Swot Analysis of "Merck Latin America (B): Argentina" written by Michael Beer, James Weber includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Argentina Merck facing as an external strategic factors. Some of the topics covered in Merck Latin America (B): Argentina case study are - Strategic Management Strategies, Knowledge management, Organizational culture, Strategic planning and Organizational Development.
Some of the macro environment factors that can be used to understand the Merck Latin America (B): Argentina casestudy better are - – increasing transportation and logistics costs, geopolitical disruptions, supply chains are disrupted by pandemic , increasing energy prices, wage bills are increasing, there is increasing trade war between United States & China, increasing commodity prices,
central banks are concerned over increasing inflation, technology disruption, etc
Introduction to SWOT Analysis of Merck Latin America (B): Argentina
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Merck Latin America (B): Argentina case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Argentina Merck, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Argentina Merck 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 Merck Latin America (B): Argentina can be done for the following purposes –
1. Strategic planning using facts provided in Merck Latin America (B): Argentina case study
2. Improving business portfolio management of Argentina Merck
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 Argentina Merck
Strengths Merck Latin America (B): Argentina | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Argentina Merck in Merck Latin America (B): Argentina Harvard Business Review case study are -
High switching costs
– The high switching costs that Argentina Merck 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.
Superior customer experience
– The customer experience strategy of Argentina Merck in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Argentina Merck 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 Merck Latin America (B): Argentina HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Argentina Merck 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 Merck Latin America (B): Argentina - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Argentina Merck has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Argentina Merck to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Argentina Merck 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 Argentina Merck is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Merck Latin America (B): Argentina Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Argentina Merck 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 Michael Beer, James Weber 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
– Argentina Merck is one of the most innovative firm in sector. Manager in Merck Latin America (B): Argentina Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Merck Latin America (B): Argentina 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.
Ability to recruit top talent
– Argentina Merck is one of the leading recruiters in the industry. Managers in the Merck Latin America (B): Argentina are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Argentina Merck has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Merck Latin America (B): Argentina 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.
Sustainable margins compare to other players in Organizational Development industry
– Merck Latin America (B): Argentina firm has clearly differentiated products in the market place. This has enabled Argentina Merck to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Argentina Merck to invest into research and development (R&D) and innovation.
Weaknesses Merck Latin America (B): Argentina | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Merck Latin America (B): Argentina are -
Capital Spending Reduction
– Even during the low interest decade, Argentina Merck 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 bargaining power of channel partners
– Because of the regulatory requirements, Michael Beer, James Weber suggests that, Argentina Merck 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.
Slow to strategic competitive environment developments
– As Merck Latin America (B): Argentina HBR case study mentions - Argentina Merck 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.
Aligning sales with marketing
– It come across in the case study Merck Latin America (B): Argentina 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 Merck Latin America (B): Argentina can leverage the sales team experience to cultivate customer relationships as Argentina Merck is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Argentina Merck is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Merck Latin America (B): Argentina can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Argentina Merck 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Merck Latin America (B): Argentina 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 Argentina Merck has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Merck Latin America (B): Argentina, is just above the industry average. Argentina Merck 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.
Skills based hiring
– The stress on hiring functional specialists at Argentina Merck 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.
Products dominated business model
– Even though Argentina Merck 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 - Merck Latin America (B): Argentina should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Argentina Merck is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Argentina Merck needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Argentina Merck to focus more on services rather than just following the product oriented approach.
Opportunities Merck Latin America (B): Argentina | 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 Merck Latin America (B): Argentina are -
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. Argentina Merck 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 Argentina Merck 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.
Building a culture of innovation
– managers at Argentina Merck 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.
Leveraging digital technologies
– Argentina Merck 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Argentina Merck 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, Merck Latin America (B): Argentina, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Argentina Merck can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Merck Latin America (B): Argentina 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.
Using analytics as competitive advantage
– Argentina Merck 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 Merck Latin America (B): Argentina - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Argentina Merck to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Argentina Merck in the consumer business. Now Argentina Merck can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Argentina Merck 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.
Better consumer reach
– The expansion of the 5G network will help Argentina Merck to increase its market reach. Argentina Merck 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Argentina Merck is facing challenges because of the dominance of functional experts in the organization. Merck Latin America (B): Argentina 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.
Developing new processes and practices
– Argentina Merck 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Argentina Merck can use these opportunities to build new business models that can help the communities that Argentina Merck operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Threats Merck Latin America (B): Argentina External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Merck Latin America (B): Argentina are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Merck Latin America (B): Argentina, Argentina Merck 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 .
Increasing wage structure of Argentina Merck
– 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 Argentina Merck.
Consumer confidence and its impact on Argentina Merck 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.
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. Argentina Merck can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Argentina Merck.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Argentina Merck 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 Merck Latin America (B): Argentina .
Technology acceleration in Forth Industrial Revolution
– Argentina Merck has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Argentina Merck 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.
Stagnating economy with rate increase
– Argentina Merck 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Argentina Merck 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.
Shortening product life cycle
– it is one of the major threat that Argentina Merck is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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. Argentina Merck needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Argentina Merck 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 Merck Latin America (B): Argentina 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 Merck Latin America (B): Argentina 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 Merck Latin America (B): Argentina 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 Merck Latin America (B): Argentina 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 Merck Latin America (B): Argentina 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 Argentina Merck needs to make to build a sustainable competitive advantage.
