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, geopolitical disruptions, increasing commodity prices, increasing household debt because of falling income levels, wage bills are increasing, cloud computing is disrupting traditional business models, technology disruption,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
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.
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.
Strong track record of project management
– Dtc Telehealth is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
Ability to lead change in Sales & Marketing field
– Dtc Telehealth 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 Dtc Telehealth in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Dtc Telehealth digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dtc Telehealth 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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Dtc Telehealth 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.
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.
Ability to recruit top talent
– Dtc Telehealth is one of the leading recruiters in the industry. Managers in the American Well: The DTC Decision are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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 -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study American Well: The DTC Decision, is just above the industry average. Dtc Telehealth 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.
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.
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 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.
Slow decision making process
– As mentioned earlier in the report, Dtc Telehealth has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Dtc Telehealth even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study American Well: The DTC Decision, it seems that the employees of Dtc Telehealth 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 bargaining power of channel partners
– Because of the regulatory requirements, Elie Ofek, Natalie Kindred suggests that, Dtc Telehealth is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Lack of clear differentiation of 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.
Slow to strategic competitive environment developments
– As American Well: The DTC Decision HBR case study mentions - Dtc Telehealth 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.
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.
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 -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Dtc Telehealth 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 Dtc Telehealth to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Dtc Telehealth can use these opportunities to build new business models that can help the communities that Dtc Telehealth operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
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.
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.
Leveraging digital technologies
– Dtc Telehealth can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Dtc Telehealth can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
Loyalty marketing
– Dtc Telehealth 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, 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.
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.
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.
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.
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 -
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Dtc Telehealth 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 American Well: The DTC Decision .
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.
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. Dtc Telehealth can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 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.
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.
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.
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.
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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Dtc Telehealth with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Dtc Telehealth business can come under increasing regulations regarding data privacy, data security, etc.
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.