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 - – geopolitical disruptions, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, increasing transportation and logistics costs,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity 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 -
Successful track record of launching new products
– Roche Bonds has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Roche Bonds 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.
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.
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.
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.
Training and development
– Roche Bonds has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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.
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.
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.
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.
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.
High switching costs
– The high switching costs that Roche Bonds 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.
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.
Innovation driven organization
– Roche Bonds is one of the most innovative firm in sector. Manager in FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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 -
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.
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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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 Roche Bonds 's lucrative customers.
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.
Need for greater diversity
– Roche Bonds has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High bargaining power of channel partners
– Because of the regulatory requirements, 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.
Lack of clear differentiation of Roche Bonds products
– To increase the profitability and margins on the products, Roche Bonds needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Slow decision making process
– As mentioned earlier in the report, Roche Bonds 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. Roche Bonds 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE, it seems that the employees of Roche Bonds 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.
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 -
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.
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.
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.
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.
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. Roche Bonds can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Roche Bonds can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE 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.
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.
Using analytics as competitive advantage
– Roche Bonds 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 FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Roche Bonds to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
Creating value in data economy
– The success of analytics program of Roche Bonds has opened avenues for new revenue streams for the organization in the industry. This can help Roche Bonds to build a more holistic ecosystem as suggested in the FINANCIAL PIONEERING: THE GENENTECH ACQUISITION BY ROCHE case study. Roche Bonds can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Roche Bonds 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. Roche Bonds 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.
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.
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 -
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.
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.
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.
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.
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.
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 .
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 Roche Bonds in the Leadership & Managing People sector and impact the bottomline of the organization.
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.
Stagnating economy with rate increase
– Roche Bonds 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.
Consumer confidence and its impact on Roche Bonds 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.
Technology acceleration in Forth Industrial Revolution
– Roche Bonds has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Roche Bonds needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Increasing 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 .
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.
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.