Case Study Description of Strides Arcolab Limited's Dividend Pay-Out Decision
Arun Kumar, founder and group chief executive officer of Strides Arcolab Limited - a first generation, Indian pharmaceutical company headquartered in Bengaluru - is preparing for a crucial meeting of the Board of Directors. The meeting was called to discuss the proposed dividend payout to the company's shareholders following the completion of a US$1.725 billion sale of its specialty division - Agila Specialties - to the U.S.-based pharmaceutical company Mylan Inc. Kumar proposed that Strides distribute all the free cash available from the sale - after the retirement of debt and internal payouts - in the form of dividends to its shareholders. Strides had already communicated its decision to retire debts and reduce its leverage. Tulsi Jayakumar is affiliated with SP Jain Institute of Management & Research .
Swot Analysis of "Strides Arcolab Limited's Dividend Pay-Out Decision" written by Tulsi Jayakumar, Indu Niranjan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Strides Arcolab facing as an external strategic factors. Some of the topics covered in Strides Arcolab Limited's Dividend Pay-Out Decision case study are - Strategic Management Strategies, Marketing and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Strides Arcolab Limited's Dividend Pay-Out Decision casestudy better are - – supply chains are disrupted by pandemic , geopolitical disruptions, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy,
technology disruption, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Strides Arcolab Limited's Dividend Pay-Out Decision
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Strides Arcolab Limited's Dividend Pay-Out Decision case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Strides Arcolab, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Strides Arcolab 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 Strides Arcolab Limited's Dividend Pay-Out Decision can be done for the following purposes –
1. Strategic planning using facts provided in Strides Arcolab Limited's Dividend Pay-Out Decision case study
2. Improving business portfolio management of Strides Arcolab
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Strides Arcolab
Strengths Strides Arcolab Limited's Dividend Pay-Out Decision | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Strides Arcolab in Strides Arcolab Limited's Dividend Pay-Out Decision Harvard Business Review case study are -
Successful track record of launching new products
– Strides Arcolab has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Strides Arcolab 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.
Operational resilience
– The operational resilience strategy in the Strides Arcolab Limited's Dividend Pay-Out Decision 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.
Highly skilled collaborators
– Strides Arcolab 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 Strides Arcolab Limited's Dividend Pay-Out Decision 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 Strides Arcolab in the sector have low bargaining power. Strides Arcolab Limited's Dividend Pay-Out Decision has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Strides Arcolab to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Finance & Accounting field
– Strides Arcolab 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 Strides Arcolab in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Strides Arcolab 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 Tulsi Jayakumar, Indu Niranjan 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Strides Arcolab digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Strides Arcolab 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.
Learning organization
- Strides Arcolab 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 Strides Arcolab is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Strides Arcolab Limited's Dividend Pay-Out Decision Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Finance & Accounting industry
– Strides Arcolab Limited's Dividend Pay-Out Decision firm has clearly differentiated products in the market place. This has enabled Strides Arcolab to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Strides Arcolab to invest into research and development (R&D) and innovation.
High brand equity
– Strides Arcolab has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Strides Arcolab to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Strides Arcolab is one of the leading recruiters in the industry. Managers in the Strides Arcolab Limited's Dividend Pay-Out Decision are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Strides Arcolab 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 Strides Arcolab Limited's Dividend Pay-Out Decision - 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 Strides Arcolab Limited's Dividend Pay-Out Decision | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Strides Arcolab Limited's Dividend Pay-Out Decision are -
Slow to strategic competitive environment developments
– As Strides Arcolab Limited's Dividend Pay-Out Decision HBR case study mentions - Strides Arcolab takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on 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 Strides Arcolab supply chain. Even after few cautionary changes mentioned in the HBR case study - Strides Arcolab Limited's Dividend Pay-Out Decision, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Strides Arcolab vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Tulsi Jayakumar, Indu Niranjan suggests that, Strides Arcolab 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, Strides Arcolab 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 Strides Arcolab, firm in the HBR case study Strides Arcolab Limited's Dividend Pay-Out Decision needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Strides Arcolab 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.
No frontier risks strategy
– After analyzing the HBR case study Strides Arcolab Limited's Dividend Pay-Out Decision, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Interest costs
– Compare to the competition, Strides Arcolab 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.
Aligning sales with marketing
– It come across in the case study Strides Arcolab Limited's Dividend Pay-Out Decision 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 Strides Arcolab Limited's Dividend Pay-Out Decision can leverage the sales team experience to cultivate customer relationships as Strides Arcolab is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Strides Arcolab is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Strides Arcolab needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Strides Arcolab to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Strides Arcolab Limited's Dividend Pay-Out Decision 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 Strides Arcolab 's lucrative customers.
Opportunities Strides Arcolab Limited's Dividend Pay-Out Decision | 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 Strides Arcolab Limited's Dividend Pay-Out Decision are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Strides Arcolab 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 Strides Arcolab to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Strides Arcolab can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Strides Arcolab Limited's Dividend Pay-Out Decision 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Strides Arcolab is facing challenges because of the dominance of functional experts in the organization. Strides Arcolab Limited's Dividend Pay-Out Decision 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.
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. Strides Arcolab can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Strides Arcolab 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, Strides Arcolab Limited's Dividend Pay-Out Decision, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Strides Arcolab has opened avenues for new revenue streams for the organization in the industry. This can help Strides Arcolab to build a more holistic ecosystem as suggested in the Strides Arcolab Limited's Dividend Pay-Out Decision case study. Strides Arcolab can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Strides Arcolab 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 Finance & Accounting segment.
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 Strides Arcolab 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Strides Arcolab can use these opportunities to build new business models that can help the communities that Strides Arcolab operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Developing new processes and practices
– Strides Arcolab can develop new processes and procedures in Finance & Accounting 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.
Better consumer reach
– The expansion of the 5G network will help Strides Arcolab to increase its market reach. Strides Arcolab 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.
Loyalty marketing
– Strides Arcolab 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Strides Arcolab in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Threats Strides Arcolab Limited's Dividend Pay-Out Decision External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Strides Arcolab Limited's Dividend Pay-Out Decision are -
Regulatory challenges
– Strides Arcolab 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 Finance & Accounting industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Strides Arcolab in the Finance & Accounting industry. The Finance & Accounting 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 dependence on third party suppliers
– Strides Arcolab 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.
Stagnating economy with rate increase
– Strides Arcolab 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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Strides Arcolab can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Strides Arcolab has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Strides Arcolab needs to keep up with the evolution of technology in the Finance & Accounting 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Strides Arcolab 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 Strides Arcolab is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Strides Arcolab 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. Strides Arcolab can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Increasing wage structure of Strides Arcolab
– 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 Strides Arcolab.
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. Strides Arcolab needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Strides Arcolab in the Finance & Accounting sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Strides Arcolab Limited's Dividend Pay-Out Decision 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 Strides Arcolab Limited's Dividend Pay-Out Decision 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 Strides Arcolab Limited's Dividend Pay-Out Decision 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 Strides Arcolab Limited's Dividend Pay-Out Decision 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 Strides Arcolab Limited's Dividend Pay-Out Decision 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 Strides Arcolab needs to make to build a sustainable competitive advantage.
