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 - – there is backlash against globalization, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , increasing transportation and logistics costs, wage bills are increasing,
central banks are concerned over increasing inflation, 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 -
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.
Training and development
– Weikang Beihang has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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.
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.
Organizational Resilience of Weikang Beihang
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Weikang Beihang does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
Learning organization
- Weikang Beihang 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 Weikang Beihang is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Weikang Beihang 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.
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.
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.
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 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 Weikang Beihang supply chain. Even after few cautionary changes mentioned in the HBR case study - Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Weikang Beihang vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Weikang Beihang is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Weikang Beihang needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Weikang Beihang to focus more on services rather than just following the product oriented approach.
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.
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.
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.
Slow to strategic competitive environment developments
– As Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma HBR case study mentions - Weikang Beihang 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma, is just above the industry average. Weikang Beihang 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.
High cash cycle compare to competitors
Weikang Beihang 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.
Aligning sales with marketing
– It come across in the case study Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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 Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma can leverage the sales team experience to cultivate customer relationships as Weikang Beihang is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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 Weikang Beihang 's lucrative customers.
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 -
Loyalty marketing
– Weikang Beihang 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Weikang Beihang can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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.
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.
Buying journey improvements
– Weikang Beihang can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Weikang Pharmaceutical Co., Ltd.: Channel Management Dilemma 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.
Better consumer reach
– The expansion of the 5G network will help Weikang Beihang to increase its market reach. Weikang Beihang 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.
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.
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.
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. Weikang Beihang can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Weikang Beihang 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.
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.
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. Weikang Beihang 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. Weikang Beihang 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.
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.
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 -
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.
Regulatory challenges
– Weikang Beihang 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.
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 Weikang Beihang 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. Weikang Beihang 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.
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.
Consumer confidence and its impact on Weikang Beihang 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.
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.
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.
High dependence on third party suppliers
– Weikang Beihang 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.
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.
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.
