Tax for the CFO: Should Pfizer Acquire Allergan? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
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 government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China,
central banks are concerned over increasing inflation, increasing energy prices, 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 -
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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Tax Allergan digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tax Allergan 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.
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.
High brand equity
– Tax Allergan has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tax Allergan to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Tax Allergan 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.
Effective Research and Development (R&D)
– Tax Allergan 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 Tax for the CFO: Should Pfizer Acquire Allergan? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Finance & Accounting field
– Tax Allergan 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 Tax Allergan in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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 -
Low market penetration in new markets
– Outside its home market of Tax Allergan, firm in the HBR case study Tax for the CFO: Should Pfizer Acquire Allergan? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Tax Allergan 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.
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.
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 operating costs
– Compare to the competitors, firm in the HBR case study Tax for the CFO: Should Pfizer Acquire Allergan? 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 Tax Allergan 's lucrative customers.
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.
High cash cycle compare to competitors
Tax Allergan 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.
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.
Slow to strategic competitive environment developments
– As Tax for the CFO: Should Pfizer Acquire Allergan? HBR case study mentions - Tax Allergan 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Tax for the CFO: Should Pfizer Acquire Allergan?, it seems that the employees of Tax Allergan 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.
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 -
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tax Allergan 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, Tax for the CFO: Should Pfizer Acquire Allergan?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
Better consumer reach
– The expansion of the 5G network will help Tax Allergan to increase its market reach. Tax Allergan 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.
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.
Developing new processes and practices
– Tax Allergan can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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.
Loyalty marketing
– Tax Allergan 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 Tax Allergan 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.
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.
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.
Building a culture of innovation
– managers at Tax Allergan 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.
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.
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 -
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 .
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tax Allergan 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. Tax Allergan needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
Increasing wage structure of Tax Allergan
– 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 Tax Allergan.
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 Tax Allergan in the Finance & Accounting sector and impact the bottomline of the organization.
Consumer confidence and its impact on Tax Allergan 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.
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.
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.
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.
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.
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 Tax Allergan business can come under increasing regulations regarding data privacy, data security, etc.
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.