Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan
Pharmaceutical company Merck had created the U.S. Managed Distribution Team to handle a unique problem. In March, 1996, the U.S. Food and Drug Administration (FDA) had approved Merck's new drug application for Crixivan, a novel antiviral drug to fight acquired immunodeficiency syndrome (AIDS). Driven by positive early data from the clinical studies, a tremendous medical need for new human immunodeficiency virus (HIV) treatments, and the demands of AIDS activists to make new medicines available as quickly as possible, the FDA had approved Merck's application in a record-setting 42 days from submission. Since Merck's manufacturing facilities would not be ready to produce the drug at capacity for at least six months, a small pilot plant facility would immediately supply Crixivan for an estimated 25,000 to 30,000 patients. Propelled by the need to make Crixivan quickly available, but concerned about ensuring a continuous supply to individual patients so that immune resistance to the drug would not develop as a result of insufficient dosage, the team had grappled with the issue of how to distribute a drug in limited supply. The worst situation would be to start patients on therapy only to discontinue treatment because Merck could not continue to supply the drug. Such a situation was a setup for the emergence of viral resistance, which would markedly exacerbate the AIDS epidemic. After much consideration, the U.S. Managed Distribution Team decided to: (1) abandon traditional distribution channels; (2) manage distribution from one source; and (3) track all patients starting on therapy with Crixivan. The team had gathered to review the progress and success of its plan.
Authors :: Margaret L. Eaton, Madhi Roy, Marko Curavic
Swot Analysis of "Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan" written by Margaret L. Eaton, Madhi Roy, Marko Curavic includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Crixivan Drug facing as an external strategic factors. Some of the topics covered in Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan case study are - Strategic Management Strategies, Marketing, Policy, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan casestudy better are - – cloud computing is disrupting traditional business models, increasing commodity prices, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%,
supply chains are disrupted by pandemic , there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Crixivan Drug, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Crixivan Drug 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 Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan can be done for the following purposes –
1. Strategic planning using facts provided in Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan case study
2. Improving business portfolio management of Crixivan Drug
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 Crixivan Drug
Strengths Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Crixivan Drug in Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan Harvard Business Review case study are -
Diverse revenue streams
– Crixivan Drug is present in almost all the verticals within the industry. This has provided firm in Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan 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.
Organizational Resilience of Crixivan Drug
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Crixivan Drug does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Crixivan Drug 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 Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Crixivan Drug is one of the most innovative firm in sector. Manager in Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Crixivan Drug 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 Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan - 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
– Crixivan Drug has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Crixivan Drug 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.
Analytics focus
– Crixivan Drug 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 Margaret L. Eaton, Madhi Roy, Marko Curavic 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.
Training and development
– Crixivan Drug has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan 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.
High brand equity
– Crixivan Drug has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Crixivan Drug to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Crixivan Drug 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.
Ability to lead change in Technology & Operations field
– Crixivan Drug 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 Crixivan Drug in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Crixivan Drug in the sector have low bargaining power. Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Crixivan Drug to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan are -
High operating costs
– Compare to the competitors, firm in the HBR case study Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan 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 Crixivan Drug 's lucrative customers.
Lack of clear differentiation of Crixivan Drug products
– To increase the profitability and margins on the products, Crixivan Drug needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Crixivan Drug 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 - Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan HBR case study mentions - Crixivan Drug takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Crixivan Drug has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Crixivan Drug 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. Crixivan Drug 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Margaret L. Eaton, Madhi Roy, Marko Curavic suggests that, Crixivan Drug 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.
Increasing silos among functional specialists
– The organizational structure of Crixivan Drug is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Crixivan Drug needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Crixivan Drug to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan, in the dynamic environment Crixivan Drug has struggled to respond to the nimble upstart competition. Crixivan Drug has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan, it seems that the employees of Crixivan Drug 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.
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 Crixivan Drug supply chain. Even after few cautionary changes mentioned in the HBR case study - Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Crixivan Drug vulnerable to further global disruptions in South East Asia.
Opportunities Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan | 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 Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan are -
Creating value in data economy
– The success of analytics program of Crixivan Drug has opened avenues for new revenue streams for the organization in the industry. This can help Crixivan Drug to build a more holistic ecosystem as suggested in the Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan case study. Crixivan Drug can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Crixivan Drug 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, Crixivan Drug 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Crixivan Drug is facing challenges because of the dominance of functional experts in the organization. Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Crixivan Drug can use these opportunities to build new business models that can help the communities that Crixivan Drug operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Using analytics as competitive advantage
– Crixivan Drug 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 Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Crixivan Drug to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Crixivan Drug can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Crixivan Drug can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Crixivan Drug 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.
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 Crixivan Drug 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.
Developing new processes and practices
– Crixivan Drug 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.
Loyalty marketing
– Crixivan Drug 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Crixivan Drug 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 Crixivan Drug to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Crixivan Drug 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.
Threats Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan are -
High dependence on third party suppliers
– Crixivan Drug 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan, Crixivan Drug 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Crixivan Drug 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.
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. Crixivan Drug needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Environmental challenges
– Crixivan Drug 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. Crixivan Drug can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Crixivan Drug 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 Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan .
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 Crixivan Drug in the Technology & Operations sector and impact the bottomline of the organization.
Regulatory challenges
– Crixivan Drug 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.
Consumer confidence and its impact on Crixivan Drug 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.
Stagnating economy with rate increase
– Crixivan Drug 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.
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. Crixivan Drug 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 acceleration in Forth Industrial Revolution
– Crixivan Drug has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Crixivan Drug 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.
Shortening product life cycle
– it is one of the major threat that Crixivan Drug is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan 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 Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan 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 Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan 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 Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan 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 Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan 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 Crixivan Drug needs to make to build a sustainable competitive advantage.