Swot Analysis of "Risk Arbitrage: Abbott Labs and Alza (B)" written by George Chacko, Randolph B. Cohen, Marc Chennault includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Alza Abbott facing as an external strategic factors. Some of the topics covered in Risk Arbitrage: Abbott Labs and Alza (B) case study are - Strategic Management Strategies, Financial analysis, Financial markets, Mergers & acquisitions, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Risk Arbitrage: Abbott Labs and Alza (B) casestudy better are - – wage bills are increasing, increasing household debt because of falling income levels, increasing energy prices, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices,
banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, etc
Introduction to SWOT Analysis of Risk Arbitrage: Abbott Labs and Alza (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Risk Arbitrage: Abbott Labs and Alza (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Alza Abbott, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Alza Abbott 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 Risk Arbitrage: Abbott Labs and Alza (B) can be done for the following purposes –
1. Strategic planning using facts provided in Risk Arbitrage: Abbott Labs and Alza (B) case study
2. Improving business portfolio management of Alza Abbott
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 Alza Abbott
Strengths Risk Arbitrage: Abbott Labs and Alza (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Alza Abbott in Risk Arbitrage: Abbott Labs and Alza (B) Harvard Business Review case study are -
Training and development
– Alza Abbott has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Risk Arbitrage: Abbott Labs and Alza (B) 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.
Highly skilled collaborators
– Alza Abbott 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 Risk Arbitrage: Abbott Labs and Alza (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Alza Abbott in the sector have low bargaining power. Risk Arbitrage: Abbott Labs and Alza (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Alza Abbott to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Alza Abbott 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 Risk Arbitrage: Abbott Labs and Alza (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Alza Abbott digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Alza Abbott 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.
Diverse revenue streams
– Alza Abbott is present in almost all the verticals within the industry. This has provided firm in Risk Arbitrage: Abbott Labs and Alza (B) 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.
Successful track record of launching new products
– Alza Abbott has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Alza Abbott 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.
Analytics focus
– Alza Abbott 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 George Chacko, Randolph B. Cohen, Marc Chennault 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.
High brand equity
– Alza Abbott has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Alza Abbott to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Alza Abbott 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 Alza Abbott is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Risk Arbitrage: Abbott Labs and Alza (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Alza Abbott is one of the leading recruiters in the industry. Managers in the Risk Arbitrage: Abbott Labs and Alza (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Finance & Accounting field
– Alza Abbott 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 Alza Abbott in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Risk Arbitrage: Abbott Labs and Alza (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Risk Arbitrage: Abbott Labs and Alza (B) are -
High operating costs
– Compare to the competitors, firm in the HBR case study Risk Arbitrage: Abbott Labs and Alza (B) 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 Alza Abbott 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Alza Abbott is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Alza Abbott needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Alza Abbott to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Alza Abbott 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.
Aligning sales with marketing
– It come across in the case study Risk Arbitrage: Abbott Labs and Alza (B) 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 Risk Arbitrage: Abbott Labs and Alza (B) can leverage the sales team experience to cultivate customer relationships as Alza Abbott is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Alza Abbott 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.
High bargaining power of channel partners
– Because of the regulatory requirements, George Chacko, Randolph B. Cohen, Marc Chennault suggests that, Alza Abbott 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Alza Abbott is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Risk Arbitrage: Abbott Labs and Alza (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As Risk Arbitrage: Abbott Labs and Alza (B) HBR case study mentions - Alza Abbott 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.
Need for greater diversity
– Alza Abbott 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Risk Arbitrage: Abbott Labs and Alza (B) 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 Alza Abbott 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 Risk Arbitrage: Abbott Labs and Alza (B), in the dynamic environment Alza Abbott has struggled to respond to the nimble upstart competition. Alza Abbott has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Risk Arbitrage: Abbott Labs and Alza (B) | 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 Risk Arbitrage: Abbott Labs and Alza (B) are -
Developing new processes and practices
– Alza Abbott can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Using analytics as competitive advantage
– Alza Abbott 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 Risk Arbitrage: Abbott Labs and Alza (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Alza Abbott to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Alza Abbott in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Alza Abbott 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.
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 Alza Abbott 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.
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. Alza Abbott can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Alza Abbott can use these opportunities to build new business models that can help the communities that Alza Abbott operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Alza Abbott is facing challenges because of the dominance of functional experts in the organization. Risk Arbitrage: Abbott Labs and Alza (B) 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.
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. Alza Abbott can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Alza Abbott 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.
Buying journey improvements
– Alza Abbott can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Risk Arbitrage: Abbott Labs and Alza (B) 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Alza Abbott 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. Alza Abbott 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Alza Abbott can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Risk Arbitrage: Abbott Labs and Alza (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Risk Arbitrage: Abbott Labs and Alza (B) are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Risk Arbitrage: Abbott Labs and Alza (B), Alza Abbott may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Alza Abbott in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
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 Alza Abbott business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Alza Abbott 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
– Alza Abbott 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.
Environmental challenges
– Alza Abbott 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. Alza Abbott can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Increasing wage structure of Alza Abbott
– 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 Alza Abbott.
Consumer confidence and its impact on Alza Abbott 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.
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.
Shortening product life cycle
– it is one of the major threat that Alza Abbott is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Alza Abbott has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Alza Abbott 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.
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 Alza Abbott.
Weighted SWOT Analysis of Risk Arbitrage: Abbott Labs and Alza (B) 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 Risk Arbitrage: Abbott Labs and Alza (B) 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 Risk Arbitrage: Abbott Labs and Alza (B) 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 Risk Arbitrage: Abbott Labs and Alza (B) 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 Risk Arbitrage: Abbott Labs and Alza (B) 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 Alza Abbott needs to make to build a sustainable competitive advantage.