Case Study Description of Precia Pharma: Promoting Ethical Sales Practices
Precia Pharma Private Limited was considered one of the fastest growing companies in the highly competitive Indian pharmaceutical industry. An email from the company's star performing executive in March 2017, highlighting sales pressures and unethical practices in the industry, forced the managing director to face the reality of how the ills plaguing the pharmaceutical sector might affect his company. He wondered what he must do to maintain the company's ethical code of conduct while striving for a healthy balance between ambitious targets and good selling practices. The case explores the strategies of the company for managing the different ethical issues in a pharmaceutical setting. Sandeep Puri is affiliated with Institute of Management Technology, Ghaziabad. Ajay Kohli is affiliated with Georgia Institute of Technology.
Swot Analysis of "Precia Pharma: Promoting Ethical Sales Practices" written by Sandeep Puri, Ajay K. Kohli includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Precia Ethical facing as an external strategic factors. Some of the topics covered in Precia Pharma: Promoting Ethical Sales Practices case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Precia Pharma: Promoting Ethical Sales Practices casestudy better are - – 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%, central banks are concerned over increasing inflation, there is backlash against globalization, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, there is increasing trade war between United States & China,
competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Precia Pharma: Promoting Ethical Sales Practices
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Precia Pharma: Promoting Ethical Sales Practices case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Precia Ethical, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Precia Ethical 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 Precia Pharma: Promoting Ethical Sales Practices can be done for the following purposes –
1. Strategic planning using facts provided in Precia Pharma: Promoting Ethical Sales Practices case study
2. Improving business portfolio management of Precia Ethical
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Precia Ethical
Strengths Precia Pharma: Promoting Ethical Sales Practices | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Precia Ethical in Precia Pharma: Promoting Ethical Sales Practices Harvard Business Review case study are -
Effective Research and Development (R&D)
– Precia Ethical 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 Precia Pharma: Promoting Ethical Sales Practices - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Precia Ethical is one of the most innovative firm in sector. Manager in Precia Pharma: Promoting Ethical Sales Practices Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Precia Ethical has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Precia Pharma: Promoting Ethical Sales Practices 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.
Sustainable margins compare to other players in Sales & Marketing industry
– Precia Pharma: Promoting Ethical Sales Practices firm has clearly differentiated products in the market place. This has enabled Precia Ethical to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Precia Ethical to invest into research and development (R&D) and innovation.
High brand equity
– Precia Ethical has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Precia Ethical to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Precia Ethical 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.
Low bargaining power of suppliers
– Suppliers of Precia Ethical in the sector have low bargaining power. Precia Pharma: Promoting Ethical Sales Practices has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Precia Ethical to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Precia Ethical is one of the leading recruiters in the industry. Managers in the Precia Pharma: Promoting Ethical Sales Practices are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Precia Pharma: Promoting Ethical Sales Practices 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.
Cross disciplinary teams
– Horizontal connected teams at the Precia Ethical 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.
Ability to lead change in Sales & Marketing field
– Precia Ethical 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 Precia Ethical in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Precia Ethical 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 Sandeep Puri, Ajay K. Kohli 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.
Weaknesses Precia Pharma: Promoting Ethical Sales Practices | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Precia Pharma: Promoting Ethical Sales Practices are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Precia Pharma: Promoting Ethical Sales Practices, in the dynamic environment Precia Ethical has struggled to respond to the nimble upstart competition. Precia Ethical has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Precia Pharma: Promoting Ethical Sales Practices HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Precia Ethical has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Precia Ethical 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 decision making process
– As mentioned earlier in the report, Precia Ethical 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. Precia Ethical 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Precia Pharma: Promoting Ethical Sales Practices, is just above the industry average. Precia Ethical 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.
Slow to strategic competitive environment developments
– As Precia Pharma: Promoting Ethical Sales Practices HBR case study mentions - Precia Ethical 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.
Low market penetration in new markets
– Outside its home market of Precia Ethical, firm in the HBR case study Precia Pharma: Promoting Ethical Sales Practices needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Precia Ethical 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.
Interest costs
– Compare to the competition, Precia Ethical 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Precia Ethical 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.
Aligning sales with marketing
– It come across in the case study Precia Pharma: Promoting Ethical Sales Practices 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 Precia Pharma: Promoting Ethical Sales Practices can leverage the sales team experience to cultivate customer relationships as Precia Ethical is planning to shift buying processes online.
Opportunities Precia Pharma: Promoting Ethical Sales Practices | 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 Precia Pharma: Promoting Ethical Sales Practices are -
Buying journey improvements
– Precia Ethical can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Precia Pharma: Promoting Ethical Sales Practices 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, Precia Ethical is facing challenges because of the dominance of functional experts in the organization. Precia Pharma: Promoting Ethical Sales Practices 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.
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 Precia Ethical 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.
Learning at scale
– Online learning technologies has now opened space for Precia Ethical 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.
Leveraging digital technologies
– Precia Ethical 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.
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. Precia Ethical can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Precia Ethical in the consumer business. Now Precia Ethical can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Precia Ethical can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Precia Ethical 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 Precia Ethical to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Precia Ethical can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Precia Ethical 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, Precia Pharma: Promoting Ethical Sales Practices, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Precia Ethical in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Precia Ethical to increase its market reach. Precia Ethical 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.
Threats Precia Pharma: Promoting Ethical Sales Practices External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Precia Pharma: Promoting Ethical Sales Practices are -
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.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Precia Ethical can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Precia Ethical 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.
Technology acceleration in Forth Industrial Revolution
– Precia Ethical has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Precia Ethical needs to keep up with the evolution of technology in the Sales & Marketing 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.
High dependence on third party suppliers
– Precia Ethical 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.
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 Precia Ethical in the Sales & Marketing sector and impact the bottomline of the organization.
Environmental challenges
– Precia Ethical 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. Precia Ethical can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Precia Ethical with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Precia Ethical 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.
Regulatory challenges
– Precia Ethical 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 Sales & Marketing industry regulations.
Increasing wage structure of Precia Ethical
– 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 Precia Ethical.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Precia Ethical can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Precia Pharma: Promoting Ethical Sales Practices .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Precia Ethical in the Sales & Marketing industry. The Sales & Marketing 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.
Weighted SWOT Analysis of Precia Pharma: Promoting Ethical Sales Practices 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 Precia Pharma: Promoting Ethical Sales Practices 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 Precia Pharma: Promoting Ethical Sales Practices 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 Precia Pharma: Promoting Ethical Sales Practices 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 Precia Pharma: Promoting Ethical Sales Practices 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 Precia Ethical needs to make to build a sustainable competitive advantage.