Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016
Supplement to case HEC199. From 2008 to 2015, Valeant Pharmaceuticals International Inc. (Valeant) was a Wall Street darling under the leadership of CEO Michael Pearson. The company's stock price soared as Pearson went on an acquisition spree. Critics questioned Valeant's capacity for organic growth and its lack of commitment to research and development (R&D). In October 2015, investors began losing confidence when Valeant was subpoenaed to testify before the U.S. Senate Committee about its price-gouging practice. On-going investigations by the U.S. House Committee and Attorney's Offices regarding Valeant's patient assistance program and business relationships with Philidor Rx Services also contributed to the company's downfall. In May 2016, Valeant hired Joseph Papa to replace Pearson as CEO. One of Papa's top priorities was to pay down the $30 billion debt amassed to finance the company's acquisitions. In Case (A), students learn about the company's executive incentive compensation philosophy, acquisitions, and governance practices and are asked to assess the financial impact of Valeant's acquisitions. In Case (B), students are asked to identify the factors driving Valeant's stock price down and to assess the company's ability to pay down its $30 billion debt.
Swot Analysis of "Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016" written by Yee-Ching Lilian Chan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Valeant Valeant's facing as an external strategic factors. Some of the topics covered in Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 case study are - Strategic Management Strategies, Ethics, Financial management, Health, International business, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 casestudy better are - – technology disruption, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google,
increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Valeant Valeant's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Valeant Valeant's 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 Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 can be done for the following purposes –
1. Strategic planning using facts provided in Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 case study
2. Improving business portfolio management of Valeant Valeant's
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 Valeant Valeant's
Strengths Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Valeant Valeant's in Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Valeant Valeant's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Valeant Valeant's 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Valeant Valeant's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Valeant Valeant's 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
- Valeant Valeant's 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 Valeant Valeant's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Finance & Accounting field
– Valeant Valeant's 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 Valeant Valeant's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Valeant Valeant's is one of the leading recruiters in the industry. Managers in the Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Finance & Accounting industry
– Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 firm has clearly differentiated products in the market place. This has enabled Valeant Valeant's to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Valeant Valeant's to invest into research and development (R&D) and innovation.
High brand equity
– Valeant Valeant's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Valeant Valeant's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Valeant Valeant's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Valeant Valeant's 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.
Strong track record of project management
– Valeant Valeant's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Valeant Valeant's is one of the most innovative firm in sector. Manager in Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Valeant Valeant's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Valeant Valeant's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 are -
Capital Spending Reduction
– Even during the low interest decade, Valeant Valeant's 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, Valeant Valeant's 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.
Slow to strategic competitive environment developments
– As Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 HBR case study mentions - Valeant Valeant's 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016, in the dynamic environment Valeant Valeant's has struggled to respond to the nimble upstart competition. Valeant Valeant's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016, 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.
Products dominated business model
– Even though Valeant Valeant's 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 - Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 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 Valeant Valeant's 's lucrative customers.
Lack of clear differentiation of Valeant Valeant's products
– To increase the profitability and margins on the products, Valeant Valeant's needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Valeant Valeant's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Valeant Valeant's 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.
Low market penetration in new markets
– Outside its home market of Valeant Valeant's, firm in the HBR case study Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 | 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 Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Valeant Valeant's can use these opportunities to build new business models that can help the communities that Valeant Valeant's operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Using analytics as competitive advantage
– Valeant Valeant's 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 Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Valeant Valeant's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Valeant Valeant's can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
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. Valeant Valeant's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Valeant Valeant's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Valeant Valeant's 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.
Buying journey improvements
– Valeant Valeant's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 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.
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 Valeant Valeant's in the consumer business. Now Valeant Valeant's can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Valeant Valeant's 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Valeant Valeant's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Valeant Valeant's to increase its market reach. Valeant Valeant's 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Valeant Valeant's 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 Valeant Valeant's to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Valeant Valeant's is facing challenges because of the dominance of functional experts in the organization. Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 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 Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Valeant Valeant's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Valeant Valeant's 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 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. Valeant Valeant's needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Regulatory challenges
– Valeant Valeant's 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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Valeant Valeant's has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Valeant Valeant's 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.
Shortening product life cycle
– it is one of the major threat that Valeant Valeant's is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Valeant Valeant's 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.
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 Valeant Valeant's in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Valeant Valeant's 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 Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 .
High dependence on third party suppliers
– Valeant Valeant's 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.
Consumer confidence and its impact on Valeant Valeant's 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.
Weighted SWOT Analysis of Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 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 Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 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 Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 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 Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 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 Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 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 Valeant Valeant's needs to make to build a sustainable competitive advantage.
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