Case Study Description of Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma
In spring 2012, the issue of trans-boundary sales arose for China's Weikang Pharmaceutical Co., Ltd. (Weikang). Sales of the company's products were allocated to distributors in different regions, with each distributor enjoying a monopoly within that region. However, issues had been arising with such a rigid demarcation of sales territory. One question was whether introducing competition between sales agents would lead to higher sales, or whether regional teams could co-operate and share best practices. The sales director of Weikang pondered a conflict between two distributors that had aroused great controversy. With each party sticking to its own view, the conflict seemed intractable, and now distributors from different regions were looking for a reasonable solution. It was time for a meeting to discuss the company's channel management. Faced with such a great difficulty as a cross-border operation, how should the company proceed? Jin-Song Huang is affiliated with Beihang University. Qing-Qing Deng is affiliated with Beihang University. Li Zhuang is affiliated with Beihang University.
Authors :: Jin-Song Huang, Qing-Qing Deng, Li Zhuang
Swot Analysis of "Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma" written by Jin-Song Huang, Qing-Qing Deng, Li Zhuang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Weikang Beihang facing as an external strategic factors. Some of the topics covered in Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma case study are - Strategic Management Strategies, Marketing, Sales and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma casestudy better are - – increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, increasing transportation and logistics costs, increasing energy prices, increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Weikang Beihang, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Weikang Beihang 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 Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma can be done for the following purposes –
1. Strategic planning using facts provided in Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma case study
2. Improving business portfolio management of Weikang Beihang
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 Weikang Beihang
Strengths Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Weikang Beihang in Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Weikang Beihang in the sector have low bargaining power. Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Weikang Beihang to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Weikang Beihang 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 Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Weikang Beihang 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 Jin-Song Huang, Qing-Qing Deng, Li Zhuang can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Innovation driven organization
– Weikang Beihang is one of the most innovative firm in sector. Manager in Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Weikang Beihang is present in almost all the verticals within the industry. This has provided firm in Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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.
Operational resilience
– The operational resilience strategy in the Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to recruit top talent
– Weikang Beihang is one of the leading recruiters in the industry. Managers in the Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Weikang Beihang is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Weikang Beihang 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.
Ability to lead change in Sales & Marketing field
– Weikang Beihang 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 Weikang Beihang in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Sales & Marketing industry
– Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma firm has clearly differentiated products in the market place. This has enabled Weikang Beihang to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Weikang Beihang to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Weikang Beihang has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Weikang Beihang 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.
Weaknesses Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma are -
High bargaining power of channel partners
– Because of the regulatory requirements, Jin-Song Huang, Qing-Qing Deng, Li Zhuang suggests that, Weikang Beihang 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.
Lack of clear differentiation of Weikang Beihang products
– To increase the profitability and margins on the products, Weikang Beihang needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Weikang Beihang 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.
Interest costs
– Compare to the competition, Weikang Beihang 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.
Need for greater diversity
– Weikang Beihang 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.
Capital Spending Reduction
– Even during the low interest decade, Weikang Beihang 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 Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma, it seems that the employees of Weikang Beihang 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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 Weikang Beihang has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Weikang Beihang 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 Weikang Beihang, firm in the HBR case study Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma, 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.
Opportunities Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma | 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 Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Weikang Beihang 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, Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Weikang Beihang 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 Weikang Beihang to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Weikang Beihang can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Weikang Beihang 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Weikang Beihang 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 Weikang Beihang 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.
Manufacturing automation
– Weikang Beihang 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Weikang Beihang is facing challenges because of the dominance of functional experts in the organization. Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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.
Learning at scale
– Online learning technologies has now opened space for Weikang Beihang 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.
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 Weikang Beihang in the consumer business. Now Weikang Beihang can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Weikang Beihang 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Weikang Beihang can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Weikang Beihang 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 Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Weikang Beihang to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma are -
Technology acceleration in Forth Industrial Revolution
– Weikang Beihang has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Weikang Beihang 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.
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. Weikang Beihang can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Weikang Beihang 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.
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. Weikang Beihang needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Weikang Beihang 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 Weikang Beihang business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Weikang Beihang
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Weikang Beihang.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma, Weikang Beihang 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 .
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.
Shortening product life cycle
– it is one of the major threat that Weikang Beihang is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Weikang Beihang.
Environmental challenges
– Weikang Beihang 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. Weikang Beihang can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Weighted SWOT Analysis of Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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 Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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 Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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 Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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 Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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 Weikang Beihang needs to make to build a sustainable competitive advantage.