The Lundbeck case study describes the initial public offering (IPO) that the company made in the summer of 1999. The focus of the case is about valuation, but a number of other issues arise for discussion: The company's strategy in deciding to make the IPO What the considerations were for the management and shareholder in agreeing on the issuing price and timing The number of shares to be sold, where they would be sold, and how the after-market should be developed and maintained Lundbeck is a medium-sized pharmaceutical company based in Denmark. It is specialized in the research and development, manufacture, marketing and sale of drugs for the treatment of psychological and neurological diseases and disorders. Group sales for 1998 were DKK 3.2 billion of which its principal product, citalopram accounted for DKK 2.1 billion or two-thirds of the total. The company has production facilities in Denmark and the U.K. Most R&D is carried out by the company itself, or through licensing, and from strategic alliances with others having expertise in a specific area. Some 475 scientists and technicians are employed in R&D out of a total 2,286 full-time employees in the company. Until the IPO, the Lundbeck Foundation was the sole shareholder. The IPO would put about 20% of the shares on the market in a so-called Global Offering. A listing of the shares would be made on the Copenhagen stock market.
Swot Analysis of "Lundbeck A/S" written by Lee Remmers includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lundbeck Ipo facing as an external strategic factors. Some of the topics covered in Lundbeck A/S case study are - Strategic Management Strategies, Financial management, IPO, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Lundbeck A/S casestudy better are - – central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China,
technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lundbeck A/S case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lundbeck Ipo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lundbeck Ipo 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 Lundbeck A/S can be done for the following purposes –
1. Strategic planning using facts provided in Lundbeck A/S case study
2. Improving business portfolio management of Lundbeck Ipo
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 Lundbeck Ipo
Strengths Lundbeck A/S | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lundbeck Ipo in Lundbeck A/S Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Lundbeck Ipo 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Lundbeck Ipo digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lundbeck Ipo 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.
Learning organization
- Lundbeck Ipo 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 Lundbeck Ipo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Lundbeck A/S Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Finance & Accounting industry
– Lundbeck A/S firm has clearly differentiated products in the market place. This has enabled Lundbeck Ipo to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Lundbeck Ipo to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Lundbeck Ipo has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lundbeck Ipo has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High brand equity
– Lundbeck Ipo has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lundbeck Ipo to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Lundbeck Ipo is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Lundbeck Ipo 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.
Organizational Resilience of Lundbeck Ipo
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lundbeck Ipo does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Lundbeck Ipo 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 Lee Remmers 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.
Innovation driven organization
– Lundbeck Ipo is one of the most innovative firm in sector. Manager in Lundbeck A/S Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Lundbeck Ipo is present in almost all the verticals within the industry. This has provided firm in Lundbeck A/S 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.
Weaknesses Lundbeck A/S | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lundbeck A/S are -
Increasing silos among functional specialists
– The organizational structure of Lundbeck Ipo is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Lundbeck Ipo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lundbeck Ipo to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lundbeck Ipo is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Lundbeck A/S can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Lundbeck A/S 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 Lundbeck Ipo 's lucrative customers.
Slow to strategic competitive environment developments
– As Lundbeck A/S HBR case study mentions - Lundbeck Ipo 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.
Need for greater diversity
– Lundbeck Ipo 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Lee Remmers suggests that, Lundbeck Ipo 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 Lundbeck Ipo products
– To increase the profitability and margins on the products, Lundbeck Ipo needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Lundbeck Ipo, firm in the HBR case study Lundbeck A/S needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Lundbeck Ipo has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Lundbeck Ipo supply chain. Even after few cautionary changes mentioned in the HBR case study - Lundbeck A/S, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lundbeck Ipo vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Lundbeck A/S 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 Lundbeck A/S can leverage the sales team experience to cultivate customer relationships as Lundbeck Ipo is planning to shift buying processes online.
Opportunities Lundbeck A/S | 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 Lundbeck A/S are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Lundbeck Ipo 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lundbeck Ipo can use these opportunities to build new business models that can help the communities that Lundbeck Ipo operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Using analytics as competitive advantage
– Lundbeck Ipo 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 Lundbeck A/S - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lundbeck Ipo to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Lundbeck Ipo to increase its market reach. Lundbeck Ipo will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lundbeck Ipo 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.
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 Lundbeck Ipo 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lundbeck Ipo is facing challenges because of the dominance of functional experts in the organization. Lundbeck A/S 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lundbeck Ipo 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 Lundbeck Ipo to hire the very best people irrespective of their geographical location.
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. Lundbeck Ipo can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Lundbeck Ipo 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.
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 Lundbeck Ipo in the consumer business. Now Lundbeck Ipo can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Lundbeck Ipo 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.
Buying journey improvements
– Lundbeck Ipo can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Lundbeck A/S suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats Lundbeck A/S External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lundbeck A/S are -
Consumer confidence and its impact on Lundbeck Ipo 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.
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. Lundbeck Ipo needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Lundbeck Ipo 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 Lundbeck Ipo business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Lundbeck Ipo
– 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 Lundbeck Ipo.
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 Lundbeck Ipo in the Finance & Accounting sector and impact the bottomline of the organization.
Regulatory challenges
– Lundbeck Ipo 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.
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.
Shortening product life cycle
– it is one of the major threat that Lundbeck Ipo 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. Lundbeck Ipo can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Lundbeck Ipo 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.
Environmental challenges
– Lundbeck Ipo 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. Lundbeck Ipo can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Lundbeck A/S 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 Lundbeck A/S 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 Lundbeck A/S 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 Lundbeck A/S 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 Lundbeck A/S 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 Lundbeck Ipo needs to make to build a sustainable competitive advantage.
