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 - – increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, wage bills are increasing, increasing household debt because of falling income levels, increasing transportation and logistics costs, geopolitical disruptions,
central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, 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 -
Ability to lead change in Strategy & Execution field
– Amgen Bs is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Amgen Bs in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Amgen Bs 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.
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.
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.
Superior customer experience
– The customer experience strategy of Amgen Bs in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
Innovation driven organization
– Amgen Bs is one of the most innovative firm in sector. Manager in Amgen Inc.: Pursuing Innovation and Imitation? (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Amgen Bs has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Amgen Bs 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.
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.
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.
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.
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 -
Capital Spending Reduction
– Even during the low interest decade, Amgen Bs 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 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.
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.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Amgen Bs is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Amgen Bs needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Amgen Bs to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Amgen Inc.: Pursuing Innovation and Imitation? (A), in the dynamic environment Amgen Bs has struggled to respond to the nimble upstart competition. Amgen Bs has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
No frontier risks strategy
– After analyzing the HBR case study Amgen Inc.: Pursuing Innovation and Imitation? (A), 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Amgen Bs is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Amgen Inc.: Pursuing Innovation and Imitation? (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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 -
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Amgen Bs 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Amgen Bs 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 Amgen Bs to hire the very best people irrespective of their geographical location.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Amgen Bs can use these opportunities to build new business models that can help the communities that Amgen Bs operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Loyalty marketing
– Amgen Bs 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 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Amgen Bs 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, Amgen Inc.: Pursuing Innovation and Imitation? (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– 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.
Building a culture of innovation
– managers at Amgen Bs 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.
Better consumer reach
– The expansion of the 5G network will help Amgen Bs to increase its market reach. Amgen Bs 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.
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.
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.
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 -
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 Amgen Bs business can come under increasing regulations regarding data privacy, data security, etc.
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.
Shortening product life cycle
– it is one of the major threat that Amgen Bs is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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. Amgen Bs can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Consumer confidence and its impact on Amgen Bs 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.
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 Amgen Bs in the Strategy & Execution sector and impact the bottomline 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. 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Amgen Bs 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 Amgen Inc.: Pursuing Innovation and Imitation? (A) .
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.
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.
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.