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, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%,
wage bills are increasing, 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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Crixivan Drug 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.
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.
Operational resilience
– The operational resilience strategy in the Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan 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.
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.
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.
Sustainable margins compare to other players in Technology & Operations industry
– Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan firm has clearly differentiated products in the market place. This has enabled Crixivan Drug to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Crixivan Drug to invest into research and development (R&D) and innovation.
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.
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.
Strong track record of project management
– Crixivan Drug is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Crixivan Drug 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 Crixivan Drug is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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 -
Need for greater diversity
– Crixivan Drug 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.
No frontier risks strategy
– After analyzing the HBR case study Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan, 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.
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan, is just above the industry average. Crixivan Drug 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.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Crixivan Drug 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.
Low market penetration in new markets
– Outside its home market of Crixivan Drug, firm in the HBR case study Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Crixivan Drug 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.
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.
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 -
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Crixivan Drug 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, Merck's U.S. Managed Distribution Program for the HIV Drug Crixivan, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
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. Crixivan Drug can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Learning at scale
– Online learning technologies has now opened space for Crixivan Drug 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. Crixivan Drug can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Crixivan Drug 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.
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.
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.
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 -
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.
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 Crixivan Drug.
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.
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.
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.
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.
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.
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.
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. Crixivan Drug can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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 wage structure of Crixivan Drug
– 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 Crixivan Drug.
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 Crixivan Drug business can come under increasing regulations regarding data privacy, data security, 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.