Case Study Description of Hikma Pharmaceuticals Governance Journey
The case opens with Said Darwazah, chairman and CEO of Hikma Pharmaceuticals, the multinational generics company, anticipating the company's 2017 AGM and reflecting on changes made over the previous year to address concerns expressed by proxy advisors and some shareholders about Hikma's reliance on a combined chairman/CEO position, the long tenure of some directors, and the company's approach to executive pay. The case describes Hikma's origins as Jordanian pharma company founded by Darwazah's father in 1978, and traces the evolution of its governance as a private family company, then as publicly-traded company listed on the London Stock Exchange in 2005, and finally as a member of the FTSE 100, beginning in March 2015. Ahead of the 2017 AGM, Darwazah is confident that shareholders will approve changes made to the company's executive incentive plan (EIP) and steps taken to accelerate the turnover of long-serving directors, but he wonders how much longer the company will be able to continue with a combined Chairman/CEO and, more generally, how to marry the high level of governance expected by shareholders with the entrepreneurial spirit that had driven Hikma's growth and development.
Swot Analysis of "Hikma Pharmaceuticals Governance Journey" written by Lynn Sharp Paine, Suraj Srinivasan, Gamze Yucaoglu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hikma's Darwazah facing as an external strategic factors. Some of the topics covered in Hikma Pharmaceuticals Governance Journey case study are - Strategic Management Strategies, Boards, Corporate communications, Emerging markets, Executive compensation, Growth strategy and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Hikma Pharmaceuticals Governance Journey casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, there is increasing trade war between United States & China, central banks are concerned over increasing inflation,
cloud computing is disrupting traditional business models, wage bills are increasing, etc
Introduction to SWOT Analysis of Hikma Pharmaceuticals Governance Journey
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Hikma Pharmaceuticals Governance Journey case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hikma's Darwazah, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hikma's Darwazah 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 Hikma Pharmaceuticals Governance Journey can be done for the following purposes –
1. Strategic planning using facts provided in Hikma Pharmaceuticals Governance Journey case study
2. Improving business portfolio management of Hikma's Darwazah
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hikma's Darwazah
Strengths Hikma Pharmaceuticals Governance Journey | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hikma's Darwazah in Hikma Pharmaceuticals Governance Journey Harvard Business Review case study are -
Effective Research and Development (R&D)
– Hikma's Darwazah 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 Hikma Pharmaceuticals Governance Journey - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Hikma's Darwazah has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hikma's Darwazah 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 lead change in Leadership & Managing People field
– Hikma's Darwazah 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 Hikma's Darwazah in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Hikma's Darwazah 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.
Diverse revenue streams
– Hikma's Darwazah is present in almost all the verticals within the industry. This has provided firm in Hikma Pharmaceuticals Governance Journey 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.
Cross disciplinary teams
– Horizontal connected teams at the Hikma's Darwazah 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.
Superior customer experience
– The customer experience strategy of Hikma's Darwazah in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Hikma's Darwazah is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Hikma's Darwazah 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 Hikma's Darwazah is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Hikma Pharmaceuticals Governance Journey Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Hikma's Darwazah 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 Lynn Sharp Paine, Suraj Srinivasan, Gamze Yucaoglu 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.
Training and development
– Hikma's Darwazah has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Hikma Pharmaceuticals Governance Journey 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.
High brand equity
– Hikma's Darwazah has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hikma's Darwazah to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Hikma Pharmaceuticals Governance Journey | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hikma Pharmaceuticals Governance Journey are -
Skills based hiring
– The stress on hiring functional specialists at Hikma's Darwazah 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 Hikma Pharmaceuticals Governance Journey 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 Hikma Pharmaceuticals Governance Journey can leverage the sales team experience to cultivate customer relationships as Hikma's Darwazah is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Hikma's Darwazah is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Hikma's Darwazah needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hikma's Darwazah to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Hikma Pharmaceuticals Governance Journey, in the dynamic environment Hikma's Darwazah has struggled to respond to the nimble upstart competition. Hikma's Darwazah has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Hikma's Darwazah 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 bargaining power of channel partners
– Because of the regulatory requirements, Lynn Sharp Paine, Suraj Srinivasan, Gamze Yucaoglu suggests that, Hikma's Darwazah 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.
High cash cycle compare to competitors
Hikma's Darwazah has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Hikma Pharmaceuticals Governance Journey, it seems that the employees of Hikma's Darwazah 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.
Products dominated business model
– Even though Hikma's Darwazah 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 - Hikma Pharmaceuticals Governance Journey should strive to include more intangible value offerings along with its core products and services.
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 Hikma's Darwazah supply chain. Even after few cautionary changes mentioned in the HBR case study - Hikma Pharmaceuticals Governance Journey, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hikma's Darwazah vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Hikma's Darwazah 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. Hikma's Darwazah 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.
Opportunities Hikma Pharmaceuticals Governance Journey | 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 Hikma Pharmaceuticals Governance Journey are -
Manufacturing automation
– Hikma's Darwazah can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
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. Hikma's Darwazah can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Hikma's Darwazah 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 Hikma Pharmaceuticals Governance Journey - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hikma's Darwazah 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 Hikma's Darwazah 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 Hikma's Darwazah to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Hikma's Darwazah can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Hikma Pharmaceuticals Governance Journey 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.
Building a culture of innovation
– managers at Hikma's Darwazah 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 Leadership & Managing People segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hikma's Darwazah 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. Hikma's Darwazah 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.
Developing new processes and practices
– Hikma's Darwazah can develop new processes and procedures in Leadership & Managing People 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.
Learning at scale
– Online learning technologies has now opened space for Hikma's Darwazah 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hikma's Darwazah 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, Hikma's Darwazah 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.
Loyalty marketing
– Hikma's Darwazah 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Hikma's Darwazah can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Hikma Pharmaceuticals Governance Journey External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Hikma Pharmaceuticals Governance Journey are -
Environmental challenges
– Hikma's Darwazah 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. Hikma's Darwazah can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Consumer confidence and its impact on Hikma's Darwazah 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.
Regulatory challenges
– Hikma's Darwazah 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 Leadership & Managing People industry regulations.
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 Hikma's Darwazah.
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. Hikma's Darwazah 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 Hikma's Darwazah in the Leadership & Managing People industry. The Leadership & Managing People 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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Hikma's Darwazah 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. Hikma's Darwazah needs to understand the core reasons impacting the Leadership & Managing People 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
– Hikma's Darwazah 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.
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 Hikma's Darwazah business can come under increasing regulations regarding data privacy, data security, etc.
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.
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 Hikma's Darwazah in the Leadership & Managing People sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Hikma Pharmaceuticals Governance Journey 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 Hikma Pharmaceuticals Governance Journey 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 Hikma Pharmaceuticals Governance Journey 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 Hikma Pharmaceuticals Governance Journey 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 Hikma Pharmaceuticals Governance Journey 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 Hikma's Darwazah needs to make to build a sustainable competitive advantage.