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, cloud computing is disrupting traditional business models, there is backlash against globalization, talent flight as more people leaving formal jobs, wage bills are increasing, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy,
geopolitical disruptions, increasing commodity prices, 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 -
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.
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.
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.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Allergan South digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Allergan South 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.
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.
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.
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.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Allergan South in the sector have low bargaining power. Allergan South Africa's Merger: Contextual Leadership Sustaining Culture has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Allergan South to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Allergan South 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 Allergan South Africa's Merger: Contextual Leadership Sustaining Culture - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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 -
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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Allergan South supply chain. Even after few cautionary changes mentioned in the HBR case study - Allergan South Africa's Merger: Contextual Leadership Sustaining Culture, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Allergan South vulnerable to further global disruptions in South East Asia.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Allergan South 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.
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.
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.
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.
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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Allergan South Africa's Merger: Contextual Leadership Sustaining Culture 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 Allergan South has relatively successful track record of launching new products.
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 -
Using analytics as competitive advantage
– Allergan South has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Allergan South Africa's Merger: Contextual Leadership Sustaining Culture - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Allergan South to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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 .
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.
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.
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.
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.
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.
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.
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 .
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.
