Case Study Description of Amgen Inc.: Pursuing Innovation and Imitation? (A)
Set in 2009, the (A) case explores whether Amgen, a leading innovator of biotech-based drugs, should enter the emerging business of biosimilars (BS), which are essentially 'me-too' products. There appear to be sound reasons to explore this related diversification: innovation is getting harder, regulators are intent on encouraging BS, and Amgen needs renewed growth. But the possibility sparked a strong negative reaction within Amgen, not least because it contravened Amgen's mission. Internal debate was exacerbated by the presence of considerable uncertainty over the regulatory requirements for BS development and how difficult it would be to develop a BS. Some felt it played to Amgen's strengths, others felt that Amgen lacked critical capabilities. Many felt there was simply no need for any change in strategy at all. To navigate through this morass, Amgen needed clear strategic thinking. Amgen set out to see if an objective business case for entry could be built. This involved settling on a set of most likely assumptions, quantitatively estimating likely revenue and profitability, testing out sensitivity to assumptions using scenarios, and assessing the main risks of entry and of staying out. The analysis provided strong support for entry subject to the key assumptions. The (A) case also invites students to think through how CEO Kevin Sharer should handle a positive entry decision given the divided opinions across the senior management team.
Swot Analysis of "Amgen Inc.: Pursuing Innovation and Imitation? (A)" written by Ian W Mackenzie includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Amgen Bs facing as an external strategic factors. Some of the topics covered in Amgen Inc.: Pursuing Innovation and Imitation? (A) case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Amgen Inc.: Pursuing Innovation and Imitation? (A) casestudy better are - – challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, wage bills are increasing, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, increasing energy prices,
increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Amgen Inc.: Pursuing Innovation and Imitation? (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Amgen Inc.: Pursuing Innovation and Imitation? (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Amgen Bs, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Amgen Bs 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 Amgen Inc.: Pursuing Innovation and Imitation? (A) can be done for the following purposes –
1. Strategic planning using facts provided in Amgen Inc.: Pursuing Innovation and Imitation? (A) case study
2. Improving business portfolio management of Amgen Bs
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 Amgen Bs
Strengths Amgen Inc.: Pursuing Innovation and Imitation? (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Amgen Bs in Amgen Inc.: Pursuing Innovation and Imitation? (A) Harvard Business Review case study are -
Strong track record of project management
– Amgen Bs is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Amgen Bs is present in almost all the verticals within the industry. This has provided firm in Amgen Inc.: Pursuing Innovation and Imitation? (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.
Highly skilled collaborators
– Amgen Bs 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 Amgen Inc.: Pursuing Innovation and Imitation? (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Amgen Bs digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Amgen Bs 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.
Organizational Resilience of Amgen Bs
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Amgen Bs does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Strategy & Execution industry
– Amgen Inc.: Pursuing Innovation and Imitation? (A) firm has clearly differentiated products in the market place. This has enabled Amgen Bs to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Amgen Bs to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Amgen Bs is one of the leading recruiters in the industry. Managers in the Amgen Inc.: Pursuing Innovation and Imitation? (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.
Operational resilience
– The operational resilience strategy in the Amgen Inc.: Pursuing Innovation and Imitation? (A) 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.
Effective Research and Development (R&D)
– Amgen Bs 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 Amgen Inc.: Pursuing Innovation and Imitation? (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Amgen Bs 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 Ian W Mackenzie 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.
High switching costs
– The high switching costs that Amgen Bs 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
- Amgen Bs 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 Amgen Bs is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Amgen Inc.: Pursuing Innovation and Imitation? (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Amgen Inc.: Pursuing Innovation and Imitation? (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Amgen Inc.: Pursuing Innovation and Imitation? (A) are -
Workers concerns about automation
– As automation is fast increasing in the segment, Amgen Bs 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Amgen Inc.: Pursuing Innovation and Imitation? (A) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Amgen Bs 's lucrative customers.
High cash cycle compare to competitors
Amgen Bs 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.
Slow to strategic competitive environment developments
– As Amgen Inc.: Pursuing Innovation and Imitation? (A) HBR case study mentions - Amgen Bs 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.
Slow decision making process
– As mentioned earlier in the report, Amgen Bs 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. Amgen Bs 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.
Lack of clear differentiation of Amgen Bs products
– To increase the profitability and margins on the products, Amgen Bs needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Amgen Inc.: Pursuing Innovation and Imitation? (A), it seems that the employees of Amgen Bs 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.
Need for greater diversity
– Amgen Bs 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.
Products dominated business model
– Even though Amgen Bs 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 - Amgen Inc.: Pursuing Innovation and Imitation? (A) should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Amgen Bs, firm in the HBR case study Amgen Inc.: Pursuing Innovation and Imitation? (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Amgen Inc.: Pursuing Innovation and Imitation? (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 Amgen Bs has relatively successful track record of launching new products.
Opportunities Amgen Inc.: Pursuing Innovation and Imitation? (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 Amgen Inc.: Pursuing Innovation and Imitation? (A) are -
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. Amgen Bs can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Amgen Bs 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. Amgen Bs 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.
Creating value in data economy
– The success of analytics program of Amgen Bs has opened avenues for new revenue streams for the organization in the industry. This can help Amgen Bs to build a more holistic ecosystem as suggested in the Amgen Inc.: Pursuing Innovation and Imitation? (A) case study. Amgen Bs can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Amgen Bs 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.
Learning at scale
– Online learning technologies has now opened space for Amgen Bs 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Amgen Bs 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.
Using analytics as competitive advantage
– Amgen Bs 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 Amgen Inc.: Pursuing Innovation and Imitation? (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Amgen Bs to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Amgen Bs can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Amgen Inc.: Pursuing Innovation and Imitation? (A) 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.
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 Amgen Bs 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.
Manufacturing automation
– Amgen Bs 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Amgen Bs can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Amgen Bs 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.
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. Amgen Bs can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Amgen Inc.: Pursuing Innovation and Imitation? (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Amgen Inc.: Pursuing Innovation and Imitation? (A) are -
Regulatory challenges
– Amgen Bs 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.
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. Amgen Bs 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.
Environmental challenges
– Amgen Bs 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. Amgen Bs can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Amgen Bs 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.
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 Amgen Bs.
Technology acceleration in Forth Industrial Revolution
– Amgen Bs has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Amgen Bs 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.
Increasing wage structure of Amgen Bs
– 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 Amgen Bs.
High dependence on third party suppliers
– Amgen Bs 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.
Stagnating economy with rate increase
– Amgen Bs 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Amgen Inc.: Pursuing Innovation and Imitation? (A), Amgen Bs 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 .
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. Amgen Bs 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.
Weighted SWOT Analysis of Amgen Inc.: Pursuing Innovation and Imitation? (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 Amgen Inc.: Pursuing Innovation and Imitation? (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 Amgen Inc.: Pursuing Innovation and Imitation? (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 Amgen Inc.: Pursuing Innovation and Imitation? (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 Amgen Inc.: Pursuing Innovation and Imitation? (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 Amgen Bs needs to make to build a sustainable competitive advantage.
