Swot Analysis of "Vertex Pharmaceuticals: R&D Portfolio Management (B)" written by Francesca Gino, Gary P. Pisano includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vertex Pharmaceuticals facing as an external strategic factors. Some of the topics covered in Vertex Pharmaceuticals: R&D Portfolio Management (B) case study are - Strategic Management Strategies, Financial management, Financial markets, Knowledge management, Mergers & acquisitions, Organizational structure, Project management, Research & development, Strategic planning and Technology & Operations.
Some of the macro environment factors that can be used to understand the Vertex Pharmaceuticals: R&D Portfolio Management (B) casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, technology disruption,
supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Vertex Pharmaceuticals: R&D Portfolio Management (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Vertex Pharmaceuticals: R&D Portfolio Management (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vertex Pharmaceuticals, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vertex Pharmaceuticals 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 Vertex Pharmaceuticals: R&D Portfolio Management (B) can be done for the following purposes –
1. Strategic planning using facts provided in Vertex Pharmaceuticals: R&D Portfolio Management (B) case study
2. Improving business portfolio management of Vertex Pharmaceuticals
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 Vertex Pharmaceuticals
Strengths Vertex Pharmaceuticals: R&D Portfolio Management (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vertex Pharmaceuticals in Vertex Pharmaceuticals: R&D Portfolio Management (B) Harvard Business Review case study are -
High brand equity
– Vertex Pharmaceuticals has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Vertex Pharmaceuticals to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Technology & Operations industry
– Vertex Pharmaceuticals: R&D Portfolio Management (B) firm has clearly differentiated products in the market place. This has enabled Vertex Pharmaceuticals to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Vertex Pharmaceuticals to invest into research and development (R&D) and innovation.
Organizational Resilience of Vertex Pharmaceuticals
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Vertex Pharmaceuticals does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Vertex Pharmaceuticals 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.
Successful track record of launching new products
– Vertex Pharmaceuticals has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Vertex Pharmaceuticals 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.
Effective Research and Development (R&D)
– Vertex Pharmaceuticals 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 Vertex Pharmaceuticals: R&D Portfolio Management (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Vertex Pharmaceuticals digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Vertex Pharmaceuticals 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.
Diverse revenue streams
– Vertex Pharmaceuticals is present in almost all the verticals within the industry. This has provided firm in Vertex Pharmaceuticals: R&D Portfolio Management (B) 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.
Strong track record of project management
– Vertex Pharmaceuticals is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Vertex Pharmaceuticals in the sector have low bargaining power. Vertex Pharmaceuticals: R&D Portfolio Management (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Vertex Pharmaceuticals to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Vertex Pharmaceuticals 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 Francesca Gino, Gary P. Pisano 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.
Highly skilled collaborators
– Vertex Pharmaceuticals 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 Vertex Pharmaceuticals: R&D Portfolio Management (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Vertex Pharmaceuticals: R&D Portfolio Management (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Vertex Pharmaceuticals: R&D Portfolio Management (B) are -
Workers concerns about automation
– As automation is fast increasing in the segment, Vertex Pharmaceuticals 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Vertex Pharmaceuticals: R&D Portfolio Management (B), in the dynamic environment Vertex Pharmaceuticals has struggled to respond to the nimble upstart competition. Vertex Pharmaceuticals has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Vertex Pharmaceuticals: R&D Portfolio Management (B) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Vertex Pharmaceuticals: R&D Portfolio Management (B) can leverage the sales team experience to cultivate customer relationships as Vertex Pharmaceuticals is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Vertex Pharmaceuticals, firm in the HBR case study Vertex Pharmaceuticals: R&D Portfolio Management (B) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Vertex Pharmaceuticals is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Vertex Pharmaceuticals: R&D Portfolio Management (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Vertex Pharmaceuticals: R&D Portfolio Management (B) 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 Vertex Pharmaceuticals 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Vertex Pharmaceuticals 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.
Interest costs
– Compare to the competition, Vertex Pharmaceuticals has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Products dominated business model
– Even though Vertex Pharmaceuticals 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 - Vertex Pharmaceuticals: R&D Portfolio Management (B) should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Vertex Pharmaceuticals products
– To increase the profitability and margins on the products, Vertex Pharmaceuticals needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Vertex Pharmaceuticals is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Vertex Pharmaceuticals needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Vertex Pharmaceuticals to focus more on services rather than just following the product oriented approach.
Opportunities Vertex Pharmaceuticals: R&D Portfolio Management (B) | 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 Vertex Pharmaceuticals: R&D Portfolio Management (B) are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Vertex Pharmaceuticals 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.
Using analytics as competitive advantage
– Vertex Pharmaceuticals 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 Vertex Pharmaceuticals: R&D Portfolio Management (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Vertex Pharmaceuticals to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Vertex Pharmaceuticals 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.
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 Vertex Pharmaceuticals in the consumer business. Now Vertex Pharmaceuticals can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Vertex Pharmaceuticals 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 Vertex Pharmaceuticals to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Vertex Pharmaceuticals 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.
Buying journey improvements
– Vertex Pharmaceuticals can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Vertex Pharmaceuticals: R&D Portfolio Management (B) 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.
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. Vertex Pharmaceuticals 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. Vertex Pharmaceuticals 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.
Leveraging digital technologies
– Vertex Pharmaceuticals 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.
Developing new processes and practices
– Vertex Pharmaceuticals 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Vertex Pharmaceuticals can use these opportunities to build new business models that can help the communities that Vertex Pharmaceuticals operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Vertex Pharmaceuticals can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Vertex Pharmaceuticals is facing challenges because of the dominance of functional experts in the organization. Vertex Pharmaceuticals: R&D Portfolio Management (B) 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.
Threats Vertex Pharmaceuticals: R&D Portfolio Management (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Vertex Pharmaceuticals: R&D Portfolio Management (B) are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Vertex Pharmaceuticals 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.
Stagnating economy with rate increase
– Vertex Pharmaceuticals 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.
High dependence on third party suppliers
– Vertex Pharmaceuticals 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.
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 Vertex Pharmaceuticals.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Vertex Pharmaceuticals 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Vertex Pharmaceuticals: R&D Portfolio Management (B), Vertex Pharmaceuticals 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 .
Consumer confidence and its impact on Vertex Pharmaceuticals 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.
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. Vertex Pharmaceuticals can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Vertex Pharmaceuticals 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. Vertex Pharmaceuticals 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 Vertex Pharmaceuticals with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Vertex Pharmaceuticals
– 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 Vertex Pharmaceuticals.
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. Vertex Pharmaceuticals 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.
Weighted SWOT Analysis of Vertex Pharmaceuticals: R&D Portfolio Management (B) 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 Vertex Pharmaceuticals: R&D Portfolio Management (B) 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 Vertex Pharmaceuticals: R&D Portfolio Management (B) 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 Vertex Pharmaceuticals: R&D Portfolio Management (B) 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 Vertex Pharmaceuticals: R&D Portfolio Management (B) 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 Vertex Pharmaceuticals needs to make to build a sustainable competitive advantage.