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 - – increasing energy prices, increasing transportation and logistics costs, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, there is backlash against globalization, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%,
increasing commodity prices, cloud computing is disrupting traditional business models, 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.
Strong track record of project management
– Allergan South is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Allergan South is present in almost all the verticals within the industry. This has provided firm in Allergan South Africa's Merger: Contextual Leadership Sustaining Culture 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.
Successful track record of launching new products
– Allergan South has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Allergan South 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.
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.
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.
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.
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.
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.
Learning organization
- Allergan South 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 Allergan South is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Allergan South Africa's Merger: Contextual Leadership Sustaining Culture Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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 -
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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Caren Scheepers, Deepa Sita suggests that, Allergan South is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Allergan South, firm in the HBR case study Allergan South Africa's Merger: Contextual Leadership Sustaining Culture needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Slow to strategic competitive environment developments
– As Allergan South Africa's Merger: Contextual Leadership Sustaining Culture HBR case study mentions - Allergan South 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, Allergan South is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Allergan South Africa's Merger: Contextual Leadership Sustaining Culture can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Allergan South Africa's Merger: Contextual Leadership Sustaining Culture, in the dynamic environment Allergan South has struggled to respond to the nimble upstart competition. Allergan South has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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.
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 -
Leveraging digital technologies
– Allergan South 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.
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.
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.
Building a culture of innovation
– managers at Allergan South 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.
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. Allergan South can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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.
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.
Developing new processes and practices
– Allergan South 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.
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.
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.
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.
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 -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Allergan South 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 Allergan South Africa's Merger: Contextual Leadership Sustaining Culture .
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.
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.
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 .
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.
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.
Shortening product life cycle
– it is one of the major threat that Allergan South is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.
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.
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.