American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study SWOT Analysis Solution
Case Study Description of American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer
American Home Products' (AHP) $9 billion hostile takeover of American Cyanamid (Cyanamid) was the largest mergers and-acquistions transaction in 1994, and made AHP the fourth largest pharmaceutical firm in the United States. At the time of AHP's offer, Cyanamid had already begun to restructure by selling its consumer products businesses, spinning off its chemicals division, and entering into asset swap negotiations with SmithKline Beecham. AHP entered the fray, at least in part, to block the asset swap deal. The case takes students inside the board room and describes the tension generated by the fact that Cyanamid's management and its outside directors had different views on the desirability of the takeover. At issue is whether Cyanamid's board will endorse AHP's hostile offer in spite of the fact that management does not support the offer, and instead supports a lower-valued friendly asset swap with SmithKline Beecham. After a tense and painful board meeting that lasted several days, the board voted unanimously to support the offer.
Swot Analysis of "American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer" written by Karen H. Wruck, Sherry Pelkey Roper includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cyanamid Ahp facing as an external strategic factors. Some of the topics covered in American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer case study are - Strategic Management Strategies, Financial analysis, Mergers & acquisitions and Strategy & Execution.
Some of the macro environment factors that can be used to understand the American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer casestudy better are - – challanges to central banks by blockchain based private currencies, increasing commodity prices, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%,
competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, etc
Introduction to SWOT Analysis of American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cyanamid Ahp, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cyanamid Ahp 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 American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer can be done for the following purposes –
1. Strategic planning using facts provided in American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer case study
2. Improving business portfolio management of Cyanamid Ahp
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cyanamid Ahp
Strengths American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cyanamid Ahp in American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer Harvard Business Review case study are -
Analytics focus
– Cyanamid Ahp 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 Karen H. Wruck, Sherry Pelkey Roper 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.
Highly skilled collaborators
– Cyanamid Ahp 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 American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Cyanamid Ahp 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.
Learning organization
- Cyanamid Ahp 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 Cyanamid Ahp is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer 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 Strategy & Execution segment
- digital transformation varies from industry to industry. For Cyanamid Ahp digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cyanamid Ahp 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.
High brand equity
– Cyanamid Ahp has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cyanamid Ahp to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Cyanamid Ahp is one of the leading recruiters in the industry. Managers in the American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Cyanamid Ahp 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.
Low bargaining power of suppliers
– Suppliers of Cyanamid Ahp in the sector have low bargaining power. American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cyanamid Ahp to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Cyanamid Ahp in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Cyanamid Ahp is one of the most innovative firm in sector. Manager in American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer are -
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 Cyanamid Ahp supply chain. Even after few cautionary changes mentioned in the HBR case study - American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cyanamid Ahp vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Cyanamid Ahp 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 bargaining power of channel partners
– Because of the regulatory requirements, Karen H. Wruck, Sherry Pelkey Roper suggests that, Cyanamid Ahp 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.
Slow to strategic competitive environment developments
– As American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer HBR case study mentions - Cyanamid Ahp 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Cyanamid Ahp needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Skills based hiring
– The stress on hiring functional specialists at Cyanamid Ahp has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
No frontier risks strategy
– After analyzing the HBR case study American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer, it seems that the employees of Cyanamid Ahp 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.
Interest costs
– Compare to the competition, Cyanamid Ahp 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.
Increasing silos among functional specialists
– The organizational structure of Cyanamid Ahp is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cyanamid Ahp needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cyanamid Ahp to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Cyanamid Ahp 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. Cyanamid Ahp 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.
Opportunities American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer | 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 American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cyanamid Ahp 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, American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cyanamid Ahp is facing challenges because of the dominance of functional experts in the organization. American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer 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.
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 Cyanamid Ahp in the consumer business. Now Cyanamid Ahp can target international markets with far fewer capital restrictions requirements than the existing system.
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. Cyanamid Ahp can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Cyanamid Ahp can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Using analytics as competitive advantage
– Cyanamid Ahp 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 American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cyanamid Ahp to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Cyanamid Ahp 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.
Developing new processes and practices
– Cyanamid Ahp can develop new processes and procedures in Strategy & Execution 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cyanamid Ahp can use these opportunities to build new business models that can help the communities that Cyanamid Ahp operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cyanamid Ahp in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Cyanamid Ahp can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Cyanamid Ahp 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.
Creating value in data economy
– The success of analytics program of Cyanamid Ahp has opened avenues for new revenue streams for the organization in the industry. This can help Cyanamid Ahp to build a more holistic ecosystem as suggested in the American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer case study. Cyanamid Ahp can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer are -
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.
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. Cyanamid Ahp 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.
Consumer confidence and its impact on Cyanamid Ahp 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.
Environmental challenges
– Cyanamid Ahp 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. Cyanamid Ahp can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Regulatory challenges
– Cyanamid Ahp 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 Strategy & Execution industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cyanamid Ahp in the Strategy & Execution industry. The Strategy & Execution 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.
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 Cyanamid Ahp 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 Cyanamid Ahp.
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 Cyanamid Ahp in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Cyanamid Ahp 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cyanamid Ahp 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 American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer .
Increasing wage structure of Cyanamid Ahp
– 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 Cyanamid Ahp.
Technology acceleration in Forth Industrial Revolution
– Cyanamid Ahp has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cyanamid Ahp needs to keep up with the evolution of technology in the Strategy & Execution 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.
Weighted SWOT Analysis of American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer 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 American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer 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 American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer 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 American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer 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 American Cyanamid (A): Boardroom Response to a Hostile Takeover Offer 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 Cyanamid Ahp needs to make to build a sustainable competitive advantage.
