Tax for the CFO: Should Pfizer Acquire Allergan? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Tax for the CFO: Should Pfizer Acquire Allergan?
On November 20, 2015, the chief financial officer of Pfizer Inc. (Pfizer) was preparing to make a recommendation about whether to proceed with or stop merger talks between Pfizer and Allergan plc (Allergan), a pharmaceutical company with headquarters in New Jersey but tax residence in Ireland. Informal talks had been going on for almost a month, but both sides were rapidly approaching the pre-arranged deadline. The two teams had less than a week to either formally agree to proceed with a merger or walk away. Formalizing the agreement meant activating a US$400 million breakup clause that would make it costlier to call the deal off at a later date. Allergan's Irish tax residency made this merger both attractive and concerning. While it provided the opportunity to lower Pfizer's worldwide tax rate, the U.S. Treasury Department had recently announced regulatory changes targeting mergers that relocated a company's tax residence to a low-tax country (called "tax inversions"). Pfizer's legal team members were confident that the announced changes would not affect the proposed merger with Allergan. However, they were less certain about if-and when-the U.S. Treasury Department might make changes again.
Authors :: Matthew Sooy, Mitchell Stein, Michael Saunders
Swot Analysis of "Tax for the CFO: Should Pfizer Acquire Allergan?" written by Matthew Sooy, Mitchell Stein, Michael Saunders includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tax Allergan facing as an external strategic factors. Some of the topics covered in Tax for the CFO: Should Pfizer Acquire Allergan? case study are - Strategic Management Strategies, Financial analysis, Mergers & acquisitions, Pricing and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Tax for the CFO: Should Pfizer Acquire Allergan? casestudy better are - – increasing energy prices, talent flight as more people leaving formal jobs, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China,
geopolitical disruptions, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Tax for the CFO: Should Pfizer Acquire Allergan?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tax for the CFO: Should Pfizer Acquire Allergan? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tax Allergan, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tax Allergan 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 Tax for the CFO: Should Pfizer Acquire Allergan? can be done for the following purposes –
1. Strategic planning using facts provided in Tax for the CFO: Should Pfizer Acquire Allergan? case study
2. Improving business portfolio management of Tax Allergan
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 Tax Allergan
Strengths Tax for the CFO: Should Pfizer Acquire Allergan? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tax Allergan in Tax for the CFO: Should Pfizer Acquire Allergan? Harvard Business Review case study are -
Highly skilled collaborators
– Tax Allergan 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 Tax for the CFO: Should Pfizer Acquire Allergan? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Tax Allergan is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Tax Allergan 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.
Learning organization
- Tax Allergan 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 Tax Allergan is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Tax for the CFO: Should Pfizer Acquire Allergan? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Finance & Accounting industry
– Tax for the CFO: Should Pfizer Acquire Allergan? firm has clearly differentiated products in the market place. This has enabled Tax Allergan to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Tax Allergan to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Tax Allergan has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tax Allergan 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 Tax for the CFO: Should Pfizer Acquire Allergan? 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.
Training and development
– Tax Allergan has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Tax for the CFO: Should Pfizer Acquire Allergan? 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.
Low bargaining power of suppliers
– Suppliers of Tax Allergan in the sector have low bargaining power. Tax for the CFO: Should Pfizer Acquire Allergan? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tax Allergan to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Tax Allergan 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 Matthew Sooy, Mitchell Stein, Michael Saunders 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.
Diverse revenue streams
– Tax Allergan is present in almost all the verticals within the industry. This has provided firm in Tax for the CFO: Should Pfizer Acquire Allergan? case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Innovation driven organization
– Tax Allergan is one of the most innovative firm in sector. Manager in Tax for the CFO: Should Pfizer Acquire Allergan? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Tax for the CFO: Should Pfizer Acquire Allergan? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tax for the CFO: Should Pfizer Acquire Allergan? are -
Slow decision making process
– As mentioned earlier in the report, Tax Allergan 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. Tax Allergan 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.
Interest costs
– Compare to the competition, Tax Allergan 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.
Increasing silos among functional specialists
– The organizational structure of Tax Allergan is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Tax Allergan needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tax Allergan to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Tax Allergan 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Tax for the CFO: Should Pfizer Acquire Allergan? 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 Tax Allergan has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Tax for the CFO: Should Pfizer Acquire Allergan?, in the dynamic environment Tax Allergan has struggled to respond to the nimble upstart competition. Tax Allergan has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tax Allergan is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Tax for the CFO: Should Pfizer Acquire Allergan? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Matthew Sooy, Mitchell Stein, Michael Saunders suggests that, Tax Allergan 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.
No frontier risks strategy
– After analyzing the HBR case study Tax for the CFO: Should Pfizer Acquire Allergan?, 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.
Capital Spending Reduction
– Even during the low interest decade, Tax Allergan 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.
Products dominated business model
– Even though Tax Allergan 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 - Tax for the CFO: Should Pfizer Acquire Allergan? should strive to include more intangible value offerings along with its core products and services.
Opportunities Tax for the CFO: Should Pfizer Acquire Allergan? | 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 Tax for the CFO: Should Pfizer Acquire Allergan? 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, Tax Allergan can use these opportunities to build new business models that can help the communities that Tax Allergan operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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 Tax Allergan 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tax Allergan can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tax Allergan can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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. Tax Allergan 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. Tax Allergan 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.
Buying journey improvements
– Tax Allergan can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Tax for the CFO: Should Pfizer Acquire Allergan? 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.
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. Tax Allergan 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 Tax Allergan in the consumer business. Now Tax Allergan can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Tax Allergan has opened avenues for new revenue streams for the organization in the industry. This can help Tax Allergan to build a more holistic ecosystem as suggested in the Tax for the CFO: Should Pfizer Acquire Allergan? case study. Tax Allergan can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tax Allergan 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.
Leveraging digital technologies
– Tax Allergan 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tax Allergan is facing challenges because of the dominance of functional experts in the organization. Tax for the CFO: Should Pfizer Acquire Allergan? 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.
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. Tax Allergan can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Tax for the CFO: Should Pfizer Acquire Allergan? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tax for the CFO: Should Pfizer Acquire Allergan? are -
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. Tax Allergan 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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tax Allergan with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Tax for the CFO: Should Pfizer Acquire Allergan?, Tax Allergan 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 .
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
– Tax Allergan has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Tax Allergan 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.
High dependence on third party suppliers
– Tax Allergan 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
– Tax Allergan 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tax Allergan 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 Tax for the CFO: Should Pfizer Acquire Allergan? .
Environmental challenges
– Tax Allergan 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. Tax Allergan can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Tax Allergan.
Shortening product life cycle
– it is one of the major threat that Tax Allergan is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Tax Allergan 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.
Weighted SWOT Analysis of Tax for the CFO: Should Pfizer Acquire Allergan? 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 Tax for the CFO: Should Pfizer Acquire Allergan? 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 Tax for the CFO: Should Pfizer Acquire Allergan? 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 Tax for the CFO: Should Pfizer Acquire Allergan? 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 Tax for the CFO: Should Pfizer Acquire Allergan? 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 Tax Allergan needs to make to build a sustainable competitive advantage.