Case Study Description of Allergan South Africa's Merger: Contextual Leadership Sustaining Culture
In early 2016, the chief executive officer (CEO) of Allergan South Africa had been leading his team through changes resulting from a number of mergers over the past four years. Allergan Inc. (Allergan) had been the third-largest generic drug maker in the United States after it combined with Actavis plc in 2015, and the company was depicted as an example of "merger mania" in the pharmaceutical sector. Operating in 40 countries, Allergan had gone through a total of five mergers between 2012 and 2015-a period that had included a hostile takeover bid, cost cutting exercises, and, eventually, an acquisition. The CEO at Allergan South Africa had been working with his human resources director to build a "supertribe" culture in response to the changes. Now, faced with the challenge of yet another anticipated merger, some of the executive team had resigned, unwilling to go through the turmoil of more acquisitions. How could the CEO keep his people engaged at the regional division? What leadership style would enable him to effectively make the needed changes? Caren Scheepers and Deepa Sita are affiliated with University of Pretoria.
Swot Analysis of "Allergan South Africa's Merger: Contextual Leadership Sustaining Culture" written by Caren Scheepers, Deepa Sita includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Allergan South facing as an external strategic factors. Some of the topics covered in Allergan South Africa's Merger: Contextual Leadership Sustaining Culture case study are - Strategic Management Strategies, Leadership, Mergers & acquisitions, Organizational culture and Organizational Development.
Some of the macro environment factors that can be used to understand the Allergan South Africa's Merger: Contextual Leadership Sustaining Culture casestudy better are - – there is increasing trade war between United States & China, there is backlash against globalization, increasing transportation and logistics costs, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, increasing government debt because of Covid-19 spendings,
talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Allergan South Africa's Merger: Contextual Leadership Sustaining Culture
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Allergan South Africa's Merger: Contextual Leadership Sustaining Culture case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Allergan South, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Allergan South 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 Allergan South Africa's Merger: Contextual Leadership Sustaining Culture can be done for the following purposes –
1. Strategic planning using facts provided in Allergan South Africa's Merger: Contextual Leadership Sustaining Culture case study
2. Improving business portfolio management of Allergan South
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 Allergan South
Strengths Allergan South Africa's Merger: Contextual Leadership Sustaining Culture | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Allergan South in Allergan South Africa's Merger: Contextual Leadership Sustaining Culture Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Allergan South Africa's Merger: Contextual Leadership Sustaining Culture Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High brand equity
– Allergan South has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Allergan South to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Allergan South is one of the most innovative firm in sector. Manager in Allergan South Africa's Merger: Contextual Leadership Sustaining Culture Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Allergan South in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Allergan South has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Allergan South Africa's Merger: Contextual Leadership Sustaining Culture Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High switching costs
– The high switching costs that Allergan South 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.
Ability to recruit top talent
– Allergan South is one of the leading recruiters in the industry. Managers in the Allergan South Africa's Merger: Contextual Leadership Sustaining Culture are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Allergan South 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 Allergan South Africa's Merger: Contextual Leadership Sustaining Culture HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Allergan South
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Allergan South does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Organizational Development industry
– Allergan South Africa's Merger: Contextual Leadership Sustaining Culture firm has clearly differentiated products in the market place. This has enabled Allergan South to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Allergan South to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Allergan South 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.
Analytics focus
– Allergan South 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 Caren Scheepers, Deepa Sita 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.
Weaknesses Allergan South Africa's Merger: Contextual Leadership Sustaining Culture | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Allergan South Africa's Merger: Contextual Leadership Sustaining Culture are -
Increasing silos among functional specialists
– The organizational structure of Allergan South is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Allergan South needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Allergan South to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Allergan South 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Allergan South Africa's Merger: Contextual Leadership Sustaining Culture has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Allergan South 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Allergan South Africa's Merger: Contextual Leadership Sustaining Culture, 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.
Slow decision making process
– As mentioned earlier in the report, Allergan South has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Allergan South even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Allergan South 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.
Skills based hiring
– The stress on hiring functional specialists at Allergan South 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Allergan South Africa's Merger: Contextual Leadership Sustaining Culture, it seems that the employees of Allergan South 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.
Interest costs
– Compare to the competition, Allergan South 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.
Products dominated business model
– Even though Allergan South has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Allergan South Africa's Merger: Contextual Leadership Sustaining Culture should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Allergan South 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.
Opportunities Allergan South Africa's Merger: Contextual Leadership Sustaining Culture | 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 Allergan South Africa's Merger: Contextual Leadership Sustaining Culture are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Allergan South 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, Allergan South Africa's Merger: Contextual Leadership Sustaining Culture, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Allergan South 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.
Manufacturing automation
– Allergan South 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.
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 Allergan South in the consumer business. Now Allergan South can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Allergan South can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Allergan South can use these opportunities to build new business models that can help the communities that Allergan South operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
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. Allergan South 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. Allergan South 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.
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 Allergan South 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Allergan South can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Allergan South can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Allergan South Africa's Merger: Contextual Leadership Sustaining Culture 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.
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. Allergan South can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Allergan South 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Allergan South is facing challenges because of the dominance of functional experts in the organization. Allergan South Africa's Merger: Contextual Leadership Sustaining Culture 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.
Threats Allergan South Africa's Merger: Contextual Leadership Sustaining Culture External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Allergan South Africa's Merger: Contextual Leadership Sustaining Culture are -
Increasing wage structure of Allergan South
– 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 Allergan South.
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. Allergan South needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
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. Allergan South 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.
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. Allergan South can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Allergan South has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Allergan South 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.
Regulatory challenges
– Allergan South 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Allergan South Africa's Merger: Contextual Leadership Sustaining Culture, Allergan South 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Allergan South with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Allergan South 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. Allergan South can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
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 Allergan South business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Allergan South 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.
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.
Stagnating economy with rate increase
– Allergan South 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.
Weighted SWOT Analysis of Allergan South Africa's Merger: Contextual Leadership Sustaining Culture 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 Allergan South Africa's Merger: Contextual Leadership Sustaining Culture 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 Allergan South Africa's Merger: Contextual Leadership Sustaining Culture 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 Allergan South Africa's Merger: Contextual Leadership Sustaining Culture 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 Allergan South Africa's Merger: Contextual Leadership Sustaining Culture 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 Allergan South needs to make to build a sustainable competitive advantage.