Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story
In May 2007, Amgen Inc. (Amgen) received disappointing news from the European Medicines Agency (EMEA) that its drug Vectibix, developed to fight metastatic colorectal cancer, had been rejected. This was especially surprising news given that a similar rival drug had received approval several years prior. Moreover, Vectibix had also received Food and Drug Administration approval in 2006. During additional trials, Amgen has learned that the Vectibix is only effective with the 60% of the population that has a specific gene marker. Given this development, what should Amgen's strategy around Vectibix be both in Europe and the United States?
Authors :: Richard G. Hamermesh, Raju Kucherlapati, Rachel Gordon
Swot Analysis of "Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story" written by Richard G. Hamermesh, Raju Kucherlapati, Rachel Gordon includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vectibix Amgen facing as an external strategic factors. Some of the topics covered in Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story case study are - Strategic Management Strategies, Government, Marketing and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story casestudy better are - – there is increasing trade war between United States & China, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion,
increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vectibix Amgen, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vectibix Amgen 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 Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story can be done for the following purposes –
1. Strategic planning using facts provided in Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story case study
2. Improving business portfolio management of Vectibix Amgen
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Vectibix Amgen
Strengths Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vectibix Amgen in Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story Harvard Business Review case study are -
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story firm has clearly differentiated products in the market place. This has enabled Vectibix Amgen to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Vectibix Amgen to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Vectibix Amgen 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.
Low bargaining power of suppliers
– Suppliers of Vectibix Amgen in the sector have low bargaining power. Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Vectibix Amgen to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Vectibix Amgen
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Vectibix Amgen does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Vectibix Amgen 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.
Ability to lead change in Innovation & Entrepreneurship field
– Vectibix Amgen 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 Vectibix Amgen in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Vectibix Amgen has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Vectibix Amgen to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Vectibix Amgen has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Vectibix Amgen 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.
Highly skilled collaborators
– Vectibix Amgen 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 Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Vectibix Amgen 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 Vectibix Amgen is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Vectibix Amgen 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 Richard G. Hamermesh, Raju Kucherlapati, Rachel Gordon 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.
Innovation driven organization
– Vectibix Amgen is one of the most innovative firm in sector. Manager in Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story are -
Lack of clear differentiation of Vectibix Amgen products
– To increase the profitability and margins on the products, Vectibix Amgen needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Vectibix Amgen 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 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 Vectibix Amgen supply chain. Even after few cautionary changes mentioned in the HBR case study - Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Vectibix Amgen vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story, in the dynamic environment Vectibix Amgen has struggled to respond to the nimble upstart competition. Vectibix Amgen has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Vectibix Amgen 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story, is just above the industry average. Vectibix Amgen 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Vectibix Amgen 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Vectibix Amgen is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Vectibix Amgen is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Vectibix Amgen needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Vectibix Amgen to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Vectibix Amgen 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 bargaining power of channel partners
– Because of the regulatory requirements, Richard G. Hamermesh, Raju Kucherlapati, Rachel Gordon suggests that, Vectibix Amgen 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.
Opportunities Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story | 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 Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story are -
Leveraging digital technologies
– Vectibix Amgen 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.
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 Vectibix Amgen in the consumer business. Now Vectibix Amgen can target international markets with far fewer capital restrictions requirements than the existing system.
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. Vectibix Amgen can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Vectibix Amgen can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Vectibix Amgen is facing challenges because of the dominance of functional experts in the organization. Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Vectibix Amgen can use these opportunities to build new business models that can help the communities that Vectibix Amgen operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Manufacturing automation
– Vectibix Amgen can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Vectibix Amgen 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 Vectibix Amgen to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Vectibix Amgen 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 Vectibix Amgen 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 Innovation & Entrepreneurship segment.
Using analytics as competitive advantage
– Vectibix Amgen 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 Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Vectibix Amgen to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Vectibix Amgen 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. Vectibix Amgen 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.
Buying journey improvements
– Vectibix Amgen can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story 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.
Threats Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story are -
Shortening product life cycle
– it is one of the major threat that Vectibix Amgen is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story, Vectibix Amgen may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Consumer confidence and its impact on Vectibix Amgen 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.
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 Vectibix Amgen business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Vectibix Amgen 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. Vectibix Amgen can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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. Vectibix Amgen needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Vectibix Amgen 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.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Vectibix Amgen can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Vectibix Amgen 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Vectibix Amgen with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Vectibix Amgen has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Vectibix Amgen needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
Increasing wage structure of Vectibix Amgen
– 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 Vectibix Amgen.
Weighted SWOT Analysis of Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story 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 Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story 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 Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story 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 Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story 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 Managing Drugs on the Forefront of Personalized Medicine: The Erbitux and Vectibix Story 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 Vectibix Amgen needs to make to build a sustainable competitive advantage.
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