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 transportation and logistics costs, technology disruption, there is backlash against globalization, increasing energy prices, geopolitical disruptions, increasing government debt because of Covid-19 spendings, increasing commodity prices,
banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, 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 -
Ability to lead change in Organizational Development field
– Allergan South 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 Allergan South in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Allergan South Africa's Merger: Contextual Leadership Sustaining Culture, is just above the industry average. Allergan South 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.
Lack of clear differentiation of Allergan South products
– To increase the profitability and margins on the products, Allergan South needs to provide more differentiated products than what it is currently offering in the marketplace.
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 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.
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.
Aligning sales with marketing
– It come across in the case study Allergan South Africa's Merger: Contextual Leadership Sustaining Culture 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 Allergan South Africa's Merger: Contextual Leadership Sustaining Culture can leverage the sales team experience to cultivate customer relationships as Allergan South is planning to shift buying processes online.
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.
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.
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 -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Allergan South 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 Allergan South 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. 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.
Creating value in data economy
– The success of analytics program of Allergan South has opened avenues for new revenue streams for the organization in the industry. This can help Allergan South to build a more holistic ecosystem as suggested in the Allergan South Africa's Merger: Contextual Leadership Sustaining Culture case study. Allergan South can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Allergan South to increase its market reach. Allergan South 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.
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.
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.
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.
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.
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.
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.
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 -
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.
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 Allergan South in the Organizational Development sector and impact the bottomline of the organization.
Consumer confidence and its impact on Allergan South 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
High dependence on third party suppliers
– Allergan South 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.
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.