Discovering the Future: R&D Strategy at Merck SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Discovering the Future: R&D Strategy at Merck
Given explosive growth in technologies for drug discovery, how does Merck remain competitive in an industry that is fragmented and continues to consolidate?
Swot Analysis of "Discovering the Future: R&D Strategy at Merck" written by Gary P. Pisano, Kim Slack includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merck Discovering facing as an external strategic factors. Some of the topics covered in Discovering the Future: R&D Strategy at Merck case study are - Strategic Management Strategies, Product development and Technology & Operations.
Some of the macro environment factors that can be used to understand the Discovering the Future: R&D Strategy at Merck casestudy better are - – increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, increasing household debt because of falling income levels, increasing transportation and logistics costs, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings,
wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Discovering the Future: R&D Strategy at Merck
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Discovering the Future: R&D Strategy at Merck case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merck Discovering, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merck Discovering 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 Discovering the Future: R&D Strategy at Merck can be done for the following purposes –
1. Strategic planning using facts provided in Discovering the Future: R&D Strategy at Merck case study
2. Improving business portfolio management of Merck Discovering
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 Merck Discovering
Strengths Discovering the Future: R&D Strategy at Merck | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merck Discovering in Discovering the Future: R&D Strategy at Merck Harvard Business Review case study are -
Sustainable margins compare to other players in Technology & Operations industry
– Discovering the Future: R&D Strategy at Merck firm has clearly differentiated products in the market place. This has enabled Merck Discovering to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Merck Discovering to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Merck Discovering 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 Discovering the Future: R&D Strategy at Merck - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Merck Discovering has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Merck Discovering 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.
Strong track record of project management
– Merck Discovering is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Merck Discovering is one of the most innovative firm in sector. Manager in Discovering the Future: R&D Strategy at Merck Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Merck Discovering digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Merck Discovering 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.
Ability to recruit top talent
– Merck Discovering is one of the leading recruiters in the industry. Managers in the Discovering the Future: R&D Strategy at Merck are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Discovering the Future: R&D Strategy at Merck 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.
Cross disciplinary teams
– Horizontal connected teams at the Merck Discovering 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.
Highly skilled collaborators
– Merck Discovering 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 Discovering the Future: R&D Strategy at Merck HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Merck Discovering 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.
High brand equity
– Merck Discovering has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Merck Discovering to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Discovering the Future: R&D Strategy at Merck | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Discovering the Future: R&D Strategy at Merck are -
Capital Spending Reduction
– Even during the low interest decade, Merck Discovering 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.
Need for greater diversity
– Merck Discovering 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.
Interest costs
– Compare to the competition, Merck Discovering 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.
Products dominated business model
– Even though Merck Discovering 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 - Discovering the Future: R&D Strategy at Merck should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Merck Discovering 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.
Lack of clear differentiation of Merck Discovering products
– To increase the profitability and margins on the products, Merck Discovering needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Merck Discovering 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Discovering the Future: R&D Strategy at Merck, is just above the industry average. Merck Discovering 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Merck Discovering is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Discovering the Future: R&D Strategy at Merck can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Merck Discovering is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Merck Discovering needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Merck Discovering to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Discovering the Future: R&D Strategy at Merck 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 Merck Discovering 's lucrative customers.
Opportunities Discovering the Future: R&D Strategy at Merck | 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 Discovering the Future: R&D Strategy at Merck are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Merck Discovering 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 Merck Discovering to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Merck Discovering 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Merck Discovering can use these opportunities to build new business models that can help the communities that Merck Discovering operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
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. Merck Discovering can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Merck Discovering to increase its market reach. Merck Discovering 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.
Building a culture of innovation
– managers at Merck Discovering 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.
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 Merck Discovering 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.
Loyalty marketing
– Merck Discovering 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.
Leveraging digital technologies
– Merck Discovering 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.
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. Merck Discovering can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Merck Discovering 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.
Learning at scale
– Online learning technologies has now opened space for Merck Discovering 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Merck Discovering 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, Discovering the Future: R&D Strategy at Merck, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Discovering the Future: R&D Strategy at Merck External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Discovering the Future: R&D Strategy at Merck are -
Environmental challenges
– Merck Discovering 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. Merck Discovering can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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. Merck Discovering can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Merck Discovering business can come under increasing regulations regarding data privacy, data security, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Discovering the Future: R&D Strategy at Merck, Merck Discovering 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 .
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.
Regulatory challenges
– Merck Discovering 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.
Increasing wage structure of Merck Discovering
– 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 Merck Discovering.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merck Discovering with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Merck Discovering in the Technology & Operations sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Merck Discovering has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Merck Discovering 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.
Consumer confidence and its impact on Merck Discovering 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 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. Merck Discovering needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Discovering the Future: R&D Strategy at Merck 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 Discovering the Future: R&D Strategy at Merck 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 Discovering the Future: R&D Strategy at Merck 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 Discovering the Future: R&D Strategy at Merck 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 Discovering the Future: R&D Strategy at Merck 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 Merck Discovering needs to make to build a sustainable competitive advantage.