Genentech (in 2011): After the Acquisition by Roche SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study Description of Genentech (in 2011): After the Acquisition by Roche
Roche had just finished purchasing the last public shares of Genentech in an effort to secure their expertise in biotechnology. However, the recent failure of the colon cancer drug, Avastin, had raised questions about the partnership. Roche's main motives in the acquisition were to gain rights to Avastin and use it for a myriad of other applications. Positive clinical trials would have lead to significantly increased sales and growth into other cancer applications. Instead, the negative results caused Roche shares to drop by 10 percent. The incident raised questions at Roche about the efficiency of drug development at Genentech. Phase III trial failures represented a significant loss of time and money. And, in this case, the FDA revoked Avastin's approval for treatment of breast cancer causing further harm to revenue opportunities for Roche. Now that Roche was in charge, expectations were raised for producing successful Phase III trials that would bring more products to market. But, what was the appropriate resource allocation for early drug discovery and Phase II and III trials? On one side, Genentech wanted to focus on early drug development as a means to keep the future product pipeline well stocked; on the other side, Roche was focused on getting drugs through Phase II and III trials and into the market to generate revenue.
Authors :: Marne L. Arthaud-Day, Frank T. Rothaermel, Wei Zhang
Swot Analysis of "Genentech (in 2011): After the Acquisition by Roche" written by Marne L. Arthaud-Day, Frank T. Rothaermel, Wei Zhang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Roche Genentech facing as an external strategic factors. Some of the topics covered in Genentech (in 2011): After the Acquisition by Roche case study are - Strategic Management Strategies, Mergers & acquisitions and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Genentech (in 2011): After the Acquisition by Roche casestudy better are - – challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, technology disruption, increasing government debt because of Covid-19 spendings,
digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Genentech (in 2011): After the Acquisition by Roche
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Genentech (in 2011): After the Acquisition by Roche case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Roche Genentech, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Roche Genentech 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 Genentech (in 2011): After the Acquisition by Roche can be done for the following purposes –
1. Strategic planning using facts provided in Genentech (in 2011): After the Acquisition by Roche case study
2. Improving business portfolio management of Roche Genentech
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 Roche Genentech
Strengths Genentech (in 2011): After the Acquisition by Roche | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Roche Genentech in Genentech (in 2011): After the Acquisition by Roche Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Genentech (in 2011): After the Acquisition by Roche firm has clearly differentiated products in the market place. This has enabled Roche Genentech to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Roche Genentech to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Genentech (in 2011): After the Acquisition by Roche 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.
High brand equity
– Roche Genentech has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Roche Genentech to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Roche Genentech 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 Genentech (in 2011): After the Acquisition by Roche HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Strategy & Execution field
– Roche Genentech 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 Roche Genentech in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Roche Genentech 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 Genentech (in 2011): After the Acquisition by Roche - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Roche Genentech has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Roche Genentech 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.
Low bargaining power of suppliers
– Suppliers of Roche Genentech in the sector have low bargaining power. Genentech (in 2011): After the Acquisition by Roche has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Roche Genentech to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Roche Genentech has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Genentech (in 2011): After the Acquisition by Roche 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 Roche Genentech 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.
High switching costs
– The high switching costs that Roche Genentech 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.
Superior customer experience
– The customer experience strategy of Roche Genentech in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Genentech (in 2011): After the Acquisition by Roche | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Genentech (in 2011): After the Acquisition by Roche are -
Slow to strategic competitive environment developments
– As Genentech (in 2011): After the Acquisition by Roche HBR case study mentions - Roche Genentech 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.
Capital Spending Reduction
– Even during the low interest decade, Roche Genentech 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Roche Genentech is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Genentech (in 2011): After the Acquisition by Roche 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 Roche Genentech 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 - Genentech (in 2011): After the Acquisition by Roche should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Genentech (in 2011): After the Acquisition by Roche, 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.
Skills based hiring
– The stress on hiring functional specialists at Roche Genentech 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.
Aligning sales with marketing
– It come across in the case study Genentech (in 2011): After the Acquisition by Roche 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 Genentech (in 2011): After the Acquisition by Roche can leverage the sales team experience to cultivate customer relationships as Roche Genentech is planning to shift buying processes online.
Need for greater diversity
– Roche Genentech 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.
Increasing silos among functional specialists
– The organizational structure of Roche Genentech is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Roche Genentech needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Roche Genentech to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Roche Genentech 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. Roche Genentech 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.
Interest costs
– Compare to the competition, Roche Genentech 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.
Opportunities Genentech (in 2011): After the Acquisition by Roche | 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 Genentech (in 2011): After the Acquisition by Roche are -
Better consumer reach
– The expansion of the 5G network will help Roche Genentech to increase its market reach. Roche Genentech 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.
Creating value in data economy
– The success of analytics program of Roche Genentech has opened avenues for new revenue streams for the organization in the industry. This can help Roche Genentech to build a more holistic ecosystem as suggested in the Genentech (in 2011): After the Acquisition by Roche case study. Roche Genentech can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Roche Genentech 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 Roche Genentech 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, Roche Genentech can use these opportunities to build new business models that can help the communities that Roche Genentech operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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. Roche Genentech 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. Roche Genentech 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Roche Genentech 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 Roche Genentech 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.
Using analytics as competitive advantage
– Roche Genentech 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 Genentech (in 2011): After the Acquisition by Roche - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Roche Genentech to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Roche Genentech 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.
Buying journey improvements
– Roche Genentech can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Genentech (in 2011): After the Acquisition by Roche 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.
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. Roche Genentech can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Roche Genentech 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, Genentech (in 2011): After the Acquisition by Roche, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Roche Genentech 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.
Threats Genentech (in 2011): After the Acquisition by Roche External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Genentech (in 2011): After the Acquisition by Roche are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Roche Genentech with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Genentech (in 2011): After the Acquisition by Roche, Roche Genentech 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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Roche Genentech 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 Genentech (in 2011): After the Acquisition by Roche .
High dependence on third party suppliers
– Roche Genentech 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.
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. Roche Genentech needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Roche Genentech business can come under increasing regulations regarding data privacy, data security, 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.
Regulatory challenges
– Roche Genentech 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.
Increasing wage structure of Roche Genentech
– 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 Roche Genentech.
Shortening product life cycle
– it is one of the major threat that Roche Genentech is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Roche Genentech 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.
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. Roche Genentech can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Roche Genentech.
Weighted SWOT Analysis of Genentech (in 2011): After the Acquisition by Roche 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 Genentech (in 2011): After the Acquisition by Roche 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 Genentech (in 2011): After the Acquisition by Roche 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 Genentech (in 2011): After the Acquisition by Roche 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 Genentech (in 2011): After the Acquisition by Roche 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 Roche Genentech needs to make to build a sustainable competitive advantage.