Manufacturing at ALZA: The Right Prescription? (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Manufacturing at ALZA: The Right Prescription? (A)
ALZA, a company specializing in drug delivery systems such as transdermal patches, considers manufacturing its own products. Until now, the company has conducted research and development on its patented system but has then licensed the technology to client-partner companies, such as Ciba-Geigy, that produce the patches and slow-release pills. These client-partner companies always selected the drugs to be incorporated into the systems on the basis of their experience in pharmaceutical markets. Moreover, these partners had done all the manufacturing. Students are asked to consider the implications of ALZA taking responsibility for not only selecting drugs and markets on its own but also managing a high-volume manufacturing facility. The case focuses on a potentially risky venture requiring a whole set of new capabilities.
Swot Analysis of "Manufacturing at ALZA: The Right Prescription? (A)" written by Dorothy Leonard-Barton, Allegra Young includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Alza Patches facing as an external strategic factors. Some of the topics covered in Manufacturing at ALZA: The Right Prescription? (A) case study are - Strategic Management Strategies, Manufacturing, Product development, Strategic planning, Strategy execution, Technology and Technology & Operations.
Some of the macro environment factors that can be used to understand the Manufacturing at ALZA: The Right Prescription? (A) casestudy better are - – increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy,
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%, etc
Introduction to SWOT Analysis of Manufacturing at ALZA: The Right Prescription? (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Manufacturing at ALZA: The Right Prescription? (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Alza Patches, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Alza Patches 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 Manufacturing at ALZA: The Right Prescription? (A) can be done for the following purposes –
1. Strategic planning using facts provided in Manufacturing at ALZA: The Right Prescription? (A) case study
2. Improving business portfolio management of Alza Patches
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 Alza Patches
Strengths Manufacturing at ALZA: The Right Prescription? (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Alza Patches in Manufacturing at ALZA: The Right Prescription? (A) Harvard Business Review case study are -
Highly skilled collaborators
– Alza Patches 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 Manufacturing at ALZA: The Right Prescription? (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Alza Patches has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Alza Patches to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Alza Patches is one of the most innovative firm in sector. Manager in Manufacturing at ALZA: The Right Prescription? (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Alza Patches 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 Alza Patches is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Manufacturing at ALZA: The Right Prescription? (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Alza Patches is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Alza Patches digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Alza Patches 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 lead change in Technology & Operations field
– Alza Patches 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 Alza Patches 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 Alza Patches 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.
Training and development
– Alza Patches has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Manufacturing at ALZA: The Right Prescription? (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.
Organizational Resilience of Alza Patches
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Alza Patches does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Alza Patches is present in almost all the verticals within the industry. This has provided firm in Manufacturing at ALZA: The Right Prescription? (A) 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.
Effective Research and Development (R&D)
– Alza Patches 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 Manufacturing at ALZA: The Right Prescription? (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.
Weaknesses Manufacturing at ALZA: The Right Prescription? (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Manufacturing at ALZA: The Right Prescription? (A) are -
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 Alza Patches supply chain. Even after few cautionary changes mentioned in the HBR case study - Manufacturing at ALZA: The Right Prescription? (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Alza Patches vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Manufacturing at ALZA: The Right Prescription? (A), in the dynamic environment Alza Patches has struggled to respond to the nimble upstart competition. Alza Patches has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Dorothy Leonard-Barton, Allegra Young suggests that, Alza Patches 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Manufacturing at ALZA: The Right Prescription? (A), is just above the industry average. Alza Patches 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 operating costs
– Compare to the competitors, firm in the HBR case study Manufacturing at ALZA: The Right Prescription? (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 Alza Patches 's lucrative customers.
Interest costs
– Compare to the competition, Alza Patches 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.
High cash cycle compare to competitors
Alza Patches 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.
Slow decision making process
– As mentioned earlier in the report, Alza Patches 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. Alza Patches 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.
Capital Spending Reduction
– Even during the low interest decade, Alza Patches 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Alza Patches is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Manufacturing at ALZA: The Right Prescription? (A) 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 Alza Patches is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Alza Patches needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Alza Patches to focus more on services rather than just following the product oriented approach.
Opportunities Manufacturing at ALZA: The Right Prescription? (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 Manufacturing at ALZA: The Right Prescription? (A) are -
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 Alza Patches in the consumer business. Now Alza Patches can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Alza Patches 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.
Leveraging digital technologies
– Alza Patches 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.
Manufacturing automation
– Alza Patches 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.
Better consumer reach
– The expansion of the 5G network will help Alza Patches to increase its market reach. Alza Patches 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Alza Patches 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, Manufacturing at ALZA: The Right Prescription? (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Alza Patches 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Alza Patches can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Alza Patches 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, Alza Patches 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 Alza Patches 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.
Loyalty marketing
– Alza Patches 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.
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. Alza Patches can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Manufacturing at ALZA: The Right Prescription? (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Manufacturing at ALZA: The Right Prescription? (A) are -
Increasing wage structure of Alza Patches
– 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 Alza Patches.
High dependence on third party suppliers
– Alza Patches 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Alza Patches with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Alza Patches business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Alza Patches 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.
Shortening product life cycle
– it is one of the major threat that Alza Patches is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Alza Patches.
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 Alza Patches in the Technology & Operations sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Alza Patches has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Alza Patches 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.
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.
Stagnating economy with rate increase
– Alza Patches 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Alza Patches 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. Alza Patches needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Manufacturing at ALZA: The Right Prescription? (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 Manufacturing at ALZA: The Right Prescription? (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 Manufacturing at ALZA: The Right Prescription? (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 Manufacturing at ALZA: The Right Prescription? (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 Manufacturing at ALZA: The Right Prescription? (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 Alza Patches needs to make to build a sustainable competitive advantage.
