Case Study Description of Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A)
In the early 1990s, Merck faced a series of challenges because of significant changes in its competitive and regulatory environment (e.g., growth in power of pharmaceutical buyers like managed care organizations led to price pressures and President Clinton's review of the entire U.S. health-care industry). The case describes the company under its previous CEO, and primarily under Ray Gilmartin, the new CEO. Discusses the strategic, organizational, cultural, and management challenges that Merck faced, as well as Gilmartin's change program from 1994 to 1998, which was aimed at helping Merck address these issues.
Swot Analysis of "Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A)" written by Michael Beer, Perry L. Fagan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merck Gilmartin's facing as an external strategic factors. Some of the topics covered in Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) case study are - Strategic Management Strategies, Competitive strategy, Cross-cultural management, Globalization, Organizational culture, Organizational structure and Organizational Development.
Some of the macro environment factors that can be used to understand the Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) casestudy better are - – wage bills are increasing, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google,
supply chains are disrupted by pandemic , increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merck Gilmartin's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merck Gilmartin's 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 & Co., Inc.: Corporate Strategy, Organization and Culture (A) can be done for the following purposes –
1. Strategic planning using facts provided in Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) case study
2. Improving business portfolio management of Merck Gilmartin's
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 Merck Gilmartin's
Strengths Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merck Gilmartin's in Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) Harvard Business Review case study are -
Strong track record of project management
– Merck Gilmartin's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Merck Gilmartin's 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, Perry L. Fagan 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.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Merck Gilmartin's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Merck Gilmartin's 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.
High brand equity
– Merck Gilmartin's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Merck Gilmartin's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Merck Gilmartin's in the sector have low bargaining power. Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Merck Gilmartin's to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Merck Gilmartin's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Merck Gilmartin's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) 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.
Superior customer experience
– The customer experience strategy of Merck Gilmartin's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Merck Gilmartin's is present in almost all the verticals within the industry. This has provided firm in Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) 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.
Cross disciplinary teams
– Horizontal connected teams at the Merck Gilmartin's 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.
Learning organization
- Merck Gilmartin's 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 Merck Gilmartin's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Merck Gilmartin's 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.
Weaknesses Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) are -
Low market penetration in new markets
– Outside its home market of Merck Gilmartin's, firm in the HBR case study Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Merck Gilmartin's supply chain. Even after few cautionary changes mentioned in the HBR case study - Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Merck Gilmartin's vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Merck Gilmartin's 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.
Skills based hiring
– The stress on hiring functional specialists at Merck Gilmartin's 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.
Increasing silos among functional specialists
– The organizational structure of Merck Gilmartin's is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Merck Gilmartin's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Merck Gilmartin's to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A), it seems that the employees of Merck Gilmartin's 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.
No frontier risks strategy
– After analyzing the HBR case study Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A), 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A), is just above the industry average. Merck Gilmartin's 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.
Aligning sales with marketing
– It come across in the case study Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) 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 & Co., Inc.: Corporate Strategy, Organization and Culture (A) can leverage the sales team experience to cultivate customer relationships as Merck Gilmartin's is planning to shift buying processes online.
Products dominated business model
– Even though Merck Gilmartin's 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 & Co., Inc.: Corporate Strategy, Organization and Culture (A) should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) HBR case study mentions - Merck Gilmartin's 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 Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) | 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 & Co., Inc.: Corporate Strategy, Organization and Culture (A) are -
Leveraging digital technologies
– Merck Gilmartin's 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
– Merck Gilmartin's 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.
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. Merck Gilmartin's 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. Merck Gilmartin's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Merck Gilmartin's can use these opportunities to build new business models that can help the communities that Merck Gilmartin's operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Merck Gilmartin's 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.
Building a culture of innovation
– managers at Merck Gilmartin's 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Merck Gilmartin's 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 Merck Gilmartin's in the consumer business. Now Merck Gilmartin's can target international markets with far fewer capital restrictions requirements than the existing system.
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. Merck Gilmartin's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Merck Gilmartin's has opened avenues for new revenue streams for the organization in the industry. This can help Merck Gilmartin's to build a more holistic ecosystem as suggested in the Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) case study. Merck Gilmartin's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Merck Gilmartin's 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 & Co., Inc.: Corporate Strategy, Organization and Culture (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Merck Gilmartin's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Merck Gilmartin's 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.
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 Merck Gilmartin's 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.
Threats Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A) are -
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. Merck Gilmartin's needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Merck Gilmartin's 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merck Gilmartin's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Merck Gilmartin's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Merck Gilmartin's business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Merck Gilmartin's 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.
Stagnating economy with rate increase
– Merck Gilmartin's 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.
Technology acceleration in Forth Industrial Revolution
– Merck Gilmartin's has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Merck Gilmartin's 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.
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 Merck Gilmartin's.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Merck Gilmartin's 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.
Environmental challenges
– Merck Gilmartin's 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. Merck Gilmartin's can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
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 Merck Gilmartin's in the Organizational Development sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Merck Gilmartin's 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 & Co., Inc.: Corporate Strategy, Organization and Culture (A) 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 & Co., Inc.: Corporate Strategy, Organization and Culture (A) 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 & Co., Inc.: Corporate Strategy, Organization and Culture (A) 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 & Co., Inc.: Corporate Strategy, Organization and Culture (A) 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 & Co., Inc.: Corporate Strategy, Organization and Culture (A) 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 Merck Gilmartin's needs to make to build a sustainable competitive advantage.
