Sitting in his office in Saint Gabriel's Hospital, Dr. Monteagudo, the head of the hospital's pharmacy, was mulling over his possibilities for reducing spending: "It's the first week of February and the hospital's general manager has already given me an ultimatum. I have no clue how we are to free up resources and achieve the savings we'll need to adjust to the budget cuts that the Ministry of Health has made for 2011." Having to comply with draconian budgeting was not Dr. Monteagudo's only concern. He was also facing some operational challenges that required prompt action, such as the problem of the embarrassingly long lines at the hospital's pharmacy. The lines had been getting longer and more frequent for months and some outpatients had complained that they had had to wait for more than 45 minutes to pick up their medication. The issue was so evident that other department heads even made jokes while chatting over coffee: "Monteagudo, what's going on at your pharmacy? Are you selling soccer tickets?" Monteagudo and his team had tried everything they could to cut back on the workload at the pharmacy in hopes of alleviating the problem. Specifically, some months back they had increased the amounts of medication they dispensed to outpatients at each visit. ("That means they won't have to come back as often."). Though at first it seemed to solve the problem, it also had some serious collateral implications: "It's true that our outpatients are visiting us fewer times per year, which makes the lines shorter. But we also need to consider the amount of drugs that patients will have to throw away at home if their treatment plans change or come to an end in between their visits to the hospital pharmacy."
Authors :: Eduard Calvo Page, Frederic Sabria Miracle
Swot Analysis of "Bioco" written by Eduard Calvo Page, Frederic Sabria Miracle includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pharmacy Monteagudo facing as an external strategic factors. Some of the topics covered in Bioco case study are - Strategic Management Strategies, Financial analysis, Marketing, Motivating people, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Bioco casestudy better are - – there is backlash against globalization, technology disruption, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings,
talent flight as more people leaving formal jobs, increasing transportation and logistics costs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Bioco case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pharmacy Monteagudo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pharmacy Monteagudo 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 Bioco can be done for the following purposes –
1. Strategic planning using facts provided in Bioco case study
2. Improving business portfolio management of Pharmacy Monteagudo
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pharmacy Monteagudo
Strengths Bioco | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pharmacy Monteagudo in Bioco Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Pharmacy Monteagudo in the sector have low bargaining power. Bioco has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pharmacy Monteagudo to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Pharmacy Monteagudo 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.
Successful track record of launching new products
– Pharmacy Monteagudo has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pharmacy Monteagudo 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.
Ability to recruit top talent
– Pharmacy Monteagudo is one of the leading recruiters in the industry. Managers in the Bioco are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Pharmacy Monteagudo is present in almost all the verticals within the industry. This has provided firm in Bioco 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.
Superior customer experience
– The customer experience strategy of Pharmacy Monteagudo 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)
– Pharmacy Monteagudo 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 Bioco - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Pharmacy Monteagudo 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.
Training and development
– Pharmacy Monteagudo has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Bioco 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.
Organizational Resilience of Pharmacy Monteagudo
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pharmacy Monteagudo does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Pharmacy Monteagudo 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 Eduard Calvo Page, Frederic Sabria Miracle 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.
Sustainable margins compare to other players in Technology & Operations industry
– Bioco firm has clearly differentiated products in the market place. This has enabled Pharmacy Monteagudo to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Pharmacy Monteagudo to invest into research and development (R&D) and innovation.
Weaknesses Bioco | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bioco are -
High bargaining power of channel partners
– Because of the regulatory requirements, Eduard Calvo Page, Frederic Sabria Miracle suggests that, Pharmacy Monteagudo 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pharmacy Monteagudo is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Bioco can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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 Pharmacy Monteagudo supply chain. Even after few cautionary changes mentioned in the HBR case study - Bioco, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pharmacy Monteagudo vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Bioco, it seems that the employees of Pharmacy Monteagudo don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Bioco, is just above the industry average. Pharmacy Monteagudo 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.
Slow decision making process
– As mentioned earlier in the report, Pharmacy Monteagudo 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. Pharmacy Monteagudo 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.
Skills based hiring
– The stress on hiring functional specialists at Pharmacy Monteagudo 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Pharmacy Monteagudo 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.
Aligning sales with marketing
– It come across in the case study Bioco 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 Bioco can leverage the sales team experience to cultivate customer relationships as Pharmacy Monteagudo is planning to shift buying processes online.
High cash cycle compare to competitors
Pharmacy Monteagudo 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.
Interest costs
– Compare to the competition, Pharmacy Monteagudo 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 Bioco | 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 Bioco are -
Creating value in data economy
– The success of analytics program of Pharmacy Monteagudo has opened avenues for new revenue streams for the organization in the industry. This can help Pharmacy Monteagudo to build a more holistic ecosystem as suggested in the Bioco case study. Pharmacy Monteagudo can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Pharmacy Monteagudo 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.
Manufacturing automation
– Pharmacy Monteagudo can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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.
Using analytics as competitive advantage
– Pharmacy Monteagudo 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 Bioco - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pharmacy Monteagudo to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Pharmacy Monteagudo 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.
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 Pharmacy Monteagudo in the consumer business. Now Pharmacy Monteagudo can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pharmacy Monteagudo can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Pharmacy Monteagudo 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 Technology & Operations segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pharmacy Monteagudo can use these opportunities to build new business models that can help the communities that Pharmacy Monteagudo operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
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 Pharmacy Monteagudo 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pharmacy Monteagudo 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 Pharmacy Monteagudo to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Pharmacy Monteagudo can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Pharmacy Monteagudo 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.
Threats Bioco External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Bioco are -
Environmental challenges
– Pharmacy Monteagudo 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. Pharmacy Monteagudo can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Regulatory challenges
– Pharmacy Monteagudo 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 Technology & Operations industry regulations.
Stagnating economy with rate increase
– Pharmacy Monteagudo 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 Pharmacy Monteagudo business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Pharmacy Monteagudo is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Pharmacy Monteagudo 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.
High dependence on third party suppliers
– Pharmacy Monteagudo 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pharmacy Monteagudo 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 Bioco .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Bioco, Pharmacy Monteagudo may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Increasing wage structure of Pharmacy Monteagudo
– 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 Pharmacy Monteagudo.
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. Pharmacy Monteagudo 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.
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 Pharmacy Monteagudo.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pharmacy Monteagudo can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Bioco 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 Bioco 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 Bioco 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 Bioco 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 Bioco 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 Pharmacy Monteagudo needs to make to build a sustainable competitive advantage.
