Case Study Description of Upjohn Co.: The Upjohn - Pharmacia Merger
In August 1995, the Upjohn Co. and Pharmacia AB announced a "merger of equals." This case provides background information on the industry, the position of Upjohn, and Upjohn's rationale for the proposed merger.
Swot Analysis of "Upjohn Co.: The Upjohn - Pharmacia Merger" written by Krishna G. Palepu, Amy P. Hutton includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Upjohn Pharmacia facing as an external strategic factors. Some of the topics covered in Upjohn Co.: The Upjohn - Pharmacia Merger case study are - Strategic Management Strategies, Economics, Financial analysis, Financial management, Joint ventures, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Upjohn Co.: The Upjohn - Pharmacia Merger casestudy better are - – challanges to central banks by blockchain based private currencies, geopolitical disruptions, there is backlash against globalization, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic ,
increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Upjohn Co.: The Upjohn - Pharmacia Merger
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Upjohn Co.: The Upjohn - Pharmacia Merger case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Upjohn Pharmacia, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Upjohn Pharmacia 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 Upjohn Co.: The Upjohn - Pharmacia Merger can be done for the following purposes –
1. Strategic planning using facts provided in Upjohn Co.: The Upjohn - Pharmacia Merger case study
2. Improving business portfolio management of Upjohn Pharmacia
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 Upjohn Pharmacia
Strengths Upjohn Co.: The Upjohn - Pharmacia Merger | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Upjohn Pharmacia in Upjohn Co.: The Upjohn - Pharmacia Merger Harvard Business Review case study are -
High brand equity
– Upjohn Pharmacia has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Upjohn Pharmacia to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Upjohn Pharmacia is one of the leading recruiters in the industry. Managers in the Upjohn Co.: The Upjohn - Pharmacia Merger are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Upjohn Pharmacia is present in almost all the verticals within the industry. This has provided firm in Upjohn Co.: The Upjohn - Pharmacia Merger 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.
High switching costs
– The high switching costs that Upjohn Pharmacia 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Upjohn Co.: The Upjohn - Pharmacia Merger firm has clearly differentiated products in the market place. This has enabled Upjohn Pharmacia to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Upjohn Pharmacia to invest into research and development (R&D) and innovation.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Upjohn Pharmacia digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Upjohn Pharmacia 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.
Cross disciplinary teams
– Horizontal connected teams at the Upjohn Pharmacia 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.
Training and development
– Upjohn Pharmacia has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Upjohn Co.: The Upjohn - Pharmacia Merger 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.
Organizational Resilience of Upjohn Pharmacia
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Upjohn Pharmacia does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Upjohn Pharmacia 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 Upjohn Co.: The Upjohn - Pharmacia Merger HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Upjohn Pharmacia is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Upjohn Pharmacia is one of the most innovative firm in sector. Manager in Upjohn Co.: The Upjohn - Pharmacia Merger Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Upjohn Co.: The Upjohn - Pharmacia Merger | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Upjohn Co.: The Upjohn - Pharmacia Merger are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Upjohn Co.: The Upjohn - Pharmacia Merger, it seems that the employees of Upjohn Pharmacia 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Upjohn Co.: The Upjohn - Pharmacia Merger, in the dynamic environment Upjohn Pharmacia has struggled to respond to the nimble upstart competition. Upjohn Pharmacia has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Upjohn Co.: The Upjohn - Pharmacia Merger 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 Upjohn Pharmacia 's lucrative customers.
Need for greater diversity
– Upjohn Pharmacia 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.
Lack of clear differentiation of Upjohn Pharmacia products
– To increase the profitability and margins on the products, Upjohn Pharmacia needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Upjohn Pharmacia is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Upjohn Co.: The Upjohn - Pharmacia Merger can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Upjohn Co.: The Upjohn - Pharmacia Merger, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Products dominated business model
– Even though Upjohn Pharmacia 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 - Upjohn Co.: The Upjohn - Pharmacia Merger should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Upjohn Pharmacia 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.
Skills based hiring
– The stress on hiring functional specialists at Upjohn Pharmacia 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.
Low market penetration in new markets
– Outside its home market of Upjohn Pharmacia, firm in the HBR case study Upjohn Co.: The Upjohn - Pharmacia Merger needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Upjohn Co.: The Upjohn - Pharmacia Merger | 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 Upjohn Co.: The Upjohn - Pharmacia Merger are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Upjohn Pharmacia 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.
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. Upjohn Pharmacia can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Upjohn Pharmacia 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 Upjohn Co.: The Upjohn - Pharmacia Merger - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Upjohn Pharmacia 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 Finance & Accounting industry, but it has also influenced the consumer preferences. Upjohn Pharmacia can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Upjohn Pharmacia 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Upjohn Pharmacia 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, Upjohn Co.: The Upjohn - Pharmacia Merger, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Upjohn Pharmacia can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Upjohn Pharmacia 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, Upjohn Pharmacia can use these opportunities to build new business models that can help the communities that Upjohn Pharmacia operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Developing new processes and practices
– Upjohn Pharmacia 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.
Building a culture of innovation
– managers at Upjohn Pharmacia 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.
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. Upjohn Pharmacia 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. Upjohn Pharmacia 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
– Upjohn Pharmacia 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.
Threats Upjohn Co.: The Upjohn - Pharmacia Merger External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Upjohn Co.: The Upjohn - Pharmacia Merger are -
Stagnating economy with rate increase
– Upjohn Pharmacia 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.
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 Upjohn Pharmacia business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Upjohn Pharmacia
– 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 Upjohn Pharmacia.
Consumer confidence and its impact on Upjohn Pharmacia 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.
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 Upjohn Pharmacia.
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. Upjohn Pharmacia 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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Upjohn Pharmacia 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 Upjohn Co.: The Upjohn - Pharmacia Merger .
Technology acceleration in Forth Industrial Revolution
– Upjohn Pharmacia has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Upjohn Pharmacia needs to keep up with the evolution of technology in the Finance & Accounting 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Upjohn Pharmacia with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Upjohn Pharmacia in the Finance & Accounting sector and impact the bottomline of the organization.
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. Upjohn Pharmacia can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Upjohn Pharmacia 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.
Weighted SWOT Analysis of Upjohn Co.: The Upjohn - Pharmacia Merger 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 Upjohn Co.: The Upjohn - Pharmacia Merger 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 Upjohn Co.: The Upjohn - Pharmacia Merger 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 Upjohn Co.: The Upjohn - Pharmacia Merger 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 Upjohn Co.: The Upjohn - Pharmacia Merger 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 Upjohn Pharmacia needs to make to build a sustainable competitive advantage.
