Case Study Description of Genentech--Capacity Planning
While facilitating a complex clinical approval process over the next two to three years for a family of new cancer drugs, Genentech must develop a long-term capacity plan for a major class of new cancer products. Adding to the complexity and uncertainty is the fact that the lead time for planning, building, and certifying a new $600 million plus production-scale facility is five years. In addition, ensuring that the best process technology is incorporated into such a new plant makes the task facing David Ebersman, the senior vice-president of products operations, and his management team a daunting one. Frames the issues Ebersman and his team face and outlines the approach to date. Genentech--Capacity Planning, Spreadsheet Answer Key (606-714) supports the spreadsheet supplement to this case.
Authors :: Daniel C. Snow, Steven C. Wheelwright, Alison Berkley Wagonfeld
Swot Analysis of "Genentech--Capacity Planning" written by Daniel C. Snow, Steven C. Wheelwright, Alison Berkley Wagonfeld includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Genentech Ebersman facing as an external strategic factors. Some of the topics covered in Genentech--Capacity Planning case study are - Strategic Management Strategies, Manufacturing, Product development and Technology & Operations.
Some of the macro environment factors that can be used to understand the Genentech--Capacity Planning casestudy better are - – central banks are concerned over increasing inflation, geopolitical disruptions, wage bills are increasing, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , increasing commodity prices, increasing household debt because of falling income levels,
banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Genentech--Capacity Planning
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Genentech--Capacity Planning case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Genentech Ebersman, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Genentech Ebersman 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 Genentech--Capacity Planning can be done for the following purposes –
1. Strategic planning using facts provided in Genentech--Capacity Planning case study
2. Improving business portfolio management of Genentech Ebersman
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 Genentech Ebersman
Strengths Genentech--Capacity Planning | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Genentech Ebersman in Genentech--Capacity Planning Harvard Business Review case study are -
Effective Research and Development (R&D)
– Genentech Ebersman 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 Genentech--Capacity Planning - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Genentech Ebersman 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 Genentech--Capacity Planning HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Genentech Ebersman in the sector have low bargaining power. Genentech--Capacity Planning has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Genentech Ebersman to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Genentech Ebersman is one of the most innovative firm in sector. Manager in Genentech--Capacity Planning Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Genentech Ebersman 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 Daniel C. Snow, Steven C. Wheelwright, Alison Berkley Wagonfeld 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.
High brand equity
– Genentech Ebersman has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Genentech Ebersman to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Genentech Ebersman has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Genentech--Capacity Planning 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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Genentech Ebersman digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Genentech Ebersman 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.
Organizational Resilience of Genentech Ebersman
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Genentech Ebersman does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Technology & Operations industry
– Genentech--Capacity Planning firm has clearly differentiated products in the market place. This has enabled Genentech Ebersman to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Genentech Ebersman to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Genentech Ebersman has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Genentech Ebersman 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.
Diverse revenue streams
– Genentech Ebersman is present in almost all the verticals within the industry. This has provided firm in Genentech--Capacity Planning 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.
Weaknesses Genentech--Capacity Planning | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Genentech--Capacity Planning are -
Capital Spending Reduction
– Even during the low interest decade, Genentech Ebersman 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Genentech Ebersman needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Skills based hiring
– The stress on hiring functional specialists at Genentech Ebersman 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.
Low market penetration in new markets
– Outside its home market of Genentech Ebersman, firm in the HBR case study Genentech--Capacity Planning needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Daniel C. Snow, Steven C. Wheelwright, Alison Berkley Wagonfeld suggests that, Genentech Ebersman 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.
High cash cycle compare to competitors
Genentech Ebersman 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.
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 Genentech Ebersman supply chain. Even after few cautionary changes mentioned in the HBR case study - Genentech--Capacity Planning, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Genentech Ebersman vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Genentech Ebersman 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. Genentech Ebersman 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Genentech--Capacity Planning, it seems that the employees of Genentech Ebersman 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Genentech Ebersman is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Genentech--Capacity Planning can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Genentech--Capacity Planning, in the dynamic environment Genentech Ebersman has struggled to respond to the nimble upstart competition. Genentech Ebersman has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Genentech--Capacity Planning | 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 Genentech--Capacity Planning are -
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. Genentech Ebersman 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. Genentech Ebersman 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Genentech Ebersman 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.
Using analytics as competitive advantage
– Genentech Ebersman 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 Genentech--Capacity Planning - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Genentech Ebersman to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Genentech Ebersman 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.
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 Genentech Ebersman in the consumer business. Now Genentech Ebersman can target international markets with far fewer capital restrictions requirements than the existing system.
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. Genentech Ebersman can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Genentech Ebersman has opened avenues for new revenue streams for the organization in the industry. This can help Genentech Ebersman to build a more holistic ecosystem as suggested in the Genentech--Capacity Planning case study. Genentech Ebersman can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Genentech Ebersman can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Genentech--Capacity Planning suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Genentech Ebersman 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 Genentech Ebersman to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Genentech Ebersman 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, Genentech--Capacity Planning, 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 Genentech Ebersman 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
– Genentech Ebersman 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.
Developing new processes and practices
– Genentech Ebersman 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 Genentech--Capacity Planning External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Genentech--Capacity Planning are -
Stagnating economy with rate increase
– Genentech Ebersman 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.
Environmental challenges
– Genentech Ebersman 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. Genentech Ebersman can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Genentech Ebersman with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Genentech Ebersman 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 Genentech Ebersman in the Technology & Operations sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Genentech Ebersman in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology acceleration in Forth Industrial Revolution
– Genentech Ebersman has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Genentech Ebersman 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.
Regulatory challenges
– Genentech Ebersman 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.
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 Genentech Ebersman business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Genentech Ebersman 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.
Increasing wage structure of Genentech Ebersman
– 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 Genentech Ebersman.
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. Genentech Ebersman can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Genentech Ebersman 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.
Weighted SWOT Analysis of Genentech--Capacity Planning 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 Genentech--Capacity Planning 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 Genentech--Capacity Planning 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 Genentech--Capacity Planning 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 Genentech--Capacity Planning 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 Genentech Ebersman needs to make to build a sustainable competitive advantage.