FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE
The case describes the financing of the Genentech acquisition by Roche. The case explores the innovative way of financing by Roche at the beginning of 2009, just months after the Lehman Brothers bankruptcy. With equity markets in free fall, and with debt markets "shut off", the CFO of Roche manages to finance an acquisition costing more than USD 40 billion, and scores three hits in a matter of weeks: a) the largest private issue of bonds in the US (USD 16.6 billion); b) the largest private issue of bonds in Continental Europe (Euro 11.25 billion); c) the largest private issue of bonds in UK (Sterling1.25 billion). The case presents the facts, the issues at stake, and the incredibly bold and innovative financiang route chosen by the Roche CFO. Learning objectives: The main teaching point of this case is its "anti-crisis" message. At one of the worst possible moments of the 2008 financial crisis, an enlightened CFO (with a small team of talented people) decides that he cannot be affected by the external environment, and decides to go ahead to finance a value creating investment opportunity. The main learnings from this case are: 1) making class participants realize that there are alternative ways to finance good investment opportunities; 2) that although capital structure is important, the creating value mechanism was the project rather than financing; 3) that the financing, however, was the enabler of the value creation potential of the project.
Authors :: Stewart Hamilton, Anna Eckardt Salvatore
Swot Analysis of "FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE" written by Stewart Hamilton, Anna Eckardt Salvatore includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Roche Bonds facing as an external strategic factors. Some of the topics covered in FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE case study are - Strategic Management Strategies, Financial management, Leadership and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE casestudy better are - – central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, etc
Introduction to SWOT Analysis of FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Roche Bonds, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Roche Bonds 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 FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE can be done for the following purposes –
1. Strategic planning using facts provided in FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE case study
2. Improving business portfolio management of Roche Bonds
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 Roche Bonds
Strengths FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Roche Bonds in FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE Harvard Business Review case study are -
Ability to lead change in Leadership & Managing People field
– Roche Bonds 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 Roche Bonds in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Roche Bonds digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Roche Bonds 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
– Roche Bonds is one of the leading recruiters in the industry. Managers in the FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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.
Low bargaining power of suppliers
– Suppliers of Roche Bonds in the sector have low bargaining power. FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Roche Bonds to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Roche Bonds has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Roche Bonds to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Roche Bonds 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 Stewart Hamilton, Anna Eckardt Salvatore 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.
Effective Research and Development (R&D)
– Roche Bonds 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 FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE - 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
– Roche Bonds is present in almost all the verticals within the industry. This has provided firm in FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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
– FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE firm has clearly differentiated products in the market place. This has enabled Roche Bonds to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Roche Bonds to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Roche Bonds 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 FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Roche Bonds 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 Roche Bonds is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE are -
Interest costs
– Compare to the competition, Roche Bonds 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.
Increasing silos among functional specialists
– The organizational structure of Roche Bonds is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Roche Bonds needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Roche Bonds to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Roche Bonds 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.
No frontier risks strategy
– After analyzing the HBR case study FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE, 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.
Slow to strategic competitive environment developments
– As FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE HBR case study mentions - Roche Bonds 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.
Low market penetration in new markets
– Outside its home market of Roche Bonds, firm in the HBR case study FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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 Roche Bonds has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Roche Bonds is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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 bargaining power of channel partners
– Because of the regulatory requirements, Stewart Hamilton, Anna Eckardt Salvatore suggests that, Roche Bonds is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE, is just above the industry average. Roche Bonds 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 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 Roche Bonds supply chain. Even after few cautionary changes mentioned in the HBR case study - FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Roche Bonds vulnerable to further global disruptions in South East Asia.
Opportunities FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE | 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 FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Roche Bonds in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Roche Bonds to increase its market reach. Roche Bonds 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.
Loyalty marketing
– Roche Bonds 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Roche Bonds 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, FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Roche Bonds can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Roche Bonds 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Roche Bonds can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Roche Bonds 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.
Building a culture of innovation
– managers at Roche Bonds 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 Leadership & Managing People segment.
Leveraging digital technologies
– Roche Bonds 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, Roche Bonds can use these opportunities to build new business models that can help the communities that Roche Bonds operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Roche Bonds is facing challenges because of the dominance of functional experts in the organization. FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Roche Bonds 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 Roche Bonds to hire the very best people irrespective of their geographical location.
Threats FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE, Roche Bonds 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 .
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 Roche Bonds.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Roche Bonds with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Roche Bonds is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Roche Bonds 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Roche Bonds 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. Roche Bonds can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
High dependence on third party suppliers
– Roche Bonds 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, Roche Bonds 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 FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE .
Regulatory challenges
– Roche Bonds 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 Leadership & Managing People industry regulations.
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 Roche Bonds business can come under increasing regulations regarding data privacy, data security, etc.
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. Roche Bonds 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.
Increasing wage structure of Roche Bonds
– 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 Roche Bonds.
Weighted SWOT Analysis of FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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 FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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 FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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 FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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 FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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 Roche Bonds needs to make to build a sustainable competitive advantage.
