Novartis: Leading a Global Enterprise SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Novartis: Leading a Global Enterprise
Novartis, the world's leading healthcare company, was formed in 1996 out of a merger of two very different, mid-tier Switzerland-based pharma companies. The case traces the company's evolution over the past 17 years, as it transformed into a truly global enterprise with 127,000 employees of 153 nationalities in 140 countries generating $56.7 billion in 2012 revenues and $9.6 billion in net income, making the firm one of the world's largest and most profitable companies. CEO since 2010, Joe Jimenez had taken over from one of the merger's architects and visionary legacy CEO Daniel Vasella. He recognized that the global health care environment would create severe challenges for Novartis in the years ahead and that Novartis needed to make sure it had the right strategy, structure, talent and spirit to live up to its ambitions.
Authors :: William W. George, Krishna G. Palepu, Carin-Isabel Knoop
Swot Analysis of "Novartis: Leading a Global Enterprise" written by William W. George, Krishna G. Palepu, Carin-Isabel Knoop includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Novartis 127,000 facing as an external strategic factors. Some of the topics covered in Novartis: Leading a Global Enterprise case study are - Strategic Management Strategies, Change management, Globalization, Health, Leading teams, Mergers & acquisitions, Organizational culture, Organizational structure, Talent management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Novartis: Leading a Global Enterprise casestudy better are - – talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, technology disruption, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Novartis: Leading a Global Enterprise
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Novartis: Leading a Global Enterprise case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Novartis 127,000, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Novartis 127,000 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 Novartis: Leading a Global Enterprise can be done for the following purposes –
1. Strategic planning using facts provided in Novartis: Leading a Global Enterprise case study
2. Improving business portfolio management of Novartis 127,000
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 Novartis 127,000
Strengths Novartis: Leading a Global Enterprise | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Novartis 127,000 in Novartis: Leading a Global Enterprise Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Novartis 127,000 digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Novartis 127,000 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.
Innovation driven organization
– Novartis 127,000 is one of the most innovative firm in sector. Manager in Novartis: Leading a Global Enterprise Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Novartis 127,000
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Novartis 127,000 does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Strategy & Execution field
– Novartis 127,000 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 Novartis 127,000 in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Novartis 127,000 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 Novartis: Leading a Global Enterprise HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Novartis 127,000 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.
Operational resilience
– The operational resilience strategy in the Novartis: Leading a Global Enterprise 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.
Learning organization
- Novartis 127,000 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 Novartis 127,000 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Novartis: Leading a Global Enterprise Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Novartis 127,000 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Novartis 127,000 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.
High switching costs
– The high switching costs that Novartis 127,000 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.
Low bargaining power of suppliers
– Suppliers of Novartis 127,000 in the sector have low bargaining power. Novartis: Leading a Global Enterprise has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Novartis 127,000 to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Novartis 127,000 has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Novartis 127,000 to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Novartis: Leading a Global Enterprise | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Novartis: Leading a Global Enterprise are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Novartis: Leading a Global Enterprise 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 Novartis 127,000 has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Novartis 127,000 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 Novartis 127,000 products
– To increase the profitability and margins on the products, Novartis 127,000 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 Novartis: Leading a Global Enterprise, 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.
Interest costs
– Compare to the competition, Novartis 127,000 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, Novartis 127,000 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.
Low market penetration in new markets
– Outside its home market of Novartis 127,000, firm in the HBR case study Novartis: Leading a Global Enterprise needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Novartis: Leading a Global Enterprise, in the dynamic environment Novartis 127,000 has struggled to respond to the nimble upstart competition. Novartis 127,000 has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Novartis: Leading a Global Enterprise HBR case study mentions - Novartis 127,000 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 Novartis 127,000 supply chain. Even after few cautionary changes mentioned in the HBR case study - Novartis: Leading a Global Enterprise, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Novartis 127,000 vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Novartis 127,000 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.
Opportunities Novartis: Leading a Global Enterprise | 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 Novartis: Leading a Global Enterprise are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Novartis 127,000 can use these opportunities to build new business models that can help the communities that Novartis 127,000 operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Loyalty marketing
– Novartis 127,000 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Novartis 127,000 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 Novartis 127,000 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 Novartis 127,000 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.
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. Novartis 127,000 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. Novartis 127,000 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Novartis 127,000 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, Novartis: Leading a Global Enterprise, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Novartis 127,000 in the consumer business. Now Novartis 127,000 can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Novartis 127,000 has opened avenues for new revenue streams for the organization in the industry. This can help Novartis 127,000 to build a more holistic ecosystem as suggested in the Novartis: Leading a Global Enterprise case study. Novartis 127,000 can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Novartis 127,000 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
– Novartis 127,000 can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Novartis: Leading a Global Enterprise 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Novartis 127,000 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 Novartis 127,000 to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Novartis 127,000 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 Novartis: Leading a Global Enterprise External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Novartis: Leading a Global Enterprise are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Novartis 127,000 with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Novartis 127,000 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.
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 Novartis 127,000.
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. Novartis 127,000 can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Novartis 127,000 is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Novartis 127,000 needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Novartis 127,000 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 dependence on third party suppliers
– Novartis 127,000 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.
Stagnating economy with rate increase
– Novartis 127,000 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.
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 Novartis 127,000 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 Novartis: Leading a Global Enterprise, Novartis 127,000 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 wage structure of Novartis 127,000
– 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 Novartis 127,000.
Weighted SWOT Analysis of Novartis: Leading a Global Enterprise 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 Novartis: Leading a Global Enterprise 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 Novartis: Leading a Global Enterprise 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 Novartis: Leading a Global Enterprise 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 Novartis: Leading a Global Enterprise 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 Novartis 127,000 needs to make to build a sustainable competitive advantage.