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 - – technology disruption, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions,
increasing transportation and logistics costs, 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 -
Highly skilled collaborators
– Cardinal Shoppe 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 Cardinal Health (A): The Medicine Shoppe Acquisition HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Cardinal Shoppe 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.
Learning organization
- Cardinal Shoppe 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 Cardinal Shoppe is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Cardinal Health (A): The Medicine Shoppe Acquisition Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
High brand equity
– Cardinal Shoppe has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cardinal Shoppe to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Cardinal Shoppe is one of the leading recruiters in the industry. Managers in the Cardinal Health (A): The Medicine Shoppe Acquisition are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Ability to lead change in Sales & Marketing field
– Cardinal Shoppe is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Cardinal Shoppe in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Organizational Resilience of Cardinal Shoppe
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cardinal Shoppe 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 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.
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 -
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.
High cash cycle compare to competitors
Cardinal Shoppe 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.
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.
Capital Spending Reduction
– Even during the low interest decade, Cardinal Shoppe 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.
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 operating costs
– Compare to the competitors, firm in the HBR case study Cardinal Health (A): The Medicine Shoppe Acquisition has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Cardinal Shoppe 's lucrative customers.
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.
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Cardinal Health (A): The Medicine Shoppe Acquisition, in the dynamic environment Cardinal Shoppe has struggled to respond to the nimble upstart competition. Cardinal Shoppe has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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 -
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.
Developing new processes and practices
– Cardinal Shoppe can develop new processes and procedures in Sales & Marketing 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.
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.
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.
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.
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.
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.
Buying journey improvements
– Cardinal Shoppe can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Cardinal Health (A): The Medicine Shoppe Acquisition 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.
Building a culture of innovation
– managers at Cardinal Shoppe 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 Sales & Marketing segment.
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cardinal Shoppe is facing challenges because of the dominance of functional experts in the organization. Cardinal Health (A): The Medicine Shoppe Acquisition 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.
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 -
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cardinal Shoppe 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 Cardinal Health (A): The Medicine Shoppe Acquisition .
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.
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.
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.
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.
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 Cardinal Shoppe business can come under increasing regulations regarding data privacy, data security, etc.
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.
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. Cardinal Shoppe needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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.
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.
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. Cardinal Shoppe 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.
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.
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.