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 SWOT Analysis Solution
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 - – increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, increasing commodity prices, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs,
digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, 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 -
Effective Research and Development (R&D)
– Valeant Valeant's 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 Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Valeant Valeant's in the sector have low bargaining power. Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Valeant Valeant's to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
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.
Operational resilience
– The operational resilience strategy in the Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 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.
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.
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.
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 -
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.
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 decision making process
– As mentioned earlier in the report, Valeant Valeant's 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. Valeant Valeant's 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Yee-Ching Lilian Chan suggests that, Valeant Valeant's 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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 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 Valeant Valeant's has relatively successful track record of launching new products.
Need for greater diversity
– Valeant Valeant's has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High cash cycle compare to competitors
Valeant Valeant's has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016, it seems that the employees of Valeant Valeant's don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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.
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 Valeant Valeant's supply chain. Even after few cautionary changes mentioned in the HBR case study - Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Valeant Valeant's vulnerable to further global disruptions in South East Asia.
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 -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Valeant Valeant's 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, Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Valeant Valeant's 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.
Learning at scale
– Online learning technologies has now opened space for Valeant Valeant's 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.
Creating value in data economy
– The success of analytics program of Valeant Valeant's has opened avenues for new revenue streams for the organization in the industry. This can help Valeant Valeant's to build a more holistic ecosystem as suggested in the Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016 case study. Valeant Valeant's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
Leveraging digital technologies
– Valeant Valeant's 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.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Valeant Valeant's 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. Valeant Valeant's 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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Valeant Valeant's 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 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 -
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.
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.
Increasing wage structure of Valeant Valeant's
– 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 Valeant Valeant's.
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.
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.
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.
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 Valeant Valeant's.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Valeant Valeant's business can come under increasing regulations regarding data privacy, data security, etc.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Valeant Pharmaceuticals International, Inc.: Case (B) Corporate Crisis in 2015 and 2016, Valeant Valeant's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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.
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. Valeant Valeant's 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 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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