Case Study Description of Patanjali Ayurved Limited: Disruption or Innovation?
In 2012, the founder of Patanjali Ayurved Limited (PAL) and his associate were leveraging a unique business model by venturing into the fast-moving consumer goods sector in India. By March 2016, PAL had become the fourth-largest company in this highly competitive industry and was planning to become the market leader by 2020. Through its low-priced herbal and Ayurvedic products, PAL occupied a unique white space in the already existing strategic groups of domestic and multinational competitors. Industry experts were undecided about whether PAL posed a serious threat to multinational and domestic firms or if PAL should be praised for creating a new market for its products in India. If PAL was posing a real threat, then other fast-moving consumer goods firms had to develop strategies to maintain their own position, and PAL needed a plan to face the challenges involved in its future growth. Saurabh Bhattacharya is affiliated with Newcastle University. Arpita Agnihotri is affiliated with Northland College.
Swot Analysis of "Patanjali Ayurved Limited: Disruption or Innovation?" written by Saurabh Bhattacharya, Arpita Agnihotri includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pal Ayurved facing as an external strategic factors. Some of the topics covered in Patanjali Ayurved Limited: Disruption or Innovation? case study are - Strategic Management Strategies, Manufacturing, Marketing, Strategy, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Patanjali Ayurved Limited: Disruption or Innovation? casestudy better are - – increasing energy prices, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China,
supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Patanjali Ayurved Limited: Disruption or Innovation?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Patanjali Ayurved Limited: Disruption or Innovation? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pal Ayurved, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pal Ayurved 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 Patanjali Ayurved Limited: Disruption or Innovation? can be done for the following purposes –
1. Strategic planning using facts provided in Patanjali Ayurved Limited: Disruption or Innovation? case study
2. Improving business portfolio management of Pal Ayurved
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 Pal Ayurved
Strengths Patanjali Ayurved Limited: Disruption or Innovation? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pal Ayurved in Patanjali Ayurved Limited: Disruption or Innovation? Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Pal Ayurved in the sector have low bargaining power. Patanjali Ayurved Limited: Disruption or Innovation? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pal Ayurved to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Pal Ayurved 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 Patanjali Ayurved Limited: Disruption or Innovation? 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.
Superior customer experience
– The customer experience strategy of Pal Ayurved in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Leadership & Managing People industry
– Patanjali Ayurved Limited: Disruption or Innovation? firm has clearly differentiated products in the market place. This has enabled Pal Ayurved to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Pal Ayurved to invest into research and development (R&D) and innovation.
Learning organization
- Pal Ayurved 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 Pal Ayurved is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Patanjali Ayurved Limited: Disruption or Innovation? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Pal Ayurved has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pal Ayurved to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Pal Ayurved is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Pal Ayurved
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pal Ayurved does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Pal Ayurved is present in almost all the verticals within the industry. This has provided firm in Patanjali Ayurved Limited: Disruption or Innovation? 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.
Innovation driven organization
– Pal Ayurved is one of the most innovative firm in sector. Manager in Patanjali Ayurved Limited: Disruption or Innovation? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Pal Ayurved 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 Patanjali Ayurved Limited: Disruption or Innovation? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Patanjali Ayurved Limited: Disruption or Innovation? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Patanjali Ayurved Limited: Disruption or Innovation? are -
No frontier risks strategy
– After analyzing the HBR case study Patanjali Ayurved Limited: Disruption or Innovation?, 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 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 Pal Ayurved supply chain. Even after few cautionary changes mentioned in the HBR case study - Patanjali Ayurved Limited: Disruption or Innovation?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pal Ayurved vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Saurabh Bhattacharya, Arpita Agnihotri suggests that, Pal Ayurved 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.
Slow decision making process
– As mentioned earlier in the report, Pal Ayurved 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. Pal Ayurved 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.
Increasing silos among functional specialists
– The organizational structure of Pal Ayurved is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Pal Ayurved needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pal Ayurved to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Pal Ayurved 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Patanjali Ayurved Limited: Disruption or Innovation?, it seems that the employees of Pal Ayurved don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High operating costs
– Compare to the competitors, firm in the HBR case study Patanjali Ayurved Limited: Disruption or Innovation? 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 Pal Ayurved 's lucrative customers.
Products dominated business model
– Even though Pal Ayurved 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 - Patanjali Ayurved Limited: Disruption or Innovation? should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Patanjali Ayurved Limited: Disruption or Innovation? 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 Patanjali Ayurved Limited: Disruption or Innovation? can leverage the sales team experience to cultivate customer relationships as Pal Ayurved is planning to shift buying processes online.
Need for greater diversity
– Pal Ayurved 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.
Opportunities Patanjali Ayurved Limited: Disruption or Innovation? | 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 Patanjali Ayurved Limited: Disruption or Innovation? are -
Developing new processes and practices
– Pal Ayurved 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. Pal Ayurved can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pal Ayurved 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.
Learning at scale
– Online learning technologies has now opened space for Pal Ayurved to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Creating value in data economy
– The success of analytics program of Pal Ayurved has opened avenues for new revenue streams for the organization in the industry. This can help Pal Ayurved to build a more holistic ecosystem as suggested in the Patanjali Ayurved Limited: Disruption or Innovation? case study. Pal Ayurved can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pal Ayurved 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, Patanjali Ayurved Limited: Disruption or Innovation?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Pal Ayurved 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.
Buying journey improvements
– Pal Ayurved can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Patanjali Ayurved Limited: Disruption or Innovation? 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.
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 Pal Ayurved 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pal Ayurved 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 Pal Ayurved to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pal Ayurved 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.
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. Pal Ayurved 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. Pal Ayurved 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.
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 Pal Ayurved in the consumer business. Now Pal Ayurved can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Patanjali Ayurved Limited: Disruption or Innovation? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Patanjali Ayurved Limited: Disruption or Innovation? are -
Stagnating economy with rate increase
– Pal Ayurved 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.
Increasing wage structure of Pal Ayurved
– 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 Pal Ayurved.
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 Pal Ayurved business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pal Ayurved 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.
Shortening product life cycle
– it is one of the major threat that Pal Ayurved is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Pal Ayurved 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pal Ayurved with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Pal Ayurved 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.
Consumer confidence and its impact on Pal Ayurved 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.
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. Pal Ayurved can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Pal Ayurved needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pal Ayurved 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 Patanjali Ayurved Limited: Disruption or Innovation? .
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 Pal Ayurved.
Weighted SWOT Analysis of Patanjali Ayurved Limited: Disruption or Innovation? 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 Patanjali Ayurved Limited: Disruption or Innovation? 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 Patanjali Ayurved Limited: Disruption or Innovation? 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 Patanjali Ayurved Limited: Disruption or Innovation? 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 Patanjali Ayurved Limited: Disruption or Innovation? 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 Pal Ayurved needs to make to build a sustainable competitive advantage.
