Case Study Description of Zandu Pharmaceutical Works: The Takeover Bid (A)
This case is about the takeover bid of Zandu Pharmaceutical Works, a small Indian traditional medicine manufacturer based at Jamnagar, (Gujarat, India). It encapsulates the protracted multi-level negotiations among its two promoter families - the Parikhs and the Vaidyas - with Kolkata, India based Emami group that intended to take over the firm in 2008. The two families had established Zandu Pharma in 1910. The Vaidyas came from a lineage of Ayurveda practitioners and brought technical know-how to the business. The Parikhs belonged to a traditional trading community and brought their business acumen to the firm. Complimenting each other, the two families managed the business for about hundred years. However, with passage of time, the later generations of the Parikhs gained technical knowledge and became firmly entrenched within the firm's operations. On the other hand, the Vaidyas failed to effectively pass on the technical expertise to their later generations. Thus their importance in the eyes of the Parikhs went down and Vaidya descendants were viewed as incompetent. The Vaidyas felt ignored and marginalized; the Parikhs repeatedly denied their demand for a director's position on the company's board. Pushed into a corner, the Vaidyas sold their stake in Zandu to Kolkata based beautycare and healthcare company - Emami. The Parikhs viewed this as a hostile move and tried to thwart Emami's bid for Zandu's control. The decision dilemma that Parikhs face in the case is - whether to sell their stake to Emami or to fight the takeover battle. The case narrates the circumstances and the actions taken by parties involved. The case deals with various managerial issues like leadership, communication, acquisition strategy and emotional issues faced by promoter families. The case serves as an effective tool for students to learn and apply leadership, communication, strategic and negotiation skills in complex acquisition scenarios, like those in family controlled businesses.
Swot Analysis of "Zandu Pharmaceutical Works: The Takeover Bid (A)" written by Kavil Ramachandran, Jayshree Suresh, Navneet Bhatnagar includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Parikhs Vaidyas facing as an external strategic factors. Some of the topics covered in Zandu Pharmaceutical Works: The Takeover Bid (A) case study are - Strategic Management Strategies, Decision making, Negotiations, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Zandu Pharmaceutical Works: The Takeover Bid (A) casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, increasing commodity prices, geopolitical disruptions, increasing transportation and logistics costs, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%,
increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Zandu Pharmaceutical Works: The Takeover Bid (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zandu Pharmaceutical Works: The Takeover Bid (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Parikhs Vaidyas, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Parikhs Vaidyas 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 Zandu Pharmaceutical Works: The Takeover Bid (A) can be done for the following purposes –
1. Strategic planning using facts provided in Zandu Pharmaceutical Works: The Takeover Bid (A) case study
2. Improving business portfolio management of Parikhs Vaidyas
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 Parikhs Vaidyas
Strengths Zandu Pharmaceutical Works: The Takeover Bid (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Parikhs Vaidyas in Zandu Pharmaceutical Works: The Takeover Bid (A) Harvard Business Review case study are -
High brand equity
– Parikhs Vaidyas has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Parikhs Vaidyas to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Parikhs Vaidyas 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 Kavil Ramachandran, Jayshree Suresh, Navneet Bhatnagar 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
– Parikhs Vaidyas 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 Zandu Pharmaceutical Works: The Takeover Bid (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Parikhs Vaidyas
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Parikhs Vaidyas does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Parikhs Vaidyas are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Parikhs Vaidyas is one of the leading recruiters in the industry. Managers in the Zandu Pharmaceutical Works: The Takeover Bid (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Parikhs Vaidyas is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Parikhs Vaidyas digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Parikhs Vaidyas 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.
Superior customer experience
– The customer experience strategy of Parikhs Vaidyas in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Parikhs Vaidyas 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
- Parikhs Vaidyas 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 Parikhs Vaidyas is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Zandu Pharmaceutical Works: The Takeover Bid (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Parikhs Vaidyas is present in almost all the verticals within the industry. This has provided firm in Zandu Pharmaceutical Works: The Takeover Bid (A) 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 Zandu Pharmaceutical Works: The Takeover Bid (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zandu Pharmaceutical Works: The Takeover Bid (A) are -
Workers concerns about automation
– As automation is fast increasing in the segment, Parikhs Vaidyas 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.
Slow decision making process
– As mentioned earlier in the report, Parikhs Vaidyas 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. Parikhs Vaidyas 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.
Low market penetration in new markets
– Outside its home market of Parikhs Vaidyas, firm in the HBR case study Zandu Pharmaceutical Works: The Takeover Bid (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Parikhs Vaidyas 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 - Zandu Pharmaceutical Works: The Takeover Bid (A) should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Parikhs Vaidyas 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 star products
– The top 2 products and services of the firm as mentioned in the Zandu Pharmaceutical Works: The Takeover Bid (A) 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 Parikhs Vaidyas has relatively successful track record of launching new products.
Need for greater diversity
– Parikhs Vaidyas 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.
Aligning sales with marketing
– It come across in the case study Zandu Pharmaceutical Works: The Takeover Bid (A) 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 Zandu Pharmaceutical Works: The Takeover Bid (A) can leverage the sales team experience to cultivate customer relationships as Parikhs Vaidyas is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Kavil Ramachandran, Jayshree Suresh, Navneet Bhatnagar suggests that, Parikhs Vaidyas 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.
Skills based hiring
– The stress on hiring functional specialists at Parikhs Vaidyas 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Zandu Pharmaceutical Works: The Takeover Bid (A), in the dynamic environment Parikhs Vaidyas has struggled to respond to the nimble upstart competition. Parikhs Vaidyas has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Zandu Pharmaceutical Works: The Takeover Bid (A) | 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 Zandu Pharmaceutical Works: The Takeover Bid (A) are -
Learning at scale
– Online learning technologies has now opened space for Parikhs Vaidyas to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Using analytics as competitive advantage
– Parikhs Vaidyas 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 Zandu Pharmaceutical Works: The Takeover Bid (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Parikhs Vaidyas to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Parikhs Vaidyas has opened avenues for new revenue streams for the organization in the industry. This can help Parikhs Vaidyas to build a more holistic ecosystem as suggested in the Zandu Pharmaceutical Works: The Takeover Bid (A) case study. Parikhs Vaidyas can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Parikhs Vaidyas to increase its market reach. Parikhs Vaidyas 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.
Leveraging digital technologies
– Parikhs Vaidyas 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Parikhs Vaidyas 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.
Manufacturing automation
– Parikhs Vaidyas 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.
Loyalty marketing
– Parikhs Vaidyas 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Parikhs Vaidyas is facing challenges because of the dominance of functional experts in the organization. Zandu Pharmaceutical Works: The Takeover Bid (A) 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.
Building a culture of innovation
– managers at Parikhs Vaidyas 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 Strategy & Execution segment.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Parikhs Vaidyas 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 Parikhs Vaidyas to hire the very best people irrespective of their geographical location.
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 Parikhs Vaidyas 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Parikhs Vaidyas can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Zandu Pharmaceutical Works: The Takeover Bid (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zandu Pharmaceutical Works: The Takeover Bid (A) are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Zandu Pharmaceutical Works: The Takeover Bid (A), Parikhs Vaidyas may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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 Parikhs Vaidyas business can come under increasing regulations regarding data privacy, data security, etc.
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. Parikhs Vaidyas needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Parikhs Vaidyas is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Parikhs Vaidyas with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Parikhs Vaidyas 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
– Parikhs Vaidyas 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. Parikhs Vaidyas can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Parikhs Vaidyas in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Parikhs Vaidyas 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 Zandu Pharmaceutical Works: The Takeover Bid (A) .
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. Parikhs Vaidyas 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 Parikhs Vaidyas 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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Parikhs Vaidyas can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Zandu Pharmaceutical Works: The Takeover Bid (A) 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 Zandu Pharmaceutical Works: The Takeover Bid (A) 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 Zandu Pharmaceutical Works: The Takeover Bid (A) 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 Zandu Pharmaceutical Works: The Takeover Bid (A) 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 Zandu Pharmaceutical Works: The Takeover Bid (A) 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 Parikhs Vaidyas needs to make to build a sustainable competitive advantage.