Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc.
The global pharmaceutical industry has gone through substantial changes in the last few decade and pharmaceutical firms face major challenges, including headline-grabbing litigation, imminent patent expirations, new technologies, rising drug development costs, generic drug substitution, international competitors, and complex public policy issues. Describes the pharmaceutical industry in 2006, including: the drug development process; threats from biotech and generics competitors; pharmaceutical manufacturing, selling, and marketing; and pharmaceutical consumption in Europe, the third world, and the U.S. Merck and Pfizer are analyzed in-depth and a contrast between Merck, as a research-based firm opposed to mergers, and Pfizer, as a marketing powerhouse growing through acquisitions, is developed. Thirteen exhibits give concrete focus to the issues of the case.
Swot Analysis of "Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc." written by David J. Collis, Troy Smith includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pharmaceutical Pfizer facing as an external strategic factors. Some of the topics covered in Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. case study are - Strategic Management Strategies, International business and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. casestudy better are - – talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing commodity prices, there is backlash against globalization, etc
Introduction to SWOT Analysis of Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pharmaceutical Pfizer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pharmaceutical Pfizer 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. can be done for the following purposes –
1. Strategic planning using facts provided in Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. case study
2. Improving business portfolio management of Pharmaceutical Pfizer
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 Pharmaceutical Pfizer
Strengths Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pharmaceutical Pfizer in Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. firm has clearly differentiated products in the market place. This has enabled Pharmaceutical Pfizer to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Pharmaceutical Pfizer to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Pharmaceutical Pfizer has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pharmaceutical Pfizer 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 Pharmaceutical Pfizer digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pharmaceutical Pfizer 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.
Ability to lead change in Strategy & Execution field
– Pharmaceutical Pfizer 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 Pharmaceutical Pfizer in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Pharmaceutical Pfizer in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Pharmaceutical Pfizer 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Pharmaceutical Pfizer is one of the leading recruiters in the industry. Managers in the Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Pharmaceutical Pfizer in the sector have low bargaining power. Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pharmaceutical Pfizer to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Pharmaceutical Pfizer has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pharmaceutical Pfizer to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Pharmaceutical Pfizer is present in almost all the verticals within the industry. This has provided firm in Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. 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.
Training and development
– Pharmaceutical Pfizer has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. 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.
Cross disciplinary teams
– Horizontal connected teams at the Pharmaceutical Pfizer 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.
Weaknesses Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. are -
High bargaining power of channel partners
– Because of the regulatory requirements, David J. Collis, Troy Smith suggests that, Pharmaceutical Pfizer 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc., in the dynamic environment Pharmaceutical Pfizer has struggled to respond to the nimble upstart competition. Pharmaceutical Pfizer has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Pharmaceutical Pfizer 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.
Lack of clear differentiation of Pharmaceutical Pfizer products
– To increase the profitability and margins on the products, Pharmaceutical Pfizer needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Pharmaceutical Pfizer, firm in the HBR case study Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Pharmaceutical Pfizer 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. can leverage the sales team experience to cultivate customer relationships as Pharmaceutical Pfizer is planning to shift buying processes online.
High cash cycle compare to competitors
Pharmaceutical Pfizer 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.
No frontier risks strategy
– After analyzing the HBR case study Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc., 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Pharmaceutical Pfizer 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pharmaceutical Pfizer is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. | 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. are -
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. Pharmaceutical Pfizer can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Pharmaceutical Pfizer 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.
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. Pharmaceutical Pfizer 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. Pharmaceutical Pfizer 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.
Using analytics as competitive advantage
– Pharmaceutical Pfizer 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pharmaceutical Pfizer to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pharmaceutical Pfizer 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 Pharmaceutical Pfizer to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pharmaceutical Pfizer can use these opportunities to build new business models that can help the communities that Pharmaceutical Pfizer operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pharmaceutical Pfizer 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pharmaceutical Pfizer can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pharmaceutical Pfizer 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.
Building a culture of innovation
– managers at Pharmaceutical Pfizer 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.
Creating value in data economy
– The success of analytics program of Pharmaceutical Pfizer has opened avenues for new revenue streams for the organization in the industry. This can help Pharmaceutical Pfizer to build a more holistic ecosystem as suggested in the Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. case study. Pharmaceutical Pfizer can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Pharmaceutical Pfizer can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Pharmaceutical Pfizer 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. are -
Increasing wage structure of Pharmaceutical Pfizer
– 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 Pharmaceutical Pfizer.
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. Pharmaceutical Pfizer needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Pharmaceutical Pfizer is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Pharmaceutical Pfizer can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Pharmaceutical Pfizer 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.
Technology acceleration in Forth Industrial Revolution
– Pharmaceutical Pfizer has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Pharmaceutical Pfizer 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.
Environmental challenges
– Pharmaceutical Pfizer 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. Pharmaceutical Pfizer can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Pharmaceutical Pfizer 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc., Pharmaceutical Pfizer 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 Pharmaceutical Pfizer business can come under increasing regulations regarding data privacy, data security, etc.
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 Pharmaceutical Pfizer 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pharmaceutical Pfizer 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. 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 Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc. 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 Pharmaceutical Pfizer needs to make to build a sustainable competitive advantage.