Case Study Description of Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland
Zimmer Holdings, an orthopedic devices company in the United States, is suddenly faced with the prospect of its British competitor acquiring one of the Swiss companies, which would have been an ideal target for its own acquisition. With the announcement of the merger already in the news, Zimmer Holdings has a narrow time window to decide its response. Students are asked to take the position of an advisor to senior management and provide a recommendation to management on actions to pursue. The case provides an ideal platform to discuss global competition and the imperatives of a global marketplace, evaluation of a target and assessing the uncertainties in the process, discussing negotiating strategies and post-acquisition processes.
Swot Analysis of "Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland" written by Charles Dhanaraj, Mark Bickel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Zimmer Holdings facing as an external strategic factors. Some of the topics covered in Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland case study are - Strategic Management Strategies, International business, Mergers & acquisitions and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, increasing commodity prices, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies,
technology disruption, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Zimmer Holdings, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Zimmer Holdings 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 Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland can be done for the following purposes –
1. Strategic planning using facts provided in Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland case study
2. Improving business portfolio management of Zimmer Holdings
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 Zimmer Holdings
Strengths Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Zimmer Holdings in Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland Harvard Business Review case study are -
Successful track record of launching new products
– Zimmer Holdings has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Zimmer Holdings 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.
High brand equity
– Zimmer Holdings has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Zimmer Holdings to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Zimmer Holdings 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.
Ability to recruit top talent
– Zimmer Holdings is one of the leading recruiters in the industry. Managers in the Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Leadership & Managing People field
– Zimmer Holdings 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 Zimmer Holdings in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Zimmer Holdings is present in almost all the verticals within the industry. This has provided firm in Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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 Zimmer Holdings 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 Zimmer Holdings digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Zimmer Holdings 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.
Training and development
– Zimmer Holdings has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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 Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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.
Organizational Resilience of Zimmer Holdings
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Zimmer Holdings does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Zimmer Holdings is one of the most innovative firm in sector. Manager in Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland are -
Capital Spending Reduction
– Even during the low interest decade, Zimmer Holdings 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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 Zimmer Holdings has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland, is just above the industry average. Zimmer Holdings 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 Zimmer Holdings supply chain. Even after few cautionary changes mentioned in the HBR case study - Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Zimmer Holdings vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Zimmer Holdings products
– To increase the profitability and margins on the products, Zimmer Holdings needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Zimmer Holdings has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Zimmer Holdings 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland, in the dynamic environment Zimmer Holdings has struggled to respond to the nimble upstart competition. Zimmer Holdings has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Zimmer Holdings is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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 operating costs
– Compare to the competitors, firm in the HBR case study Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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 Zimmer Holdings 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland, 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.
Opportunities Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland | 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 Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland are -
Manufacturing automation
– Zimmer Holdings 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Zimmer Holdings 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.
Developing new processes and practices
– Zimmer Holdings can develop new processes and procedures in Leadership & Managing People 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.
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. Zimmer Holdings can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Zimmer Holdings can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Zimmer Holdings has opened avenues for new revenue streams for the organization in the industry. This can help Zimmer Holdings to build a more holistic ecosystem as suggested in the Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland case study. Zimmer Holdings can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Zimmer Holdings in the consumer business. Now Zimmer Holdings can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Zimmer Holdings can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Zimmer Holdings 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.
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. Zimmer Holdings 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. Zimmer Holdings 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
– Zimmer Holdings 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.
Better consumer reach
– The expansion of the 5G network will help Zimmer Holdings to increase its market reach. Zimmer Holdings 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.
Leveraging digital technologies
– Zimmer Holdings 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.
Threats Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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 Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland, Zimmer Holdings 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 dependence on third party suppliers
– Zimmer Holdings 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.
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. Zimmer Holdings needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Zimmer Holdings 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Zimmer Holdings 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 Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland .
Consumer confidence and its impact on Zimmer Holdings 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
– Zimmer Holdings has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Zimmer Holdings 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 wage structure of Zimmer Holdings
– 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 Zimmer Holdings.
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 Zimmer Holdings with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Zimmer Holdings.
Stagnating economy with rate increase
– Zimmer Holdings 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.
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.
Weighted SWOT Analysis of Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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 Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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 Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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 Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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 Zimmer Holdings (A): Acquisition of Centerpulse, Switzerland 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 Zimmer Holdings needs to make to build a sustainable competitive advantage.