Case Study Description of Ligand Pharmaceuticals Incorporated
In an activist role, the hedge fund Third Point LLC has three board seats and an ownership stake of 9.5% in Ligand Pharmaceuticals, Inc., a specialty pharmaceutical company. Third Point believed that Ligand had a strong drug portfolio and pipeline but that it was highly undervalued due to poor management. After gaining board representation, Third Point convinced the other directors to try to sell the company. Six months have passed since Ligand began soliciting bidders, but no buyer has emerged. With the sale of the company appearing to have stalled, Third Point has to decide whether to restart the bidding process, hold onto a longer-term position, or walk away.
Swot Analysis of "Ligand Pharmaceuticals Incorporated" written by Nabil N. El-Hage, Michael Gorzynski includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ligand Pharmaceuticals facing as an external strategic factors. Some of the topics covered in Ligand Pharmaceuticals Incorporated case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Ligand Pharmaceuticals Incorporated casestudy better are - – digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, supply chains are disrupted by pandemic ,
wage bills are increasing, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Ligand Pharmaceuticals Incorporated
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ligand Pharmaceuticals Incorporated case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ligand Pharmaceuticals, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ligand Pharmaceuticals 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 Ligand Pharmaceuticals Incorporated can be done for the following purposes –
1. Strategic planning using facts provided in Ligand Pharmaceuticals Incorporated case study
2. Improving business portfolio management of Ligand Pharmaceuticals
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ligand Pharmaceuticals
Strengths Ligand Pharmaceuticals Incorporated | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ligand Pharmaceuticals in Ligand Pharmaceuticals Incorporated Harvard Business Review case study are -
Ability to recruit top talent
– Ligand Pharmaceuticals is one of the leading recruiters in the industry. Managers in the Ligand Pharmaceuticals Incorporated are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Ligand Pharmaceuticals has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ligand Pharmaceuticals to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Finance & Accounting field
– Ligand Pharmaceuticals 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 Ligand Pharmaceuticals in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Ligand Pharmaceuticals
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ligand Pharmaceuticals does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Ligand Pharmaceuticals is one of the most innovative firm in sector. Manager in Ligand Pharmaceuticals Incorporated Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Ligand Pharmaceuticals in the sector have low bargaining power. Ligand Pharmaceuticals Incorporated has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ligand Pharmaceuticals to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Ligand Pharmaceuticals 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 Ligand Pharmaceuticals Incorporated - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Ligand Pharmaceuticals digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ligand Pharmaceuticals 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.
Diverse revenue streams
– Ligand Pharmaceuticals is present in almost all the verticals within the industry. This has provided firm in Ligand Pharmaceuticals Incorporated 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.
Superior customer experience
– The customer experience strategy of Ligand Pharmaceuticals in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Ligand Pharmaceuticals 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.
Cross disciplinary teams
– Horizontal connected teams at the Ligand Pharmaceuticals 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.
Weaknesses Ligand Pharmaceuticals Incorporated | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ligand Pharmaceuticals Incorporated are -
Workers concerns about automation
– As automation is fast increasing in the segment, Ligand Pharmaceuticals 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.
Capital Spending Reduction
– Even during the low interest decade, Ligand Pharmaceuticals 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 Ligand Pharmaceuticals Incorporated, it seems that the employees of Ligand Pharmaceuticals 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.
Lack of clear differentiation of Ligand Pharmaceuticals products
– To increase the profitability and margins on the products, Ligand Pharmaceuticals needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Ligand Pharmaceuticals 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.
High cash cycle compare to competitors
Ligand Pharmaceuticals 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ligand Pharmaceuticals is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Ligand Pharmaceuticals Incorporated can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Ligand Pharmaceuticals has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to strategic competitive environment developments
– As Ligand Pharmaceuticals Incorporated HBR case study mentions - Ligand Pharmaceuticals 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.
Aligning sales with marketing
– It come across in the case study Ligand Pharmaceuticals Incorporated 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 Ligand Pharmaceuticals Incorporated can leverage the sales team experience to cultivate customer relationships as Ligand Pharmaceuticals is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Nabil N. El-Hage, Michael Gorzynski suggests that, Ligand Pharmaceuticals 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.
Opportunities Ligand Pharmaceuticals Incorporated | 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 Ligand Pharmaceuticals Incorporated are -
Building a culture of innovation
– managers at Ligand Pharmaceuticals 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 Finance & Accounting segment.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ligand Pharmaceuticals 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 Ligand Pharmaceuticals to hire the very best people irrespective of their geographical location.
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 Ligand Pharmaceuticals 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.
Using analytics as competitive advantage
– Ligand Pharmaceuticals 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 Ligand Pharmaceuticals Incorporated - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ligand Pharmaceuticals 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
– Ligand Pharmaceuticals can develop new processes and procedures in Finance & Accounting 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ligand Pharmaceuticals 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ligand Pharmaceuticals in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ligand Pharmaceuticals can use these opportunities to build new business models that can help the communities that Ligand Pharmaceuticals operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Ligand Pharmaceuticals can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ligand Pharmaceuticals 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, Ligand Pharmaceuticals Incorporated, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Ligand Pharmaceuticals 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ligand Pharmaceuticals 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. Ligand Pharmaceuticals 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ligand Pharmaceuticals can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Ligand Pharmaceuticals Incorporated External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ligand Pharmaceuticals Incorporated are -
Consumer confidence and its impact on Ligand Pharmaceuticals 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.
Environmental challenges
– Ligand Pharmaceuticals 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. Ligand Pharmaceuticals can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ligand Pharmaceuticals 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 Ligand Pharmaceuticals Incorporated .
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 Ligand Pharmaceuticals business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Ligand Pharmaceuticals 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
– Ligand Pharmaceuticals 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.
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 Ligand Pharmaceuticals in the Finance & Accounting sector and impact the bottomline of the organization.
Regulatory challenges
– Ligand Pharmaceuticals 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 Finance & Accounting industry regulations.
Shortening product life cycle
– it is one of the major threat that Ligand Pharmaceuticals is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ligand Pharmaceuticals can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Ligand Pharmaceuticals.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Ligand Pharmaceuticals Incorporated, Ligand Pharmaceuticals may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Weighted SWOT Analysis of Ligand Pharmaceuticals Incorporated 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 Ligand Pharmaceuticals Incorporated 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 Ligand Pharmaceuticals Incorporated 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 Ligand Pharmaceuticals Incorporated 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 Ligand Pharmaceuticals Incorporated 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 Ligand Pharmaceuticals needs to make to build a sustainable competitive advantage.