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 - – increasing energy prices, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, there is increasing trade war between United States & China, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google,
supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, 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 -
Low bargaining power of suppliers
– Suppliers of Upjohn Pharmacia in the sector have low bargaining power. Upjohn Co.: The Upjohn - Pharmacia Merger has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Upjohn Pharmacia to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Finance & Accounting field
– Upjohn Pharmacia 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 Upjohn Pharmacia in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Upjohn Co.: The Upjohn - Pharmacia Merger 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.
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.
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.
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.
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.
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.
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.
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.
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.
Learning organization
- Upjohn Pharmacia 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 Upjohn Pharmacia is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Upjohn Co.: The Upjohn - Pharmacia Merger Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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 -
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Upjohn Co.: The Upjohn - Pharmacia Merger, is just above the industry average. Upjohn Pharmacia 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.
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.
Aligning sales with marketing
– It come across in the case study Upjohn Co.: The Upjohn - Pharmacia Merger 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 Upjohn Co.: The Upjohn - Pharmacia Merger can leverage the sales team experience to cultivate customer relationships as Upjohn Pharmacia is planning to shift buying processes online.
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.
Capital Spending Reduction
– Even during the low interest decade, Upjohn Pharmacia 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.
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.
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 Upjohn Pharmacia supply chain. Even after few cautionary changes mentioned in the HBR case study - Upjohn Co.: The Upjohn - Pharmacia Merger, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Upjohn Pharmacia vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Upjohn Pharmacia is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Upjohn Pharmacia needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Upjohn Pharmacia to focus more on services rather than just following the product oriented approach.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Krishna G. Palepu, Amy P. Hutton suggests that, Upjohn Pharmacia 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 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 -
Creating value in data economy
– The success of analytics program of Upjohn Pharmacia has opened avenues for new revenue streams for the organization in the industry. This can help Upjohn Pharmacia to build a more holistic ecosystem as suggested in the Upjohn Co.: The Upjohn - Pharmacia Merger case study. Upjohn Pharmacia can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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. 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Upjohn Pharmacia 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 Upjohn Pharmacia to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Upjohn Pharmacia is facing challenges because of the dominance of functional experts in the organization. Upjohn Co.: The Upjohn - Pharmacia Merger case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Upjohn Pharmacia 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 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.
Loyalty marketing
– Upjohn Pharmacia 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.
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.
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.
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 Upjohn Pharmacia in the consumer business. Now Upjohn Pharmacia can target international markets with far fewer capital restrictions requirements than the existing system.
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 -
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.
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.
Environmental challenges
– Upjohn Pharmacia 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. Upjohn Pharmacia can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Upjohn Co.: The Upjohn - Pharmacia Merger, Upjohn Pharmacia 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 .
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.
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.
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.
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. Upjohn Pharmacia needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Upjohn Pharmacia 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.
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.
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.
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.