The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights
This case is designed for MBA students in M&A or derivatives courses. In January 2011, Sanofi-Aventis was finalizing its offer terms for acquiring Genzyme. The M&A valuation disputes were about the market potential of alemtuzumab, a drug in Genzyme's pipeline, and how quickly Genzyme could resolve some of its manufacturing issues. To bridge the gap in their estimates, advisers had suggested an up-front cash payment and a contingent value right (CVR). Was a CVR the magical solution to bridging the valuation gap?
Swot Analysis of "The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights" written by Pedro Matos, Dmitriy Aleyev, Chong Xu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Genzyme Cvr facing as an external strategic factors. Some of the topics covered in The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights case study are - Strategic Management Strategies, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices,
increasing energy prices, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Genzyme Cvr, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Genzyme Cvr 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights can be done for the following purposes –
1. Strategic planning using facts provided in The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights case study
2. Improving business portfolio management of Genzyme Cvr
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 Genzyme Cvr
Strengths The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Genzyme Cvr in The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights Harvard Business Review case study are -
Effective Research and Development (R&D)
– Genzyme Cvr 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Genzyme Cvr has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights 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.
Operational resilience
– The operational resilience strategy in the The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights 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.
Strong track record of project management
– Genzyme Cvr is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Genzyme Cvr in the sector have low bargaining power. The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Genzyme Cvr to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Genzyme Cvr in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Genzyme Cvr is one of the most innovative firm in sector. Manager in The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Genzyme Cvr 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 Genzyme Cvr is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Genzyme Cvr 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Genzyme Cvr is present in almost all the verticals within the industry. This has provided firm in The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights 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 Genzyme Cvr
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Genzyme Cvr does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Genzyme Cvr 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 Pedro Matos, Dmitriy Aleyev, Chong Xu 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.
Weaknesses The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights, it seems that the employees of Genzyme Cvr 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.
Slow decision making process
– As mentioned earlier in the report, Genzyme Cvr 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. Genzyme Cvr 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.
Aligning sales with marketing
– It come across in the case study The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights can leverage the sales team experience to cultivate customer relationships as Genzyme Cvr 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights 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 Genzyme Cvr has relatively successful track record of launching new products.
Products dominated business model
– Even though Genzyme Cvr 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 - The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights should strive to include more intangible value offerings along with its core products and services.
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 Genzyme Cvr supply chain. Even after few cautionary changes mentioned in the HBR case study - The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Genzyme Cvr vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Genzyme Cvr has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights, in the dynamic environment Genzyme Cvr has struggled to respond to the nimble upstart competition. Genzyme Cvr has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights HBR case study mentions - Genzyme Cvr 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
– Genzyme Cvr 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Genzyme Cvr 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.
Opportunities The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights | 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights are -
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. Genzyme Cvr can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Genzyme Cvr 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.
Using analytics as competitive advantage
– Genzyme Cvr 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Genzyme Cvr to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Genzyme Cvr 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, The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Genzyme Cvr 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 Genzyme Cvr in the consumer business. Now Genzyme Cvr can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Genzyme Cvr 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.
Better consumer reach
– The expansion of the 5G network will help Genzyme Cvr to increase its market reach. Genzyme Cvr 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.
Developing new processes and practices
– Genzyme Cvr 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Genzyme Cvr 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 Genzyme Cvr to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Genzyme Cvr 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Genzyme Cvr is facing challenges because of the dominance of functional experts in the organization. The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights 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.
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. Genzyme Cvr 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. Genzyme Cvr 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.
Threats The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights are -
Environmental challenges
– Genzyme Cvr 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. Genzyme Cvr can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Stagnating economy with rate increase
– Genzyme Cvr 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.
Regulatory challenges
– Genzyme Cvr 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.
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 Genzyme Cvr 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights, Genzyme Cvr 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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Genzyme Cvr 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Genzyme Cvr in the Finance & Accounting industry. The Finance & Accounting 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Genzyme Cvr with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Genzyme Cvr has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Genzyme Cvr 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.
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 Genzyme Cvr.
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 Genzyme Cvr in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing wage structure of Genzyme Cvr
– 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 Genzyme Cvr.
Weighted SWOT Analysis of The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights 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 The Sanofi-Aventis Acquisition of Genzyme: Contingent Value Rights 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 Genzyme Cvr needs to make to build a sustainable competitive advantage.