Case Study Description of Orexigen: Valuing Contrave
In January 2013, small biotechnology firm Orexigen was in the final stages of testing Contrave, a promising new pharmaceutical product for the treatment of obesity. At the time, Orexigen had no products in the market, so all its hopes of financial success rested on this new treatment. Contrave had proven to be highly effective in clinical trials, and Orexigen executives were confident it would receive FDA approval. At the same time, a much larger pharmaceutical company was considering acquiring Orexigen. Because the decision to acquire would ultimately be a financial one, the project team from the large company had to complete a valuation for Orexigen's only significant product in its pipeline, Contrave. What was the new product actually worth?
Swot Analysis of "Orexigen: Valuing Contrave" written by Tim Calkins includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Orexigen Contrave facing as an external strategic factors. Some of the topics covered in Orexigen: Valuing Contrave case study are - Strategic Management Strategies, Growth strategy, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Orexigen: Valuing Contrave casestudy better are - – technology disruption, increasing energy prices, geopolitical disruptions, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, increasing commodity prices,
cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Orexigen: Valuing Contrave
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Orexigen: Valuing Contrave case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Orexigen Contrave, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Orexigen Contrave 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 Orexigen: Valuing Contrave can be done for the following purposes –
1. Strategic planning using facts provided in Orexigen: Valuing Contrave case study
2. Improving business portfolio management of Orexigen Contrave
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 Orexigen Contrave
Strengths Orexigen: Valuing Contrave | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Orexigen Contrave in Orexigen: Valuing Contrave Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Orexigen Contrave in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Orexigen Contrave 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 Orexigen: Valuing Contrave - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Sales & Marketing industry
– Orexigen: Valuing Contrave firm has clearly differentiated products in the market place. This has enabled Orexigen Contrave to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Orexigen Contrave to invest into research and development (R&D) and innovation.
Innovation driven organization
– Orexigen Contrave is one of the most innovative firm in sector. Manager in Orexigen: Valuing Contrave Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Orexigen Contrave 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 Tim Calkins 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.
Strong track record of project management
– Orexigen Contrave is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Orexigen Contrave digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Orexigen Contrave 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.
Low bargaining power of suppliers
– Suppliers of Orexigen Contrave in the sector have low bargaining power. Orexigen: Valuing Contrave has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Orexigen Contrave to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Orexigen Contrave 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.
Diverse revenue streams
– Orexigen Contrave is present in almost all the verticals within the industry. This has provided firm in Orexigen: Valuing Contrave 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.
Cross disciplinary teams
– Horizontal connected teams at the Orexigen Contrave 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.
Successful track record of launching new products
– Orexigen Contrave has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Orexigen Contrave 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 Orexigen: Valuing Contrave | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Orexigen: Valuing Contrave are -
High cash cycle compare to competitors
Orexigen Contrave 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.
Products dominated business model
– Even though Orexigen Contrave has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Orexigen: Valuing Contrave should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Tim Calkins suggests that, Orexigen Contrave 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Orexigen: Valuing Contrave 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 Orexigen Contrave has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Orexigen: Valuing Contrave HBR case study mentions - Orexigen Contrave 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.
Skills based hiring
– The stress on hiring functional specialists at Orexigen Contrave 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.
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 Orexigen Contrave supply chain. Even after few cautionary changes mentioned in the HBR case study - Orexigen: Valuing Contrave, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Orexigen Contrave vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Orexigen Contrave 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Orexigen Contrave is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Orexigen: Valuing Contrave can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Orexigen Contrave, firm in the HBR case study Orexigen: Valuing Contrave needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Orexigen: Valuing Contrave, it seems that the employees of Orexigen Contrave 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.
Opportunities Orexigen: Valuing Contrave | 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 Orexigen: Valuing Contrave are -
Using analytics as competitive advantage
– Orexigen Contrave 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 Orexigen: Valuing Contrave - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Orexigen Contrave to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Orexigen Contrave 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 Orexigen Contrave 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.
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. Orexigen Contrave 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. Orexigen Contrave 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.
Leveraging digital technologies
– Orexigen Contrave 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.
Creating value in data economy
– The success of analytics program of Orexigen Contrave has opened avenues for new revenue streams for the organization in the industry. This can help Orexigen Contrave to build a more holistic ecosystem as suggested in the Orexigen: Valuing Contrave case study. Orexigen Contrave can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Orexigen Contrave can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Orexigen: Valuing Contrave 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.
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. Orexigen Contrave can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Orexigen Contrave to increase its market reach. Orexigen Contrave will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Orexigen Contrave 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, Orexigen: Valuing Contrave, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Orexigen Contrave 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.
Learning at scale
– Online learning technologies has now opened space for Orexigen Contrave 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.
Manufacturing automation
– Orexigen Contrave 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.
Threats Orexigen: Valuing Contrave External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Orexigen: Valuing Contrave are -
Environmental challenges
– Orexigen Contrave 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. Orexigen Contrave can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing wage structure of Orexigen Contrave
– 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 Orexigen Contrave.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Orexigen: Valuing Contrave, Orexigen Contrave 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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Orexigen Contrave 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 Orexigen: Valuing Contrave .
High dependence on third party suppliers
– Orexigen Contrave 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.
Stagnating economy with rate increase
– Orexigen Contrave 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.
Regulatory challenges
– Orexigen Contrave 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.
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. Orexigen Contrave can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Orexigen Contrave needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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. Orexigen Contrave 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Orexigen Contrave with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Orexigen Contrave 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.
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 Orexigen Contrave.
Weighted SWOT Analysis of Orexigen: Valuing Contrave 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 Orexigen: Valuing Contrave 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 Orexigen: Valuing Contrave 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 Orexigen: Valuing Contrave 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 Orexigen: Valuing Contrave 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 Orexigen Contrave needs to make to build a sustainable competitive advantage.