Should Natco Explore the Out-Licensing Opportunity? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study Description of Should Natco Explore the Out-Licensing Opportunity?
New medicine launches in India had come down by nearly 80 per cent during the last six years. The risks associated with new-drug development were high, and for that reason, companies were considering buying the potential molecules in the early stages of development at comparatively cheaper rates. Apart from cutting costs, out-licensing provided opportunities for domestic players to enter into collaborations with global players. Now, with out-licensing gaining popularity in the global pharmaceutical markets, one of the fastest growing pharmaceutical companies in India wondered whether out-licensing could be its next big Indian opportunity. Sandeep Puri is affiliated with Institute of Management Technology, Ghaziabad
Swot Analysis of "Should Natco Explore the Out-Licensing Opportunity?" written by Sandeep Puri, Swati Kapoor, Tanmay Mathur, Arshdeep Kaur includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Licensing Natco facing as an external strategic factors. Some of the topics covered in Should Natco Explore the Out-Licensing Opportunity? case study are - Strategic Management Strategies, Organizational structure, Workspaces and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Should Natco Explore the Out-Licensing Opportunity? casestudy better are - – central banks are concerned over increasing inflation, technology disruption, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , increasing transportation and logistics costs,
there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Should Natco Explore the Out-Licensing Opportunity?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Should Natco Explore the Out-Licensing Opportunity? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Licensing Natco, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Licensing Natco 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 Should Natco Explore the Out-Licensing Opportunity? can be done for the following purposes –
1. Strategic planning using facts provided in Should Natco Explore the Out-Licensing Opportunity? case study
2. Improving business portfolio management of Licensing Natco
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 Licensing Natco
Strengths Should Natco Explore the Out-Licensing Opportunity? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Licensing Natco in Should Natco Explore the Out-Licensing Opportunity? Harvard Business Review case study are -
Learning organization
- Licensing Natco 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 Licensing Natco is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Should Natco Explore the Out-Licensing Opportunity? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Licensing Natco in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Licensing Natco
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Licensing Natco does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Licensing Natco has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Licensing Natco to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Licensing Natco 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 Sandeep Puri, Swati Kapoor, Tanmay Mathur, Arshdeep Kaur 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Licensing Natco digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Licensing Natco 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 Licensing Natco 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.
Innovation driven organization
– Licensing Natco is one of the most innovative firm in sector. Manager in Should Natco Explore the Out-Licensing Opportunity? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Licensing Natco 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 Should Natco Explore the Out-Licensing Opportunity? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Licensing Natco in the sector have low bargaining power. Should Natco Explore the Out-Licensing Opportunity? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Licensing Natco to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Should Natco Explore the Out-Licensing Opportunity? 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Should Natco Explore the Out-Licensing Opportunity? firm has clearly differentiated products in the market place. This has enabled Licensing Natco to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Licensing Natco to invest into research and development (R&D) and innovation.
Weaknesses Should Natco Explore the Out-Licensing Opportunity? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Should Natco Explore the Out-Licensing Opportunity? are -
Slow to strategic competitive environment developments
– As Should Natco Explore the Out-Licensing Opportunity? HBR case study mentions - Licensing Natco 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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Licensing Natco supply chain. Even after few cautionary changes mentioned in the HBR case study - Should Natco Explore the Out-Licensing Opportunity?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Licensing Natco vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Licensing Natco has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Workers concerns about automation
– As automation is fast increasing in the segment, Licensing Natco 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.
Capital Spending Reduction
– Even during the low interest decade, Licensing Natco 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.
Increasing silos among functional specialists
– The organizational structure of Licensing Natco is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Licensing Natco needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Licensing Natco to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Should Natco Explore the Out-Licensing Opportunity?, is just above the industry average. Licensing Natco 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Sandeep Puri, Swati Kapoor, Tanmay Mathur, Arshdeep Kaur suggests that, Licensing Natco 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.
Need for greater diversity
– Licensing Natco 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Licensing Natco is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Should Natco Explore the Out-Licensing Opportunity? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Should Natco Explore the Out-Licensing Opportunity?, in the dynamic environment Licensing Natco has struggled to respond to the nimble upstart competition. Licensing Natco has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Should Natco Explore the Out-Licensing Opportunity? | 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 Should Natco Explore the Out-Licensing Opportunity? are -
Creating value in data economy
– The success of analytics program of Licensing Natco has opened avenues for new revenue streams for the organization in the industry. This can help Licensing Natco to build a more holistic ecosystem as suggested in the Should Natco Explore the Out-Licensing Opportunity? case study. Licensing Natco 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, Licensing Natco 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, Should Natco Explore the Out-Licensing Opportunity?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Licensing Natco 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 Should Natco Explore the Out-Licensing Opportunity? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Licensing Natco to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Licensing Natco 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. Licensing Natco 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.
Leveraging digital technologies
– Licensing Natco 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Licensing Natco is facing challenges because of the dominance of functional experts in the organization. Should Natco Explore the Out-Licensing Opportunity? 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Licensing Natco can use these opportunities to build new business models that can help the communities that Licensing Natco operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Licensing Natco can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Licensing Natco 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.
Building a culture of innovation
– managers at Licensing Natco 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.
Buying journey improvements
– Licensing Natco can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Should Natco Explore the Out-Licensing Opportunity? 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Licensing Natco 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.
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 Licensing Natco in the consumer business. Now Licensing Natco can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Should Natco Explore the Out-Licensing Opportunity? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Should Natco Explore the Out-Licensing Opportunity? are -
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. Licensing Natco needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Regulatory challenges
– Licensing Natco 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.
Technology acceleration in Forth Industrial Revolution
– Licensing Natco has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Licensing Natco 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.
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 Licensing Natco in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Licensing Natco 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.
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 Licensing Natco business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Should Natco Explore the Out-Licensing Opportunity?, Licensing Natco 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 .
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 dependence on third party suppliers
– Licensing Natco 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.
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.
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. Licensing Natco can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Licensing Natco 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 Should Natco Explore the Out-Licensing Opportunity? .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Licensing Natco 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.
Weighted SWOT Analysis of Should Natco Explore the Out-Licensing Opportunity? 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 Should Natco Explore the Out-Licensing Opportunity? 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 Should Natco Explore the Out-Licensing Opportunity? 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 Should Natco Explore the Out-Licensing Opportunity? 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 Should Natco Explore the Out-Licensing Opportunity? 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 Licensing Natco needs to make to build a sustainable competitive advantage.
