GSK's Acquisition of Sirtris: Independence or Integration? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of GSK's Acquisition of Sirtris: Independence or Integration?
An executive from pharmaceutical company GSK must choose how much to integrate a recently acquired biotechnology firm, Sirtris. Moncef Slaoui, GSK's Global head of R&D, championed the acquisition of Sirtris to gain access to its potentially revolutionary science. Slaoui must balance the need to recoup shareholder value after paying a two-times premium for Sirtris with his desire to retain Christoph Westphal, Sirtris's co-founder and CEO, and other key individuals at the company. His desire to protect Sirtris from GSK's size and bureaucracy occurs in a period when GSK has launched major changes in its R&D organization, which focus on decentralizing and externalizing R&D, as well as revamping the resource allocation process to parallel more of a venture capital-based model. The case also explores the views of Christoph Westphal on the early challenges of the integration and the impact GSK was having on Sirtris. Can be used in conjunction with a separate case that focuses on Sirtris's business model.
Swot Analysis of "GSK's Acquisition of Sirtris: Independence or Integration?" written by Toby Stuart, James Weber includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sirtris Gsk's facing as an external strategic factors. Some of the topics covered in GSK's Acquisition of Sirtris: Independence or Integration? case study are - Strategic Management Strategies, Mergers & acquisitions, Organizational culture, Organizational structure, Research & development and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the GSK's Acquisition of Sirtris: Independence or Integration? casestudy better are - – increasing commodity prices, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google,
geopolitical disruptions, technology disruption, etc
Introduction to SWOT Analysis of GSK's Acquisition of Sirtris: Independence or Integration?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in GSK's Acquisition of Sirtris: Independence or Integration? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sirtris Gsk's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sirtris Gsk's 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 GSK's Acquisition of Sirtris: Independence or Integration? can be done for the following purposes –
1. Strategic planning using facts provided in GSK's Acquisition of Sirtris: Independence or Integration? case study
2. Improving business portfolio management of Sirtris Gsk's
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 Sirtris Gsk's
Strengths GSK's Acquisition of Sirtris: Independence or Integration? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sirtris Gsk's in GSK's Acquisition of Sirtris: Independence or Integration? Harvard Business Review case study are -
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– GSK's Acquisition of Sirtris: Independence or Integration? firm has clearly differentiated products in the market place. This has enabled Sirtris Gsk's to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Sirtris Gsk's to invest into research and development (R&D) and innovation.
High brand equity
– Sirtris Gsk's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sirtris Gsk's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Sirtris Gsk's 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.
Effective Research and Development (R&D)
– Sirtris Gsk's 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 GSK's Acquisition of Sirtris: Independence or Integration? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Sirtris Gsk's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Sirtris Gsk's 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 Toby Stuart, James Weber 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.
Organizational Resilience of Sirtris Gsk's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sirtris Gsk's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Sirtris Gsk's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Sirtris Gsk's is one of the most innovative firm in sector. Manager in GSK's Acquisition of Sirtris: Independence or Integration? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Sirtris Gsk's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in GSK's Acquisition of Sirtris: Independence or Integration? 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.
Diverse revenue streams
– Sirtris Gsk's is present in almost all the verticals within the industry. This has provided firm in GSK's Acquisition of Sirtris: Independence or Integration? 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.
High switching costs
– The high switching costs that Sirtris Gsk's 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.
Weaknesses GSK's Acquisition of Sirtris: Independence or Integration? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of GSK's Acquisition of Sirtris: Independence or Integration? 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 Sirtris Gsk's supply chain. Even after few cautionary changes mentioned in the HBR case study - GSK's Acquisition of Sirtris: Independence or Integration?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sirtris Gsk's vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Sirtris Gsk's 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 GSK's Acquisition of Sirtris: Independence or Integration?, is just above the industry average. Sirtris Gsk's 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.
Skills based hiring
– The stress on hiring functional specialists at Sirtris Gsk's 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.
Capital Spending Reduction
– Even during the low interest decade, Sirtris Gsk's 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study GSK's Acquisition of Sirtris: Independence or Integration?, it seems that the employees of Sirtris Gsk's don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High operating costs
– Compare to the competitors, firm in the HBR case study GSK's Acquisition of Sirtris: Independence or Integration? 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 Sirtris Gsk's 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Sirtris Gsk's, firm in the HBR case study GSK's Acquisition of Sirtris: Independence or Integration? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study GSK's Acquisition of Sirtris: Independence or Integration?, in the dynamic environment Sirtris Gsk's has struggled to respond to the nimble upstart competition. Sirtris Gsk's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study GSK's Acquisition of Sirtris: Independence or Integration? 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 GSK's Acquisition of Sirtris: Independence or Integration? can leverage the sales team experience to cultivate customer relationships as Sirtris Gsk's is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sirtris Gsk's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study GSK's Acquisition of Sirtris: Independence or Integration? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities GSK's Acquisition of Sirtris: Independence or Integration? | 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 GSK's Acquisition of Sirtris: Independence or Integration? are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sirtris Gsk's 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.
Developing new processes and practices
– Sirtris Gsk's can develop new processes and procedures in Innovation & Entrepreneurship 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.
Buying journey improvements
– Sirtris Gsk's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. GSK's Acquisition of Sirtris: Independence or Integration? 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.
Creating value in data economy
– The success of analytics program of Sirtris Gsk's has opened avenues for new revenue streams for the organization in the industry. This can help Sirtris Gsk's to build a more holistic ecosystem as suggested in the GSK's Acquisition of Sirtris: Independence or Integration? case study. Sirtris Gsk's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Sirtris Gsk's 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.
Leveraging digital technologies
– Sirtris Gsk's 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sirtris Gsk's is facing challenges because of the dominance of functional experts in the organization. GSK's Acquisition of Sirtris: Independence or Integration? 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.
Manufacturing automation
– Sirtris Gsk's 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.
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. Sirtris Gsk's 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. Sirtris Gsk's 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.
Loyalty marketing
– Sirtris Gsk's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sirtris Gsk's can use these opportunities to build new business models that can help the communities that Sirtris Gsk's operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Better consumer reach
– The expansion of the 5G network will help Sirtris Gsk's to increase its market reach. Sirtris Gsk's 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. Sirtris Gsk's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats GSK's Acquisition of Sirtris: Independence or Integration? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study GSK's Acquisition of Sirtris: Independence or Integration? are -
Technology acceleration in Forth Industrial Revolution
– Sirtris Gsk's has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Sirtris Gsk's 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 Sirtris Gsk's 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sirtris Gsk's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Sirtris Gsk's needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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 Sirtris Gsk's in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
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. Sirtris Gsk's 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.
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 Sirtris Gsk's.
Increasing wage structure of Sirtris Gsk's
– 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 Sirtris Gsk's.
Regulatory challenges
– Sirtris Gsk's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Environmental challenges
– Sirtris Gsk's 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. Sirtris Gsk's can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Stagnating economy with rate increase
– Sirtris Gsk's 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 Sirtris Gsk's is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of GSK's Acquisition of Sirtris: Independence or Integration? 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 GSK's Acquisition of Sirtris: Independence or Integration? 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 GSK's Acquisition of Sirtris: Independence or Integration? 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 GSK's Acquisition of Sirtris: Independence or Integration? 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 GSK's Acquisition of Sirtris: Independence or Integration? 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 Sirtris Gsk's needs to make to build a sustainable competitive advantage.
