American Well: The DTC Decision SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of American Well: The DTC Decision
In late 2013, telehealth company American Well, which developed a digital platform that allowed patients to conduct online medical consultations with physicians, is considering pursuing a direct-to-consumer (DTC) strategy. Founded in 2006, American Well had, to date, primarily sold its solution to health plans, which then provided online care services to their members using their own brand name. But while American Well attracted some of the largest U.S. health insurers as clients, a surprisingly small number of individual members had actually used the online care service. American Well management believed low consumer awareness-the result of insufficient marketing by health plans, among other factors-was hampering uptake of what should be a highly valuable offering for all stakeholders involved. They wondered if a DTC approach, in which American Well would become a consumer brand and market a telehealth service directly to the public, for example through a mobile app, could drive utilization and catapult the business to the next level. If a DTC offering were given the green light, the company had to come up with a coherent marketing plan to launch it and figure out how to manage potential conflicts with existing clients, who might view the move as competing with their own telehealth efforts. Moreover, the move had to be considered in light of other initiatives the company had recently embarked on, such as marketing its platform to pharmacy chains, targeting large employers, and selling kiosks that provided a physical space to conduct online consultations. The case forces students to grapple with the challenges and barriers involved in disrupting an established industry, examine alternative go-to-market strategies and the timing of implementing them, and consider different business models to manage supply and generate revenues. The case also offers a rich analysis of digital marketing issues.
Swot Analysis of "American Well: The DTC Decision" written by Elie Ofek, Natalie Kindred includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Dtc Telehealth facing as an external strategic factors. Some of the topics covered in American Well: The DTC Decision case study are - Strategic Management Strategies, Entrepreneurship, Health, Marketing, Technology and Sales & Marketing.
Some of the macro environment factors that can be used to understand the American Well: The DTC Decision casestudy better are - – increasing government debt because of Covid-19 spendings, there is backlash against globalization, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, increasing energy prices,
supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of American Well: The DTC Decision
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in American Well: The DTC Decision case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dtc Telehealth, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dtc Telehealth 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 American Well: The DTC Decision can be done for the following purposes –
1. Strategic planning using facts provided in American Well: The DTC Decision case study
2. Improving business portfolio management of Dtc Telehealth
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 Dtc Telehealth
Strengths American Well: The DTC Decision | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dtc Telehealth in American Well: The DTC Decision Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Dtc Telehealth in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Dtc Telehealth is one of the most innovative firm in sector. Manager in American Well: The DTC Decision Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Dtc Telehealth 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.
Training and development
– Dtc Telehealth has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in American Well: The DTC Decision 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.
Highly skilled collaborators
– Dtc Telehealth 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 American Well: The DTC Decision HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Dtc Telehealth 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 Elie Ofek, Natalie Kindred 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.
Low bargaining power of suppliers
– Suppliers of Dtc Telehealth in the sector have low bargaining power. American Well: The DTC Decision has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dtc Telehealth to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Dtc Telehealth
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Dtc Telehealth does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Dtc Telehealth 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 Dtc Telehealth is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in American Well: The DTC Decision Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the American Well: The DTC Decision 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.
Sustainable margins compare to other players in Sales & Marketing industry
– American Well: The DTC Decision firm has clearly differentiated products in the market place. This has enabled Dtc Telehealth to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Dtc Telehealth to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Dtc Telehealth 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 American Well: The DTC Decision - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses American Well: The DTC Decision | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of American Well: The DTC Decision are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the American Well: The DTC Decision 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 Dtc Telehealth has relatively successful track record of launching new products.
High cash cycle compare to competitors
Dtc Telehealth 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.
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 Dtc Telehealth supply chain. Even after few cautionary changes mentioned in the HBR case study - American Well: The DTC Decision, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Dtc Telehealth vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Dtc Telehealth 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.
Lack of clear differentiation of Dtc Telehealth products
– To increase the profitability and margins on the products, Dtc Telehealth needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Dtc Telehealth 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, Dtc Telehealth 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.
Increasing silos among functional specialists
– The organizational structure of Dtc Telehealth is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Dtc Telehealth needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Dtc Telehealth to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study American Well: The DTC Decision 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 Dtc Telehealth 's lucrative customers.
Aligning sales with marketing
– It come across in the case study American Well: The DTC Decision 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 American Well: The DTC Decision can leverage the sales team experience to cultivate customer relationships as Dtc Telehealth is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Dtc Telehealth, firm in the HBR case study American Well: The DTC Decision needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities American Well: The DTC Decision | 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 American Well: The DTC Decision are -
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. Dtc Telehealth can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Dtc Telehealth has opened avenues for new revenue streams for the organization in the industry. This can help Dtc Telehealth to build a more holistic ecosystem as suggested in the American Well: The DTC Decision case study. Dtc Telehealth can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Dtc Telehealth in the consumer business. Now Dtc Telehealth can target international markets with far fewer capital restrictions requirements than the existing system.
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. Dtc Telehealth 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. Dtc Telehealth 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Dtc Telehealth 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, American Well: The DTC Decision, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dtc Telehealth 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.
Using analytics as competitive advantage
– Dtc Telehealth 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 American Well: The DTC Decision - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Dtc Telehealth to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Dtc Telehealth 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.
Better consumer reach
– The expansion of the 5G network will help Dtc Telehealth to increase its market reach. Dtc Telehealth 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Dtc Telehealth can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Dtc Telehealth 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.
Buying journey improvements
– Dtc Telehealth can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. American Well: The DTC Decision 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.
Learning at scale
– Online learning technologies has now opened space for Dtc Telehealth 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.
Threats American Well: The DTC Decision External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study American Well: The DTC Decision are -
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. Dtc Telehealth will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Dtc Telehealth 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.
Shortening product life cycle
– it is one of the major threat that Dtc Telehealth is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Dtc Telehealth 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
– Dtc Telehealth 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
– Dtc Telehealth 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.
Increasing wage structure of Dtc Telehealth
– 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 Dtc Telehealth.
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. Dtc Telehealth needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Dtc Telehealth has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Dtc Telehealth 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study American Well: The DTC Decision, Dtc Telehealth 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 .
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.
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 Dtc Telehealth.
Consumer confidence and its impact on Dtc Telehealth 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.
Weighted SWOT Analysis of American Well: The DTC Decision 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 American Well: The DTC Decision 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 American Well: The DTC Decision 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 American Well: The DTC Decision 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 American Well: The DTC Decision 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 Dtc Telehealth needs to make to build a sustainable competitive advantage.