Case Study Description of Medi-Cult: Pricing a Radical Innovation
Highlights the issues involved in the launch of an infertility product and procedure that allows women to become pregnant without having to undergo unpleasant hormone stimulation or experience dangerous side effects. In bringing its product to market, Medi-Cult, a small biotechnology company, must deal with regulatory constraints, larger competitors, and the challenges of introducing a new product into the local and global marketplace. Questions raised are: Should the product be priced according to its perceived value? Should Medi-Cult pursue a penetration or market skimming strategy in pricing the new product? How will the contribution margin be affected if a global, regional, or multinational pricing strategy is chosen? What are the ethical issues in pricing pharmaceuticals?
Swot Analysis of "Medi-Cult: Pricing a Radical Innovation" written by Brian Rogers, Nirmalya Kumar includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Medi Cult facing as an external strategic factors. Some of the topics covered in Medi-Cult: Pricing a Radical Innovation case study are - Strategic Management Strategies, Ethics, Marketing, Product development and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Medi-Cult: Pricing a Radical Innovation casestudy better are - – increasing transportation and logistics costs, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models,
there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Medi-Cult: Pricing a Radical Innovation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Medi-Cult: Pricing a Radical Innovation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Medi Cult, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Medi Cult 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 Medi-Cult: Pricing a Radical Innovation can be done for the following purposes –
1. Strategic planning using facts provided in Medi-Cult: Pricing a Radical Innovation case study
2. Improving business portfolio management of Medi Cult
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 Medi Cult
Strengths Medi-Cult: Pricing a Radical Innovation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Medi Cult in Medi-Cult: Pricing a Radical Innovation Harvard Business Review case study are -
Strong track record of project management
– Medi Cult is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Medi Cult
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Medi Cult does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Medi Cult is one of the leading recruiters in the industry. Managers in the Medi-Cult: Pricing a Radical Innovation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Medi Cult 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
- Medi Cult 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 Medi Cult is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Medi-Cult: Pricing a Radical Innovation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Medi Cult has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Medi Cult has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Sustainable margins compare to other players in Sales & Marketing industry
– Medi-Cult: Pricing a Radical Innovation firm has clearly differentiated products in the market place. This has enabled Medi Cult to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Medi Cult to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Medi Cult 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 Medi-Cult: Pricing a Radical Innovation - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Medi Cult is present in almost all the verticals within the industry. This has provided firm in Medi-Cult: Pricing a Radical Innovation 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.
Low bargaining power of suppliers
– Suppliers of Medi Cult in the sector have low bargaining power. Medi-Cult: Pricing a Radical Innovation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Medi Cult to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Medi Cult has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Medi-Cult: Pricing a Radical Innovation 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Medi Cult digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Medi Cult 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.
Weaknesses Medi-Cult: Pricing a Radical Innovation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Medi-Cult: Pricing a Radical Innovation are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Medi-Cult: Pricing a Radical Innovation 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 Medi Cult has relatively successful track record of launching new products.
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 Medi Cult supply chain. Even after few cautionary changes mentioned in the HBR case study - Medi-Cult: Pricing a Radical Innovation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Medi Cult vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Medi-Cult: Pricing a Radical Innovation, is just above the industry average. Medi Cult 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 Medi Cult 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.
Slow to strategic competitive environment developments
– As Medi-Cult: Pricing a Radical Innovation HBR case study mentions - Medi Cult 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 bargaining power of channel partners
– Because of the regulatory requirements, Brian Rogers, Nirmalya Kumar suggests that, Medi Cult 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Medi-Cult: Pricing a Radical Innovation, in the dynamic environment Medi Cult has struggled to respond to the nimble upstart competition. Medi Cult has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Medi Cult is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Medi Cult needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Medi Cult to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Medi Cult, firm in the HBR case study Medi-Cult: Pricing a Radical Innovation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Medi Cult 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Medi Cult is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Medi-Cult: Pricing a Radical Innovation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Medi-Cult: Pricing a Radical Innovation | 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 Medi-Cult: Pricing a Radical Innovation are -
Building a culture of innovation
– managers at Medi Cult 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.
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. Medi Cult can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Medi Cult 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Medi Cult can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Medi Cult to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Medi Cult 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.
Leveraging digital technologies
– Medi Cult 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, Medi Cult 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, Medi-Cult: Pricing a Radical Innovation, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Medi Cult can use these opportunities to build new business models that can help the communities that Medi Cult operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Medi Cult 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 Medi Cult to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Medi Cult is facing challenges because of the dominance of functional experts in the organization. Medi-Cult: Pricing a Radical Innovation 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.
Loyalty marketing
– Medi Cult 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.
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 Medi Cult in the consumer business. Now Medi Cult can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Medi-Cult: Pricing a Radical Innovation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Medi-Cult: Pricing a Radical Innovation are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology 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, Medi Cult 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 Medi-Cult: Pricing a Radical Innovation .
Stagnating economy with rate increase
– Medi Cult 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.
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. Medi Cult can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Medi Cult 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.
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. Medi Cult 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Medi-Cult: Pricing a Radical Innovation, Medi Cult may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Environmental challenges
– Medi Cult 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. Medi Cult can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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 Medi Cult.
Regulatory challenges
– Medi Cult 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.
Shortening product life cycle
– it is one of the major threat that Medi Cult is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Medi Cult business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Medi-Cult: Pricing a Radical Innovation 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 Medi-Cult: Pricing a Radical Innovation 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 Medi-Cult: Pricing a Radical Innovation 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 Medi-Cult: Pricing a Radical Innovation 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 Medi-Cult: Pricing a Radical Innovation 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 Medi Cult needs to make to build a sustainable competitive advantage.
