Alvogen is a young Icelandic generic pharmaceutical company, whose CEO believes that his global strategy will give them an edge in this competitive industry. Robert Wessman, Alvogen's CEO, was also previously the CEO of Actavis, another Icelandic generics company, which he built from 90 people in 1999 to 11,000 people and a??1.6 billion in revenues by 2007. Wessman has supreme confidence in his abilities to succeed, and a knack for convincing other people of the same and bringing them onboard his ventures. In 2009, after losing most of his net worth in the 2008 financial crisis, he used his last $2 million to found Alvogen, which he hoped to build into one of the top 5 generics companies in the world. Despite going up against the big players in the generics industry (where 50% of world sales is controlled by just 10 firms), Wessman believes that his plan for Alvogen, involving difficult-to-make drugs, biosimilar drugs, and strategies targeted to individual markets, will enable them to be competitive. He quickly recruited a team, with little more than a business plan written on a napkin, and began operations in 35 countries almost simultaneously. The company grew quickly, despite some close calls with funding, and by 2014 it has almost $650 million in sales. Currently, Wessman, top management, and some of Alvogen's investors are entertaining offers from two different groups. One option is to merge Alvogen into SuperPharm, a large, publicly-traded U.S. pharmaceutical company. The other is to be acquired by CVC, a U.K. private equity firm, and Temasek, a Singapore investment company, who are offering to buy out all Alvogen's shareholders. Or, Wessman and his team can reject both offers and continue on as an independent company.
Swot Analysis of "Alvogen" written by Daniel Isenberg, William R. Kerr includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wessman Alvogen facing as an external strategic factors. Some of the topics covered in Alvogen case study are - Strategic Management Strategies, Globalization, Managing uncertainty, Risk management and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Alvogen casestudy better are - – wage bills are increasing, increasing household debt because of falling income levels, increasing commodity prices, geopolitical disruptions, there is backlash against globalization, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy,
technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Alvogen case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wessman Alvogen, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wessman Alvogen 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 Alvogen can be done for the following purposes –
1. Strategic planning using facts provided in Alvogen case study
2. Improving business portfolio management of Wessman Alvogen
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 Wessman Alvogen
Strengths Alvogen | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wessman Alvogen in Alvogen Harvard Business Review case study are -
Successful track record of launching new products
– Wessman Alvogen has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Wessman Alvogen 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.
Innovation driven organization
– Wessman Alvogen is one of the most innovative firm in sector. Manager in Alvogen Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Wessman Alvogen 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 Wessman Alvogen is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Alvogen Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Wessman Alvogen 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 Alvogen - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Alvogen 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.
Diverse revenue streams
– Wessman Alvogen is present in almost all the verticals within the industry. This has provided firm in Alvogen 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.
Strong track record of project management
– Wessman Alvogen is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Innovation & Entrepreneurship field
– Wessman Alvogen 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 Wessman Alvogen in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Wessman Alvogen has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Wessman Alvogen to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Wessman Alvogen digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Wessman Alvogen 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.
Ability to recruit top talent
– Wessman Alvogen is one of the leading recruiters in the industry. Managers in the Alvogen are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Wessman Alvogen in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Alvogen | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Alvogen are -
No frontier risks strategy
– After analyzing the HBR case study Alvogen, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High operating costs
– Compare to the competitors, firm in the HBR case study Alvogen 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 Wessman Alvogen 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Alvogen, is just above the industry average. Wessman Alvogen needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Aligning sales with marketing
– It come across in the case study Alvogen 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 Alvogen can leverage the sales team experience to cultivate customer relationships as Wessman Alvogen is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Wessman Alvogen 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Alvogen, in the dynamic environment Wessman Alvogen has struggled to respond to the nimble upstart competition. Wessman Alvogen has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– Wessman Alvogen 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.
Lack of clear differentiation of Wessman Alvogen products
– To increase the profitability and margins on the products, Wessman Alvogen needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Wessman Alvogen 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Wessman Alvogen is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Alvogen 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 cash cycle compare to competitors
Wessman Alvogen 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.
Opportunities Alvogen | 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 Alvogen are -
Better consumer reach
– The expansion of the 5G network will help Wessman Alvogen to increase its market reach. Wessman Alvogen 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Wessman Alvogen can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Alvogen, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Wessman Alvogen has opened avenues for new revenue streams for the organization in the industry. This can help Wessman Alvogen to build a more holistic ecosystem as suggested in the Alvogen case study. Wessman Alvogen can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wessman Alvogen in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Wessman Alvogen 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 Wessman Alvogen to hire the very best people irrespective of their geographical location.
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 Wessman Alvogen in the consumer business. Now Wessman Alvogen can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Wessman Alvogen can use these opportunities to build new business models that can help the communities that Wessman Alvogen operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
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 Wessman Alvogen 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.
Leveraging digital technologies
– Wessman Alvogen 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.
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. Wessman Alvogen can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Wessman Alvogen 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.
Using analytics as competitive advantage
– Wessman Alvogen 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 Alvogen - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Wessman Alvogen to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Wessman Alvogen 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.
Threats Alvogen External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Alvogen are -
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 Wessman Alvogen.
Technology acceleration in Forth Industrial Revolution
– Wessman Alvogen has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Wessman Alvogen 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.
Consumer confidence and its impact on Wessman Alvogen demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High dependence on third party suppliers
– Wessman Alvogen 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.
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 Wessman Alvogen business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Wessman Alvogen 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Wessman Alvogen 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 Alvogen .
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. Wessman Alvogen needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Alvogen, Wessman Alvogen 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wessman Alvogen in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Shortening product life cycle
– it is one of the major threat that Wessman Alvogen is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Wessman Alvogen with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Wessman Alvogen
– 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 Wessman Alvogen.
Weighted SWOT Analysis of Alvogen 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 Alvogen 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 Alvogen 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 Alvogen 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 Alvogen 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 Wessman Alvogen needs to make to build a sustainable competitive advantage.