Case Study Description of PureTech Ventures in 2011
In early May 2011, Daphne Zohar, founder and managing partner of PureTech Ventures, a life science venture creation company in Boston, MA, was reviewing a term sheet she had just received from a venture capital (VC) firm for one of PureTech's portfolio companies. The term sheet was due to expire in a week, but through negotiations of term sheet items, PureTech could probably leave the discussions with the venture firm open for another month. PureTech had a unique position in the life sciences ecosystem. It aimed to tackle important medical needs by translating scientific innovations into commercially viable technologies, and in order to do that optimally, was structured as an operating company that created start-ups rather than a typical venture fund that simply invested in them. The VC term sheet Zohar was considering outlined a Series A funding round for one of PureTech's newly created companies. Meanwhile, Zohar's team was also in discussions with several large pharmaceutical companies that were interested in partnering or even acquiring the company. These discussions were progressing nicely but would not lead to a transaction by the due date set by the VC term sheet (or an additional month from then). The current situation presented her with a unique challenge. Should PureTech accept the "bird in hand" VC term sheet or turn it down and wait for the negotiations with the pharmaceutical companies to play out? The latter route offered the potential for a desirable, near-term partnership, but risked that the negotiations would fall through, in which case PureTech would end up losing both time and the opportunity for near-term external validation of its portfolio company.
Authors :: Andrei Hagiu, Cesar Castro, Sarah Murphy
Swot Analysis of "PureTech Ventures in 2011" written by Andrei Hagiu, Cesar Castro, Sarah Murphy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Puretech Sheet facing as an external strategic factors. Some of the topics covered in PureTech Ventures in 2011 case study are - Strategic Management Strategies, Joint ventures and Finance & Accounting.
Some of the macro environment factors that can be used to understand the PureTech Ventures in 2011 casestudy better are - – central banks are concerned over increasing inflation, increasing energy prices, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, there is increasing trade war between United States & China,
competitive advantages are harder to sustain because of technology dispersion, technology disruption, etc
Introduction to SWOT Analysis of PureTech Ventures in 2011
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in PureTech Ventures in 2011 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Puretech Sheet, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Puretech Sheet 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 PureTech Ventures in 2011 can be done for the following purposes –
1. Strategic planning using facts provided in PureTech Ventures in 2011 case study
2. Improving business portfolio management of Puretech Sheet
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 Puretech Sheet
Strengths PureTech Ventures in 2011 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Puretech Sheet in PureTech Ventures in 2011 Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the PureTech Ventures in 2011 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Puretech Sheet digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Puretech Sheet 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.
Successful track record of launching new products
– Puretech Sheet has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Puretech Sheet 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.
Innovation driven organization
– Puretech Sheet is one of the most innovative firm in sector. Manager in PureTech Ventures in 2011 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Puretech Sheet 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 Andrei Hagiu, Cesar Castro, Sarah Murphy 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.
Ability to recruit top talent
– Puretech Sheet is one of the leading recruiters in the industry. Managers in the PureTech Ventures in 2011 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Finance & Accounting industry
– PureTech Ventures in 2011 firm has clearly differentiated products in the market place. This has enabled Puretech Sheet to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Puretech Sheet to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Puretech Sheet is present in almost all the verticals within the industry. This has provided firm in PureTech Ventures in 2011 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 Puretech Sheet
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Puretech Sheet does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Puretech Sheet 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 PureTech Ventures in 2011 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Puretech Sheet 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.
High brand equity
– Puretech Sheet has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Puretech Sheet to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses PureTech Ventures in 2011 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of PureTech Ventures in 2011 are -
Capital Spending Reduction
– Even during the low interest decade, Puretech Sheet 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.
High cash cycle compare to competitors
Puretech Sheet 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.
Aligning sales with marketing
– It come across in the case study PureTech Ventures in 2011 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 PureTech Ventures in 2011 can leverage the sales team experience to cultivate customer relationships as Puretech Sheet is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study PureTech Ventures in 2011, 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.
Lack of clear differentiation of Puretech Sheet products
– To increase the profitability and margins on the products, Puretech Sheet needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Puretech Sheet 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.
Interest costs
– Compare to the competition, Puretech Sheet 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Puretech Sheet 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study PureTech Ventures in 2011, in the dynamic environment Puretech Sheet has struggled to respond to the nimble upstart competition. Puretech Sheet has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study PureTech Ventures in 2011, it seems that the employees of Puretech Sheet don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, Andrei Hagiu, Cesar Castro, Sarah Murphy suggests that, Puretech Sheet 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 PureTech Ventures in 2011 | 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 PureTech Ventures in 2011 are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Puretech Sheet 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.
Building a culture of innovation
– managers at Puretech Sheet 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
– Puretech Sheet 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 PureTech Ventures in 2011 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Puretech Sheet to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Puretech Sheet 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.
Buying journey improvements
– Puretech Sheet can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. PureTech Ventures in 2011 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.
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. Puretech Sheet can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Puretech Sheet 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 Puretech Sheet to hire the very best people irrespective of their geographical location.
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. Puretech Sheet 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. Puretech Sheet 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Puretech Sheet can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Puretech Sheet 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 Puretech Sheet 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.
Leveraging digital technologies
– Puretech Sheet 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.
Manufacturing automation
– Puretech Sheet 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.
Threats PureTech Ventures in 2011 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study PureTech Ventures in 2011 are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Puretech Sheet 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 PureTech Ventures in 2011 .
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 Puretech Sheet business can come under increasing regulations regarding data privacy, data security, etc.
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 Puretech Sheet.
Stagnating economy with rate increase
– Puretech Sheet 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.
Technology acceleration in Forth Industrial Revolution
– Puretech Sheet has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Puretech Sheet 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.
Environmental challenges
– Puretech Sheet 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. Puretech Sheet can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
High dependence on third party suppliers
– Puretech Sheet 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.
Consumer confidence and its impact on Puretech Sheet 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Puretech Sheet with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Puretech Sheet 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
– Puretech Sheet 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study PureTech Ventures in 2011, Puretech Sheet 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 .
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.
Weighted SWOT Analysis of PureTech Ventures in 2011 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 PureTech Ventures in 2011 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 PureTech Ventures in 2011 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 PureTech Ventures in 2011 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 PureTech Ventures in 2011 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 Puretech Sheet needs to make to build a sustainable competitive advantage.