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 - – central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels,
geopolitical disruptions, supply chains are disrupted by pandemic , 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 -
Highly skilled collaborators
– Pharmacy Monteagudo 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 Bioco HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Pharmacy Monteagudo digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pharmacy Monteagudo 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.
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.
Strong track record of project management
– Pharmacy Monteagudo is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
High brand equity
– Pharmacy Monteagudo has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pharmacy Monteagudo to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Pharmacy Monteagudo 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 Pharmacy Monteagudo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Bioco Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Ability to lead change in Technology & Operations field
– Pharmacy Monteagudo 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 Pharmacy Monteagudo in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Bioco | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bioco are -
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.
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.
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.
Low market penetration in new markets
– Outside its home market of Pharmacy Monteagudo, firm in the HBR case study Bioco needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
Products dominated business model
– Even though Pharmacy Monteagudo 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 - Bioco should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Pharmacy Monteagudo 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.
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.
Increasing silos among functional specialists
– The organizational structure of Pharmacy Monteagudo is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Pharmacy Monteagudo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pharmacy Monteagudo to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Pharmacy Monteagudo products
– To increase the profitability and margins on the products, Pharmacy Monteagudo needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Pharmacy Monteagudo 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.
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 -
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pharmacy Monteagudo 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.
Developing new processes and practices
– Pharmacy Monteagudo can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pharmacy Monteagudo in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pharmacy Monteagudo 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, Bioco, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
Better consumer reach
– The expansion of the 5G network will help Pharmacy Monteagudo to increase its market reach. Pharmacy Monteagudo 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.
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.
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.
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.
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.
Buying journey improvements
– Pharmacy Monteagudo can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Bioco 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.
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 -
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.
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Pharmacy Monteagudo has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Pharmacy Monteagudo needs to keep up with the evolution of technology in the Technology & Operations 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.
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.
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.
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 .
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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pharmacy Monteagudo in the Technology & Operations industry. The Technology & Operations 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.
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.
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.