Case Study Description of American Cyanamid (A) & (B) (Combined)
American Home Products' (AHP) $9 billion hostile takeover of American Cyanamid (Cyanamid) was the largest merger-and-acquistion 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 different views of Cyanamid management and its outside directors on the desirability of the takeover. After a tense and painful board meeting that lasted several days, the board voted unanimously to support the offer. A rewritten version of two earlier cases.
Swot Analysis of "American Cyanamid (A) & (B) (Combined)" 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) & (B) (Combined) 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) & (B) (Combined) casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, technology disruption, central banks are concerned over increasing inflation,
increasing commodity prices, geopolitical disruptions, etc
Introduction to SWOT Analysis of American Cyanamid (A) & (B) (Combined)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in American Cyanamid (A) & (B) (Combined) 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) & (B) (Combined) can be done for the following purposes –
1. Strategic planning using facts provided in American Cyanamid (A) & (B) (Combined) 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) & (B) (Combined) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cyanamid Ahp in American Cyanamid (A) & (B) (Combined) Harvard Business Review case study are -
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) & (B) (Combined) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– American Cyanamid (A) & (B) (Combined) firm has clearly differentiated products in the market place. This has enabled Cyanamid Ahp to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Cyanamid Ahp to invest into research and development (R&D) and innovation.
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.
Ability to lead change in Strategy & Execution field
– Cyanamid Ahp 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 Cyanamid Ahp in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Cyanamid Ahp has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in American Cyanamid (A) & (B) (Combined) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
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.
Low bargaining power of suppliers
– Suppliers of Cyanamid Ahp in the sector have low bargaining power. American Cyanamid (A) & (B) (Combined) 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.
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) & (B) (Combined) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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 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.
Ability to recruit top talent
– Cyanamid Ahp is one of the leading recruiters in the industry. Managers in the American Cyanamid (A) & (B) (Combined) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses American Cyanamid (A) & (B) (Combined) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of American Cyanamid (A) & (B) (Combined) are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the American Cyanamid (A) & (B) (Combined) 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 Cyanamid Ahp has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As American Cyanamid (A) & (B) (Combined) 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.
Products dominated business model
– Even though Cyanamid Ahp 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 - American Cyanamid (A) & (B) (Combined) should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study American Cyanamid (A) & (B) (Combined), is just above the industry average. Cyanamid Ahp needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Cyanamid Ahp 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 American Cyanamid (A) & (B) (Combined) 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 American Cyanamid (A) & (B) (Combined) can leverage the sales team experience to cultivate customer relationships as Cyanamid Ahp is planning to shift buying processes online.
Lack of clear differentiation of Cyanamid Ahp products
– To increase the profitability and margins on the products, Cyanamid Ahp 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 American Cyanamid (A) & (B) (Combined), 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.
High operating costs
– Compare to the competitors, firm in the HBR case study American Cyanamid (A) & (B) (Combined) 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 Cyanamid Ahp 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study American Cyanamid (A) & (B) (Combined), 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.
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.
Opportunities American Cyanamid (A) & (B) (Combined) | 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) & (B) (Combined) 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) & (B) (Combined), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Cyanamid Ahp 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.
Learning at scale
– Online learning technologies has now opened space for Cyanamid Ahp 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.
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) & (B) (Combined) case study. Cyanamid Ahp can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
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.
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.
Leveraging digital technologies
– Cyanamid Ahp 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.
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.
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) & (B) (Combined) 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.
Threats American Cyanamid (A) & (B) (Combined) 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) & (B) (Combined) are -
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.
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.
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.
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study American Cyanamid (A) & (B) (Combined), Cyanamid Ahp 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 .
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.
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. Cyanamid Ahp 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.
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) & (B) (Combined) .
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. Cyanamid Ahp can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cyanamid Ahp with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of American Cyanamid (A) & (B) (Combined) 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) & (B) (Combined) 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) & (B) (Combined) 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) & (B) (Combined) 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) & (B) (Combined) 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.
