Premier, Inc. (A ) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Premier, Inc. (A )
Was Premier, Inc., a hospital group purchasing organization (GPO), guilty of ethical conflicts of interest? Premier was a GPO for more than 200 affiliated not-for-profit hospitals and health care systems in the United States. A series of investigative articles in The New York Times, beginning in March 2002, charged Premier with multiple conflicts of interest. Among its allegations, the newspaper argued that seller-paid fees; investments by Premier and its executives in vendors; and investments by vendors in Premier-sponsored equity funds, research institutes, and conferences all biased the selection process for medical products and services. As a result, Premier did not always choose items of the best quality or value for its affiliated hospitals. Moreover, The Times charged, new products--particularly those developed by small firms--were effectively locked out, suppressing medical innovation and hurting patient care. Richard A. Norling, CEO, and other top executives of Premier faced the difficult task of formulating an effective response to the charges raised by The New York Times. Received the Emerson Center Award for the Outstanding Case in Business Ethics for 2004.
Swot Analysis of "Premier, Inc. (A )" written by Anne T. Lawrence includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Premier Gpo facing as an external strategic factors. Some of the topics covered in Premier, Inc. (A ) case study are - Strategic Management Strategies, Ethics and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Premier, Inc. (A ) casestudy better are - – digital marketing is dominated by two big players Facebook and Google, technology disruption, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%,
cloud computing is disrupting traditional business models, increasing commodity prices, etc
Introduction to SWOT Analysis of Premier, Inc. (A )
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Premier, Inc. (A ) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Premier Gpo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Premier Gpo 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 Premier, Inc. (A ) can be done for the following purposes –
1. Strategic planning using facts provided in Premier, Inc. (A ) case study
2. Improving business portfolio management of Premier Gpo
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Premier Gpo
Strengths Premier, Inc. (A ) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Premier Gpo in Premier, Inc. (A ) Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Premier Gpo in the sector have low bargaining power. Premier, Inc. (A ) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Premier Gpo to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Premier Gpo 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 Premier Gpo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Premier, Inc. (A ) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Premier Gpo is one of the leading recruiters in the industry. Managers in the Premier, Inc. (A ) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Premier Gpo 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 Premier, Inc. (A ) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Premier Gpo is present in almost all the verticals within the industry. This has provided firm in Premier, Inc. (A ) 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Premier, Inc. (A ) firm has clearly differentiated products in the market place. This has enabled Premier Gpo to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Premier Gpo to invest into research and development (R&D) and innovation.
High brand equity
– Premier Gpo has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Premier Gpo to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Premier Gpo
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Premier Gpo does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Premier Gpo 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.
High switching costs
– The high switching costs that Premier Gpo 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.
Operational resilience
– The operational resilience strategy in the Premier, Inc. (A ) 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.
Analytics focus
– Premier Gpo 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 Anne T. Lawrence 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.
Weaknesses Premier, Inc. (A ) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Premier, Inc. (A ) are -
High cash cycle compare to competitors
Premier Gpo 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 Premier Gpo supply chain. Even after few cautionary changes mentioned in the HBR case study - Premier, Inc. (A ), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Premier Gpo vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Premier Gpo 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. Premier Gpo 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.
No frontier risks strategy
– After analyzing the HBR case study Premier, Inc. (A ), it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Capital Spending Reduction
– Even during the low interest decade, Premier Gpo 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.
Slow to strategic competitive environment developments
– As Premier, Inc. (A ) HBR case study mentions - Premier Gpo takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Premier, Inc. (A ), is just above the industry average. Premier Gpo 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Premier, Inc. (A ) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Premier Gpo has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Premier, Inc. (A ) 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 Premier, Inc. (A ) can leverage the sales team experience to cultivate customer relationships as Premier Gpo is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Premier, Inc. (A ) 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 Premier Gpo 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Premier Gpo, firm in the HBR case study Premier, Inc. (A ) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Premier, Inc. (A ) | 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 Premier, Inc. (A ) are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Premier Gpo can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Premier Gpo to increase its market reach. Premier Gpo 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.
Buying journey improvements
– Premier Gpo can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Premier, Inc. (A ) 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Premier Gpo is facing challenges because of the dominance of functional experts in the organization. Premier, Inc. (A ) 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
– Premier Gpo can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Premier Gpo can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Creating value in data economy
– The success of analytics program of Premier Gpo has opened avenues for new revenue streams for the organization in the industry. This can help Premier Gpo to build a more holistic ecosystem as suggested in the Premier, Inc. (A ) case study. Premier Gpo can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Premier Gpo 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.
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 Premier Gpo in the consumer business. Now Premier Gpo can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Premier Gpo 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 Premier, Inc. (A ) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Premier Gpo to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Premier Gpo 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Premier Gpo can use these opportunities to build new business models that can help the communities that Premier Gpo operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Premier Gpo 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. Premier Gpo 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.
Threats Premier, Inc. (A ) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Premier, Inc. (A ) 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 Premier Gpo.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Premier Gpo can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Premier Gpo 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.
High dependence on third party suppliers
– Premier Gpo 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Premier Gpo 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 Premier, Inc. (A ) .
Consumer confidence and its impact on Premier Gpo 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Premier Gpo with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Premier Gpo 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. Premier Gpo can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Premier Gpo in the Leadership & Managing People industry. The Leadership & Managing People 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.
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.
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 Premier Gpo in the Leadership & Managing People sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Premier, Inc. (A ), Premier Gpo may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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. Premier Gpo needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Premier, Inc. (A ) 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 Premier, Inc. (A ) 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 Premier, Inc. (A ) 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 Premier, Inc. (A ) 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 Premier, Inc. (A ) 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 Premier Gpo needs to make to build a sustainable competitive advantage.