AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions
AM-Pharma is a biotech company developing a medicine for patients with acute kidney injury. The case describes the company's journey from inception in 2001 to a large deal with Pfizer in 2015. The aim is to discuss the value creation of AM-Pharma through its strategic decisions over time. It highlights the patient journey, company challenges, market size potential, and how the management team was able to raise multiple financing rounds from venture capitalists. It further provides the readers with a unique insight in the key risks and operational challenges of a biotech company and the value of an experienced management team backed by strong investors. The drug development process is inherently risky, long and expensive and the probability of commercializing a new drug is very low. The company's CEO is the protagonist and the case is split in three parts to provide the readers with surprises and open strategic questions which are time related. The case is semi-chronologically and a patient story is intermingled to provide a different perspective on clinical trials, ethical dilemmas and the high unmet medical need for new therapies. The case ends with a valuation simulation, in which the readers can negotiate the AM-Pharma/Pfizer deal themselves. Learning objective: The aim of the case study is to evaluate the value creation of AM-Pharma strategic decisions over time. 1/ The strategy diamond and Porter's Five Forces will be applied as a tool for understanding the industry and the company's strategy. 2/ The key success factors are also assessed for this challenging setting of a biotech startup. 3/ Role of Serendipity and management vision in opening new doors. 4/ Different exit options are discussed, highlighting pros, cons and what actually happened. 5/ How clinical outcome, and exit timing highly impact the valuation. The case will trigger discussions on the strategic options listed, and engage the students into exit negotiations simulation.
Authors :: Jim Pulcrano, Tim Knotnerus, Marion Owczarczak-Fogli, Mohammed El Ansari
Swot Analysis of "AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions" written by Jim Pulcrano, Tim Knotnerus, Marion Owczarczak-Fogli, Mohammed El Ansari includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pharma Biotech facing as an external strategic factors. Some of the topics covered in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions case study are - Strategic Management Strategies, International business, Mergers & acquisitions, Negotiations, Venture capital and Strategy & Execution.
Some of the macro environment factors that can be used to understand the AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions casestudy better are - – supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, increasing energy prices, talent flight as more people leaving formal jobs, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization,
challanges to central banks by blockchain based private currencies, geopolitical disruptions, etc
Introduction to SWOT Analysis of AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pharma Biotech, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pharma Biotech 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions can be done for the following purposes –
1. Strategic planning using facts provided in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions case study
2. Improving business portfolio management of Pharma Biotech
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pharma Biotech
Strengths AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pharma Biotech in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions Harvard Business Review case study are -
Strong track record of project management
– Pharma Biotech 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 Pharma Biotech 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.
Ability to lead change in Strategy & Execution field
– Pharma Biotech 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 Pharma Biotech 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 Strategy & Execution industry
– AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions firm has clearly differentiated products in the market place. This has enabled Pharma Biotech to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Pharma Biotech to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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.
Innovation driven organization
– Pharma Biotech is one of the most innovative firm in sector. Manager in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Pharma Biotech has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 Pharma Biotech in the sector have low bargaining power. AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pharma Biotech to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Pharma Biotech 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 Pharma Biotech is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Pharma Biotech has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pharma Biotech 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.
Ability to recruit top talent
– Pharma Biotech is one of the leading recruiters in the industry. Managers in the AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Pharma Biotech 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions are -
Low market penetration in new markets
– Outside its home market of Pharma Biotech, firm in the HBR case study AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Pharma Biotech 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.
Interest costs
– Compare to the competition, Pharma Biotech 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions, is just above the industry average. Pharma Biotech 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.
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 Pharma Biotech supply chain. Even after few cautionary changes mentioned in the HBR case study - AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pharma Biotech vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions HBR case study mentions - Pharma Biotech 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.
Aligning sales with marketing
– It come across in the case study AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions can leverage the sales team experience to cultivate customer relationships as Pharma Biotech is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions, it seems that the employees of Pharma Biotech 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Pharma Biotech needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow decision making process
– As mentioned earlier in the report, Pharma Biotech 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. Pharma Biotech 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pharma Biotech is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions | 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pharma Biotech is facing challenges because of the dominance of functional experts in the organization. AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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.
Buying journey improvements
– Pharma Biotech can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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.
Using analytics as competitive advantage
– Pharma Biotech 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pharma Biotech to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Pharma Biotech has opened avenues for new revenue streams for the organization in the industry. This can help Pharma Biotech to build a more holistic ecosystem as suggested in the AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions case study. Pharma Biotech can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Pharma Biotech can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pharma Biotech can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Pharma Biotech 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.
Manufacturing automation
– Pharma Biotech can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pharma Biotech 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 Pharma Biotech to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pharma Biotech 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, AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions, 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
– Pharma Biotech 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.
Developing new processes and practices
– Pharma Biotech can develop new processes and procedures in Strategy & Execution 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.
Better consumer reach
– The expansion of the 5G network will help Pharma Biotech to increase its market reach. Pharma Biotech 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.
Threats AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions are -
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 Pharma Biotech business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pharma Biotech in the Strategy & Execution industry. The Strategy & Execution 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.
Stagnating economy with rate increase
– Pharma Biotech 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 Pharma Biotech.
Shortening product life cycle
– it is one of the major threat that Pharma Biotech is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Pharma Biotech 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pharma Biotech 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions .
High dependence on third party suppliers
– Pharma Biotech 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.
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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pharma Biotech can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Pharma Biotech needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Regulatory challenges
– Pharma Biotech 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 Strategy & Execution industry regulations.
Increasing wage structure of Pharma Biotech
– 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 Pharma Biotech.
Weighted SWOT Analysis of AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 Pharma Biotech needs to make to build a sustainable competitive advantage.