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 - – technology disruption, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%,
increasing household debt because of falling income levels, there is backlash against globalization, 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 -
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.
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.
Superior customer experience
– The customer experience strategy of Tax Allergan in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous 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.
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.
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.
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.
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.
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.
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.
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.
Ability to recruit top talent
– Tax Allergan is one of the leading recruiters in the industry. Managers in the Tax for the CFO: Should Pfizer Acquire Allergan? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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 -
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.
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.
Aligning sales with marketing
– It come across in the case study Tax for the CFO: Should Pfizer Acquire Allergan? that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Tax for the CFO: Should Pfizer Acquire Allergan? can leverage the sales team experience to cultivate customer relationships as Tax Allergan is planning to shift buying processes online.
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.
Lack of clear differentiation of Tax Allergan products
– To increase the profitability and margins on the products, Tax Allergan needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Need for greater diversity
– Tax Allergan 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
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Tax for the CFO: Should Pfizer Acquire Allergan?, is just above the industry average. Tax Allergan needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
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.
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 -
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.
Using analytics as competitive advantage
– Tax Allergan 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 Tax for the CFO: Should Pfizer Acquire Allergan? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tax Allergan to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tax Allergan 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 Tax Allergan to hire the very best people irrespective of their geographical location.
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.
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.
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.
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.
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.
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.
Manufacturing automation
– Tax Allergan 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.
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.
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.
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.
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 -
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
