The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A)

This is a Darden case study.In 1998, Klaus Leisinger and Karin Schmitt of the Novartis Foundation for Sustainable Development in Basel, Switzerland, were approached by a sociologist who wanted help in launching a pilot program in Tanzania to deal with the crisis of the more than 8 million HIV/AIDS-orphaned children in sub-Saharan Africa. The proposed program was unusual in that it addressed the psychological and social traumas these children experienced. The other unusual aspect of this request was that Novartis, at that time the second-largest pharmaceutical company in the world, did not make, sell, or distribute any products related to HIV/AIDS. Novartis, and its philanthropic foundation, was committed to helping the neediest in developing countries, however. Leisinger and Schmitt did not believe that "throwing money" at problems resulted in solutions; rather, they looked for innovative ways to address problems and crises. But given the unusual nature of the request, Leisinger and Schmitt had to decide whether the foundation should help launch this program.

Authors :: Pat Werhane, Jenny Mead

Topics :: Global Business

Tags :: Ethics, Generational issues, Health, Innovation, Leadership, Social enterprise, Social responsibility, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A)" written by Pat Werhane, Jenny Mead includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Leisinger Schmitt facing as an external strategic factors. Some of the topics covered in The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) case study are - Strategic Management Strategies, Ethics, Generational issues, Health, Innovation, Leadership, Social enterprise, Social responsibility and Global Business.

Some of the macro environment factors that can be used to understand the The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, increasing transportation and logistics costs, increasing energy prices, etc

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Introduction to SWOT Analysis of The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A)

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Leisinger Schmitt, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Leisinger Schmitt 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) can be done for the following purposes –
1. Strategic planning using facts provided in The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) case study
2. Improving business portfolio management of Leisinger Schmitt
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Leisinger Schmitt

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Strengths The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Leisinger Schmitt in The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) Harvard Business Review case study are -

Successful track record of launching new products

– Leisinger Schmitt has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Leisinger Schmitt 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.

Effective Research and Development (R&D)

– Leisinger Schmitt 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 The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Analytics focus

– Leisinger Schmitt 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 Pat Werhane, Jenny Mead 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.

Cross disciplinary teams

– Horizontal connected teams at the Leisinger Schmitt 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.

Highly skilled collaborators

– Leisinger Schmitt 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 The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Learning organization

- Leisinger Schmitt 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 Leisinger Schmitt is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

High switching costs

– The high switching costs that Leisinger Schmitt 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.

Organizational Resilience of Leisinger Schmitt

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Leisinger Schmitt does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Sustainable margins compare to other players in Global Business industry

– The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) firm has clearly differentiated products in the market place. This has enabled Leisinger Schmitt to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Leisinger Schmitt to invest into research and development (R&D) and innovation.

Digital Transformation in Global Business segment

- digital transformation varies from industry to industry. For Leisinger Schmitt digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Leisinger Schmitt 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.

Innovation driven organization

– Leisinger Schmitt is one of the most innovative firm in sector. Manager in The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

High brand equity

– Leisinger Schmitt has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Leisinger Schmitt to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

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Weaknesses The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) are -

Need for greater diversity

– Leisinger Schmitt 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.

Capital Spending Reduction

– Even during the low interest decade, Leisinger Schmitt 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.

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 Leisinger Schmitt supply chain. Even after few cautionary changes mentioned in the HBR case study - The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Leisinger Schmitt vulnerable to further global disruptions in South East Asia.

High cash cycle compare to competitors

Leisinger Schmitt 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.

High bargaining power of channel partners

– Because of the regulatory requirements, Pat Werhane, Jenny Mead suggests that, Leisinger Schmitt 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.

Interest costs

– Compare to the competition, Leisinger Schmitt 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.

Skills based hiring

– The stress on hiring functional specialists at Leisinger Schmitt 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.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A), is just above the industry average. Leisinger Schmitt 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.

Aligning sales with marketing

– It come across in the case study The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) 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 The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) can leverage the sales team experience to cultivate customer relationships as Leisinger Schmitt is planning to shift buying processes online.

High dependence on star products

– The top 2 products and services of the firm as mentioned in the The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) 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 Leisinger Schmitt has relatively successful track record of launching new products.

Ability to respond to the competition

– As the decision making is very deliberative, highlighted in the case study The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A), in the dynamic environment Leisinger Schmitt has struggled to respond to the nimble upstart competition. Leisinger Schmitt has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

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Opportunities The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) | 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 The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) are -

Building a culture of innovation

– managers at Leisinger Schmitt 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 Global Business segment.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Leisinger Schmitt can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Creating value in data economy

– The success of analytics program of Leisinger Schmitt has opened avenues for new revenue streams for the organization in the industry. This can help Leisinger Schmitt to build a more holistic ecosystem as suggested in the The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) case study. Leisinger Schmitt can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

Leveraging digital technologies

– Leisinger Schmitt can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Leisinger Schmitt 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, The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A), 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

– Leisinger Schmitt 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.

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. Leisinger Schmitt can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Leisinger Schmitt 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 Leisinger Schmitt to hire the very best people irrespective of their geographical location.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Leisinger Schmitt can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

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 Leisinger Schmitt in the consumer business. Now Leisinger Schmitt 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 Leisinger Schmitt 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.

Better consumer reach

– The expansion of the 5G network will help Leisinger Schmitt to increase its market reach. Leisinger Schmitt 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.

Changes in consumer behavior post Covid-19

– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Leisinger Schmitt 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. Leisinger Schmitt 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.

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Threats The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) are -

Barriers of entry lowering

– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Leisinger Schmitt with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Leisinger Schmitt in the Global Business industry. The Global Business 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 dependence on third party suppliers

– Leisinger Schmitt 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.

Consumer confidence and its impact on Leisinger Schmitt 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.

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. Leisinger Schmitt needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.

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. Leisinger Schmitt 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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A), Leisinger Schmitt may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .

Technology acceleration in Forth Industrial Revolution

– Leisinger Schmitt has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Leisinger Schmitt needs to keep up with the evolution of technology in the Global Business 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.

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 Leisinger Schmitt is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Increasing wage structure of Leisinger Schmitt

– 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 Leisinger Schmitt.

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 Leisinger Schmitt in the Global Business sector and impact the bottomline of the organization.

Easy access to finance

– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Leisinger Schmitt can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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Weighted SWOT Analysis of The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) 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 The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) 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 The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) 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 The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) 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 The Novartis Foundation for Sustainable Development: Tackling HIV/AIDS and Poverty in South Africa (A) 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 Leisinger Schmitt needs to make to build a sustainable competitive advantage.

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