Case Study Description of Remicade/Simponi: Confidential Instructions for Merck
This two-party negotiation exercise features a real-life dispute between Merck and Johnson & Johnson regarding European distribution rights to two highly lucrative drugs.
Swot Analysis of "Remicade/Simponi: Confidential Instructions for Merck" written by Guhan Subramanian, Rhea Ghosh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merck Johnson facing as an external strategic factors. Some of the topics covered in Remicade/Simponi: Confidential Instructions for Merck case study are - Strategic Management Strategies, Growth strategy, Managing uncertainty, Negotiations, Pricing, Risk management and Communication.
Some of the macro environment factors that can be used to understand the Remicade/Simponi: Confidential Instructions for Merck casestudy better are - – increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , technology disruption,
challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Remicade/Simponi: Confidential Instructions for Merck
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Remicade/Simponi: Confidential Instructions for Merck case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merck Johnson, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merck Johnson 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 Remicade/Simponi: Confidential Instructions for Merck can be done for the following purposes –
1. Strategic planning using facts provided in Remicade/Simponi: Confidential Instructions for Merck case study
2. Improving business portfolio management of Merck Johnson
3. Assessing feasibility of the new initiative in Communication field.
4. Making a Communication topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Merck Johnson
Strengths Remicade/Simponi: Confidential Instructions for Merck | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merck Johnson in Remicade/Simponi: Confidential Instructions for Merck Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Merck Johnson 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
– Merck Johnson 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 Remicade/Simponi: Confidential Instructions for Merck HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Merck Johnson has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Remicade/Simponi: Confidential Instructions for Merck 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.
Innovation driven organization
– Merck Johnson is one of the most innovative firm in sector. Manager in Remicade/Simponi: Confidential Instructions for Merck Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Merck Johnson is one of the leading recruiters in the industry. Managers in the Remicade/Simponi: Confidential Instructions for Merck are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Merck Johnson is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Merck Johnson is present in almost all the verticals within the industry. This has provided firm in Remicade/Simponi: Confidential Instructions for Merck 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.
Analytics focus
– Merck Johnson 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 Guhan Subramanian, Rhea Ghosh 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.
Ability to lead change in Communication field
– Merck Johnson 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 Merck Johnson in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Merck Johnson 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 Remicade/Simponi: Confidential Instructions for Merck - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Merck Johnson in the sector have low bargaining power. Remicade/Simponi: Confidential Instructions for Merck has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Merck Johnson to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Merck Johnson 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 Merck Johnson is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Remicade/Simponi: Confidential Instructions for Merck Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Remicade/Simponi: Confidential Instructions for Merck | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Remicade/Simponi: Confidential Instructions for Merck are -
Aligning sales with marketing
– It come across in the case study Remicade/Simponi: Confidential Instructions for Merck 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 Remicade/Simponi: Confidential Instructions for Merck can leverage the sales team experience to cultivate customer relationships as Merck Johnson is planning to shift buying processes online.
Need for greater diversity
– Merck Johnson 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Remicade/Simponi: Confidential Instructions for Merck, in the dynamic environment Merck Johnson has struggled to respond to the nimble upstart competition. Merck Johnson has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Merck Johnson supply chain. Even after few cautionary changes mentioned in the HBR case study - Remicade/Simponi: Confidential Instructions for Merck, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Merck Johnson vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Merck Johnson products
– To increase the profitability and margins on the products, Merck Johnson needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, Guhan Subramanian, Rhea Ghosh suggests that, Merck Johnson 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Remicade/Simponi: Confidential Instructions for Merck, is just above the industry average. Merck Johnson 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.
Slow decision making process
– As mentioned earlier in the report, Merck Johnson 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. Merck Johnson 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.
High cash cycle compare to competitors
Merck Johnson 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Merck Johnson is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Remicade/Simponi: Confidential Instructions for Merck can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Remicade/Simponi: Confidential Instructions for Merck 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 Merck Johnson 's lucrative customers.
Opportunities Remicade/Simponi: Confidential Instructions for Merck | 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 Remicade/Simponi: Confidential Instructions for Merck are -
Learning at scale
– Online learning technologies has now opened space for Merck Johnson 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.
Building a culture of innovation
– managers at Merck Johnson 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 Communication segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Communication industry, but it has also influenced the consumer preferences. Merck Johnson can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Merck Johnson can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Merck Johnson 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Merck Johnson is facing challenges because of the dominance of functional experts in the organization. Remicade/Simponi: Confidential Instructions for Merck 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.
Using analytics as competitive advantage
– Merck Johnson 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 Remicade/Simponi: Confidential Instructions for Merck - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Merck Johnson to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Merck Johnson can use these opportunities to build new business models that can help the communities that Merck Johnson operates in. Secondly it can use opportunities from government spending in Communication sector.
Loyalty marketing
– Merck Johnson has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Developing new processes and practices
– Merck Johnson can develop new processes and procedures in Communication industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Better consumer reach
– The expansion of the 5G network will help Merck Johnson to increase its market reach. Merck Johnson 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 Communication industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Merck Johnson 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. Merck Johnson 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Merck Johnson in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Communication segment, and it will provide faster access to the consumers.
Threats Remicade/Simponi: Confidential Instructions for Merck External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Remicade/Simponi: Confidential Instructions for Merck are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merck Johnson with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Merck Johnson 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.
Easy access to finance
– Easy access to finance in Communication field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Merck Johnson can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Merck Johnson 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.
Shortening product life cycle
– it is one of the major threat that Merck Johnson is facing in Communication 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, Merck Johnson 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 Remicade/Simponi: Confidential Instructions for Merck .
Consumer confidence and its impact on Merck Johnson 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.
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.
Technology acceleration in Forth Industrial Revolution
– Merck Johnson has witnessed rapid integration of technology during Covid-19 in the Communication industry. As one of the leading players in the industry, Merck Johnson needs to keep up with the evolution of technology in the Communication 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.
Environmental challenges
– Merck Johnson 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. Merck Johnson can take advantage of this fund but it will also bring new competitors in the Communication industry.
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 Merck Johnson.
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 Merck Johnson in the Communication sector and impact the bottomline of the organization.
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.
Weighted SWOT Analysis of Remicade/Simponi: Confidential Instructions for Merck 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 Remicade/Simponi: Confidential Instructions for Merck 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 Remicade/Simponi: Confidential Instructions for Merck 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 Remicade/Simponi: Confidential Instructions for Merck 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 Remicade/Simponi: Confidential Instructions for Merck 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 Merck Johnson needs to make to build a sustainable competitive advantage.
