Cardinal Health (A): The Medicine Shoppe Acquisition SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Cardinal Health (A): The Medicine Shoppe Acquisition
Robert Walter, the founder and CEO of Cardinal Health, a pharmaceutical distributor, is contemplating the purchase of Medicine Shoppe, a chain of apothecaries. The purchase might be construed as competition against his own drugstore customers. But one of its many advantages is the window it provides on the turbulent outside environment, with consolidation of his customers and managed care pressure on the pharmaceutical industry.
Authors :: Regina E. Herzlinger, Miguel Abecasis, Brenda Cheng
Swot Analysis of "Cardinal Health (A): The Medicine Shoppe Acquisition" written by Regina E. Herzlinger, Miguel Abecasis, Brenda Cheng includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cardinal Shoppe facing as an external strategic factors. Some of the topics covered in Cardinal Health (A): The Medicine Shoppe Acquisition case study are - Strategic Management Strategies, Mergers & acquisitions, Operations management and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Cardinal Health (A): The Medicine Shoppe Acquisition casestudy better are - – digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, geopolitical disruptions,
there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Cardinal Health (A): The Medicine Shoppe Acquisition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cardinal Health (A): The Medicine Shoppe Acquisition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cardinal Shoppe, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cardinal Shoppe 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 Cardinal Health (A): The Medicine Shoppe Acquisition can be done for the following purposes –
1. Strategic planning using facts provided in Cardinal Health (A): The Medicine Shoppe Acquisition case study
2. Improving business portfolio management of Cardinal Shoppe
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cardinal Shoppe
Strengths Cardinal Health (A): The Medicine Shoppe Acquisition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cardinal Shoppe in Cardinal Health (A): The Medicine Shoppe Acquisition Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Cardinal Shoppe 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.
Superior customer experience
– The customer experience strategy of Cardinal Shoppe in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Cardinal Shoppe is present in almost all the verticals within the industry. This has provided firm in Cardinal Health (A): The Medicine Shoppe Acquisition case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Successful track record of launching new products
– Cardinal Shoppe has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cardinal Shoppe 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.
Low bargaining power of suppliers
– Suppliers of Cardinal Shoppe in the sector have low bargaining power. Cardinal Health (A): The Medicine Shoppe Acquisition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cardinal Shoppe to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Sales & Marketing industry
– Cardinal Health (A): The Medicine Shoppe Acquisition firm has clearly differentiated products in the market place. This has enabled Cardinal Shoppe to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Cardinal Shoppe to invest into research and development (R&D) and innovation.
Innovation driven organization
– Cardinal Shoppe is one of the most innovative firm in sector. Manager in Cardinal Health (A): The Medicine Shoppe Acquisition Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Cardinal Shoppe has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Cardinal Health (A): The Medicine Shoppe Acquisition 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.
Operational resilience
– The operational resilience strategy in the Cardinal Health (A): The Medicine Shoppe Acquisition 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Cardinal Shoppe digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cardinal Shoppe 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.
Effective Research and Development (R&D)
– Cardinal Shoppe 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 Cardinal Health (A): The Medicine Shoppe Acquisition - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Cardinal Shoppe is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Cardinal Health (A): The Medicine Shoppe Acquisition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cardinal Health (A): The Medicine Shoppe Acquisition are -
Slow to strategic competitive environment developments
– As Cardinal Health (A): The Medicine Shoppe Acquisition HBR case study mentions - Cardinal Shoppe 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Cardinal Health (A): The Medicine Shoppe Acquisition 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 Cardinal Shoppe has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Cardinal Health (A): The Medicine Shoppe Acquisition, it seems that the employees of Cardinal Shoppe 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Regina E. Herzlinger, Miguel Abecasis, Brenda Cheng suggests that, Cardinal Shoppe 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.
Aligning sales with marketing
– It come across in the case study Cardinal Health (A): The Medicine Shoppe Acquisition 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 Cardinal Health (A): The Medicine Shoppe Acquisition can leverage the sales team experience to cultivate customer relationships as Cardinal Shoppe is planning to shift buying processes online.
Lack of clear differentiation of Cardinal Shoppe products
– To increase the profitability and margins on the products, Cardinal Shoppe needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Cardinal Shoppe 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.
Low market penetration in new markets
– Outside its home market of Cardinal Shoppe, firm in the HBR case study Cardinal Health (A): The Medicine Shoppe Acquisition needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Cardinal Shoppe is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Cardinal Shoppe needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cardinal Shoppe to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Cardinal Health (A): The Medicine Shoppe Acquisition, it seems that company is thinking about the frontier risks that can impact Sales & Marketing 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.
Need for greater diversity
– Cardinal Shoppe 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.
Opportunities Cardinal Health (A): The Medicine Shoppe Acquisition | 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 Cardinal Health (A): The Medicine Shoppe Acquisition are -
Better consumer reach
– The expansion of the 5G network will help Cardinal Shoppe to increase its market reach. Cardinal Shoppe 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cardinal Shoppe 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, Cardinal Health (A): The Medicine Shoppe Acquisition, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cardinal Shoppe 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. Cardinal Shoppe 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.
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 Cardinal Shoppe in the consumer business. Now Cardinal Shoppe can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cardinal Shoppe 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 Cardinal Shoppe to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Cardinal Shoppe 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
– Cardinal Shoppe 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.
Manufacturing automation
– Cardinal Shoppe can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cardinal Shoppe in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Cardinal Shoppe 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 Cardinal Health (A): The Medicine Shoppe Acquisition - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cardinal Shoppe to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Cardinal Shoppe 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 Cardinal Shoppe has opened avenues for new revenue streams for the organization in the industry. This can help Cardinal Shoppe to build a more holistic ecosystem as suggested in the Cardinal Health (A): The Medicine Shoppe Acquisition case study. Cardinal Shoppe can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Cardinal Shoppe 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 Cardinal Health (A): The Medicine Shoppe Acquisition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cardinal Health (A): The Medicine Shoppe Acquisition are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cardinal Shoppe with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Cardinal Shoppe 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.
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 Cardinal Shoppe in the Sales & Marketing sector and impact the bottomline of the organization.
Consumer confidence and its impact on Cardinal Shoppe 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.
Technology acceleration in Forth Industrial Revolution
– Cardinal Shoppe has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Cardinal Shoppe needs to keep up with the evolution of technology in the Sales & Marketing 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cardinal Shoppe in the Sales & Marketing industry. The Sales & Marketing 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.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cardinal Shoppe 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
– Cardinal Shoppe 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 Sales & Marketing industry regulations.
Environmental challenges
– Cardinal Shoppe 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. Cardinal Shoppe can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Stagnating economy with rate increase
– Cardinal Shoppe 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Shortening product life cycle
– it is one of the major threat that Cardinal Shoppe is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Weighted SWOT Analysis of Cardinal Health (A): The Medicine Shoppe Acquisition 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 Cardinal Health (A): The Medicine Shoppe Acquisition 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 Cardinal Health (A): The Medicine Shoppe Acquisition 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 Cardinal Health (A): The Medicine Shoppe Acquisition 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 Cardinal Health (A): The Medicine Shoppe Acquisition 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 Cardinal Shoppe needs to make to build a sustainable competitive advantage.
