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.
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 Merger Aventis business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Merger Aventis 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 Aventis SA (A): Planning for a Merger .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Merger Aventis 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.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Merger Aventis in the Organizational Development sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Aventis SA (A): Planning for a Merger 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 Aventis SA (A): Planning for a Merger 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 Aventis SA (A): Planning for a Merger 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 Aventis SA (A): Planning for a Merger 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 Aventis SA (A): Planning for a Merger 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 Merger Aventis needs to make to build a sustainable competitive advantage.