This case is available in only hard copy format (HBP does not have digital distribution rights to the content). As a result, a digital Educator Copy of the case is not available through this web site.Biocon Limited was facing significant pricing pressure in their cash cow business, that primarily consisted of manufacturing Active Pharmaceutical Ingredients (APIs). To combat this commoditization, Biocon's leadership had chosen an innovation-led strategy. This new strategy consisted of licensing and developing proven molecules from strategic partners to leapfrog competition and create large molecule biologics in India. The company understood that its transition from an API to an innovation-led company focused on new biologics would require patience and a risk-taking mindset. Although there was some commonality in the bioprocessing aspects of both approaches, the regulatory approvals, product development paths, and market-access timelines were dramatically different--almost diametrically opposed. Analyzes Biocon's strategic decisions, as well as the risks and challenges associated with migrating from a manufacturing to an innovation-led enterprise. How would they balance short-term pragmatism versus long-term vision? Do they have the appropriate human resources to scale and innovate? Is their India-centric strategy appropriate, since 86% of their end-market demand is in the U.S., Europe, and Japan? Fortunately, early indications with their innovation-led strategy were showing positive signs and demonstrable results--such as their biogenetic insulin and monoclonal antibody launch in India. Their lead oral insulin project, with a planned $100 million budget, was meeting its milestones and deliverables. Many critical business challenges are detailed in this case. Nevertheless, given their fully integrated business model and significant manufacturing base, the odds are in Biocon's favor to overcome these challenges and lead India's biotechnology revolution.
Swot Analysis of "Biocon Ltd." written by Krishna G. Palepu, Ananth K. Chepuri includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Biocon's Biologics facing as an external strategic factors. Some of the topics covered in Biocon Ltd. case study are - Strategic Management Strategies, International business, Organizational structure and Global Business.
Some of the macro environment factors that can be used to understand the Biocon Ltd. casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models,
geopolitical disruptions, talent flight as more people leaving formal jobs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Biocon Ltd. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Biocon's Biologics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Biocon's Biologics 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 Biocon Ltd. can be done for the following purposes –
1. Strategic planning using facts provided in Biocon Ltd. case study
2. Improving business portfolio management of Biocon's Biologics
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 Biocon's Biologics
Strengths Biocon Ltd. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Biocon's Biologics in Biocon Ltd. Harvard Business Review case study are -
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Biocon's Biologics digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Biocon's Biologics 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.
Organizational Resilience of Biocon's Biologics
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Biocon's Biologics does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Biocon's Biologics is present in almost all the verticals within the industry. This has provided firm in Biocon Ltd. 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.
Operational resilience
– The operational resilience strategy in the Biocon Ltd. 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.
Sustainable margins compare to other players in Global Business industry
– Biocon Ltd. firm has clearly differentiated products in the market place. This has enabled Biocon's Biologics to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Biocon's Biologics to invest into research and development (R&D) and innovation.
Training and development
– Biocon's Biologics has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Biocon Ltd. 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 Biocon's Biologics in the sector have low bargaining power. Biocon Ltd. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Biocon's Biologics to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Global Business field
– Biocon's Biologics 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 Biocon's Biologics in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Biocon's Biologics has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Biocon's Biologics 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.
Cross disciplinary teams
– Horizontal connected teams at the Biocon's Biologics 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.
Ability to recruit top talent
– Biocon's Biologics is one of the leading recruiters in the industry. Managers in the Biocon Ltd. 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
– Biocon's Biologics 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 Biocon Ltd. HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Biocon Ltd. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Biocon Ltd. are -
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 Biocon's Biologics supply chain. Even after few cautionary changes mentioned in the HBR case study - Biocon Ltd., it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Biocon's Biologics vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Biocon Ltd. HBR case study mentions - Biocon's Biologics 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Krishna G. Palepu, Ananth K. Chepuri suggests that, Biocon's Biologics 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.
Aligning sales with marketing
– It come across in the case study Biocon Ltd. 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 Biocon Ltd. can leverage the sales team experience to cultivate customer relationships as Biocon's Biologics 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 Biocon Ltd. 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 Biocon's Biologics 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 Biocon Ltd., in the dynamic environment Biocon's Biologics has struggled to respond to the nimble upstart competition. Biocon's Biologics has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Biocon's Biologics 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Biocon's Biologics 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Biocon Ltd., is just above the industry average. Biocon's Biologics 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.
Interest costs
– Compare to the competition, Biocon's Biologics 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.
Capital Spending Reduction
– Even during the low interest decade, Biocon's Biologics 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.
Opportunities Biocon Ltd. | 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 Biocon Ltd. are -
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. Biocon's Biologics can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Biocon's Biologics can use these opportunities to build new business models that can help the communities that Biocon's Biologics operates in. Secondly it can use opportunities from government spending in Global Business sector.
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. Biocon's Biologics 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. Biocon's Biologics 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.
Building a culture of innovation
– managers at Biocon's Biologics 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Biocon's Biologics 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 Biocon's Biologics to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Biocon's Biologics in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Manufacturing automation
– Biocon's Biologics can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Better consumer reach
– The expansion of the 5G network will help Biocon's Biologics to increase its market reach. Biocon's Biologics 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.
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. Biocon's Biologics can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Biocon's Biologics 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Biocon's Biologics can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Biocon's Biologics can develop new processes and procedures in Global Business 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.
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 Biocon's Biologics in the consumer business. Now Biocon's Biologics can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Biocon Ltd. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Biocon Ltd. 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 Biocon Ltd., Biocon's Biologics 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 .
High dependence on third party suppliers
– Biocon's Biologics 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.
Shortening product life cycle
– it is one of the major threat that Biocon's Biologics is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Biocon's Biologics 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 Biocon Ltd. .
Consumer confidence and its impact on Biocon's Biologics 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.
Increasing wage structure of Biocon's Biologics
– 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 Biocon's Biologics.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Biocon's Biologics 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.
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 Biocon's Biologics in the Global Business sector and impact the bottomline of the organization.
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
– Biocon's Biologics 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 Biocon's Biologics business can come under increasing regulations regarding data privacy, data security, etc.
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 Biocon's Biologics.
Environmental challenges
– Biocon's Biologics 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. Biocon's Biologics can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Weighted SWOT Analysis of Biocon Ltd. 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 Biocon Ltd. 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 Biocon Ltd. 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 Biocon Ltd. 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 Biocon Ltd. 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 Biocon's Biologics needs to make to build a sustainable competitive advantage.