Case Study Description of Merrimack Pharmaceuticals, Inc. (A)
In 2006, Merrimack Pharmaceuticals was a fast-growing biotechnology company. Its leadership team was divided over whether to keep R&D organized in functional departments or transition to interdisciplinary teams. As a small company, Merrimack's R&D organization had established a culture of collaboration across scientific disciplines that some worried would diminish with larger functional departments. Others were concerned that an interdisciplinary team-based design would be inefficient and difficult to manage. This case describes the two proposed organizational designs and presents the arguments within Merrimack's leadership team for and against each. It highlights the tradeoffs associated with each design as they relate to accountability, efficiency, innovation, product orientation, and people management at every stage in the R&D process. Students will explore the relationships between task complexity, collaboration, and organizational design in R&D.
Authors :: Amy C. Edmondson, Bethany S. Gerstein, Melissa A. Valentine
Swot Analysis of "Merrimack Pharmaceuticals, Inc. (A)" written by Amy C. Edmondson, Bethany S. Gerstein, Melissa A. Valentine includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merrimack's Merrimack facing as an external strategic factors. Some of the topics covered in Merrimack Pharmaceuticals, Inc. (A) case study are - Strategic Management Strategies, Leading teams, Operations management, Organizational culture, Organizational structure, Research & development and Technology & Operations.
Some of the macro environment factors that can be used to understand the Merrimack Pharmaceuticals, Inc. (A) casestudy better are - – there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, geopolitical disruptions, technology disruption, challanges to central banks by blockchain based private currencies,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Merrimack Pharmaceuticals, Inc. (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Merrimack Pharmaceuticals, Inc. (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merrimack's Merrimack, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merrimack's Merrimack 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 Merrimack Pharmaceuticals, Inc. (A) can be done for the following purposes –
1. Strategic planning using facts provided in Merrimack Pharmaceuticals, Inc. (A) case study
2. Improving business portfolio management of Merrimack's Merrimack
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 Merrimack's Merrimack
Strengths Merrimack Pharmaceuticals, Inc. (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merrimack's Merrimack in Merrimack Pharmaceuticals, Inc. (A) Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Merrimack Pharmaceuticals, Inc. (A) 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.
Ability to lead change in Technology & Operations field
– Merrimack's Merrimack 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 Merrimack's Merrimack in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Merrimack's Merrimack 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 Merrimack's Merrimack in the sector have low bargaining power. Merrimack Pharmaceuticals, Inc. (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Merrimack's Merrimack to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Merrimack's Merrimack has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Merrimack's Merrimack 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.
Learning organization
- Merrimack's Merrimack 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 Merrimack's Merrimack is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Merrimack Pharmaceuticals, Inc. (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Technology & Operations industry
– Merrimack Pharmaceuticals, Inc. (A) firm has clearly differentiated products in the market place. This has enabled Merrimack's Merrimack to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Merrimack's Merrimack to invest into research and development (R&D) and innovation.
Training and development
– Merrimack's Merrimack has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Merrimack Pharmaceuticals, Inc. (A) 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.
Analytics focus
– Merrimack's Merrimack 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 Amy C. Edmondson, Bethany S. Gerstein, Melissa A. Valentine 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.
Effective Research and Development (R&D)
– Merrimack's Merrimack 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 Merrimack Pharmaceuticals, Inc. (A) - 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 brand equity
– Merrimack's Merrimack has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Merrimack's Merrimack to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Merrimack's Merrimack
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Merrimack's Merrimack does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Merrimack Pharmaceuticals, Inc. (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Merrimack Pharmaceuticals, Inc. (A) are -
Capital Spending Reduction
– Even during the low interest decade, Merrimack's Merrimack 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.
Skills based hiring
– The stress on hiring functional specialists at Merrimack's Merrimack 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Merrimack Pharmaceuticals, Inc. (A), in the dynamic environment Merrimack's Merrimack has struggled to respond to the nimble upstart competition. Merrimack's Merrimack has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Merrimack's Merrimack 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Merrimack Pharmaceuticals, Inc. (A), is just above the industry average. Merrimack's Merrimack 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.
Low market penetration in new markets
– Outside its home market of Merrimack's Merrimack, firm in the HBR case study Merrimack Pharmaceuticals, Inc. (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Merrimack's Merrimack 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 operating costs
– Compare to the competitors, firm in the HBR case study Merrimack Pharmaceuticals, Inc. (A) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Merrimack's Merrimack 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Amy C. Edmondson, Bethany S. Gerstein, Melissa A. Valentine suggests that, Merrimack's Merrimack 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.
No frontier risks strategy
– After analyzing the HBR case study Merrimack Pharmaceuticals, Inc. (A), it seems that company is thinking about the frontier risks that can impact Technology & Operations 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, Merrimack's Merrimack 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 Merrimack Pharmaceuticals, Inc. (A) | 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 Merrimack Pharmaceuticals, Inc. (A) are -
Learning at scale
– Online learning technologies has now opened space for Merrimack's Merrimack 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.
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. Merrimack's Merrimack can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Merrimack's Merrimack 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.
Building a culture of innovation
– managers at Merrimack's Merrimack 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.
Manufacturing automation
– Merrimack's Merrimack 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.
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. Merrimack's Merrimack can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Merrimack's Merrimack to increase its market reach. Merrimack's Merrimack 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Merrimack's Merrimack 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.
Loyalty marketing
– Merrimack's Merrimack 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.
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 Merrimack's Merrimack 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.
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 Merrimack's Merrimack in the consumer business. Now Merrimack's Merrimack can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Merrimack's Merrimack 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 Merrimack Pharmaceuticals, Inc. (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Merrimack's Merrimack to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Merrimack's Merrimack has opened avenues for new revenue streams for the organization in the industry. This can help Merrimack's Merrimack to build a more holistic ecosystem as suggested in the Merrimack Pharmaceuticals, Inc. (A) case study. Merrimack's Merrimack can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Merrimack Pharmaceuticals, Inc. (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Merrimack Pharmaceuticals, Inc. (A) 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. Merrimack's Merrimack 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Merrimack's Merrimack 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.
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.
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.
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 Merrimack's Merrimack business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Merrimack's Merrimack 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.
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. Merrimack's Merrimack 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
– Merrimack's Merrimack 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.
Consumer confidence and its impact on Merrimack's Merrimack 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.
Environmental challenges
– Merrimack's Merrimack 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. Merrimack's Merrimack can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Shortening product life cycle
– it is one of the major threat that Merrimack's Merrimack is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Merrimack's Merrimack in the Technology & Operations sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merrimack's Merrimack with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Merrimack Pharmaceuticals, Inc. (A) 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 Merrimack Pharmaceuticals, Inc. (A) 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 Merrimack Pharmaceuticals, Inc. (A) 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 Merrimack Pharmaceuticals, Inc. (A) 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 Merrimack Pharmaceuticals, Inc. (A) 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 Merrimack's Merrimack needs to make to build a sustainable competitive advantage.
