Presents Connetics, a biotechnology and pharmaceutical company, from its founding in 1993 through the final clinical trials of its flagship drug compound in 2000. Throughout that time, the company had experienced the failure of another compound, while successfully in-licensing other pharmaceutical products that would immediately generate income. Ultimately, the pivotal trial in 2000 was a failure, and CEO Tom Wiggans must manage the company through this failure (the stock went from about $25 to $5 after the results were revealed publicly).
Authors :: Robert Chess, Mark Leslie, Joshua Spitzer
Swot Analysis of "Connetics and Relaxin" written by Robert Chess, Mark Leslie, Joshua Spitzer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Connetics Compound facing as an external strategic factors. Some of the topics covered in Connetics and Relaxin case study are - Strategic Management Strategies, Crisis management, Entrepreneurship and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Connetics and Relaxin casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, increasing commodity prices, increasing energy prices, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Connetics and Relaxin
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Connetics and Relaxin case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Connetics Compound, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Connetics Compound 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 Connetics and Relaxin can be done for the following purposes –
1. Strategic planning using facts provided in Connetics and Relaxin case study
2. Improving business portfolio management of Connetics Compound
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 Connetics Compound
Strengths Connetics and Relaxin | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Connetics Compound in Connetics and Relaxin Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Connetics and Relaxin 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Connetics Compound digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Connetics Compound 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 lead change in Leadership & Managing People field
– Connetics Compound 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 Connetics Compound in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Connetics Compound has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Connetics and Relaxin 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.
Analytics focus
– Connetics Compound 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 Robert Chess, Mark Leslie, Joshua Spitzer 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Connetics and Relaxin firm has clearly differentiated products in the market place. This has enabled Connetics Compound to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Connetics Compound to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Connetics Compound has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Connetics Compound 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.
Superior customer experience
– The customer experience strategy of Connetics Compound in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Connetics Compound has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Connetics Compound to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Connetics Compound 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 Connetics and Relaxin - 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 Connetics Compound in the sector have low bargaining power. Connetics and Relaxin has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Connetics Compound to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Connetics Compound is one of the most innovative firm in sector. Manager in Connetics and Relaxin Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Connetics and Relaxin | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Connetics and Relaxin are -
High cash cycle compare to competitors
Connetics Compound 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.
Lack of clear differentiation of Connetics Compound products
– To increase the profitability and margins on the products, Connetics Compound needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Connetics and Relaxin 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 Connetics Compound 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Connetics and Relaxin, 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 star products
– The top 2 products and services of the firm as mentioned in the Connetics and Relaxin 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 Connetics Compound has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Connetics Compound has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study Connetics and Relaxin 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 Connetics and Relaxin can leverage the sales team experience to cultivate customer relationships as Connetics Compound is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Connetics Compound 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 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 Connetics Compound supply chain. Even after few cautionary changes mentioned in the HBR case study - Connetics and Relaxin, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Connetics Compound vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Connetics and Relaxin, in the dynamic environment Connetics Compound has struggled to respond to the nimble upstart competition. Connetics Compound has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Connetics Compound is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Connetics Compound needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Connetics Compound to focus more on services rather than just following the product oriented approach.
Opportunities Connetics and Relaxin | 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 Connetics and Relaxin are -
Loyalty marketing
– Connetics Compound 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Connetics Compound 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.
Manufacturing automation
– Connetics Compound 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.
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 Connetics Compound 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.
Better consumer reach
– The expansion of the 5G network will help Connetics Compound to increase its market reach. Connetics Compound 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.
Using analytics as competitive advantage
– Connetics Compound 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 Connetics and Relaxin - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Connetics Compound to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Connetics Compound can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Connetics Compound can use these opportunities to build new business models that can help the communities that Connetics Compound operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Leveraging digital technologies
– Connetics Compound 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.
Building a culture of innovation
– managers at Connetics Compound 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.
Learning at scale
– Online learning technologies has now opened space for Connetics Compound 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.
Developing new processes and practices
– Connetics Compound 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Connetics Compound can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Connetics and Relaxin External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Connetics and Relaxin are -
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. Connetics Compound needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Connetics and Relaxin, Connetics Compound 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 .
Stagnating economy with rate increase
– Connetics Compound 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.
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 Connetics Compound business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Connetics Compound 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.
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.
Environmental challenges
– Connetics Compound 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. Connetics Compound can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Connetics Compound 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 Connetics and Relaxin .
Shortening product life cycle
– it is one of the major threat that Connetics Compound is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Connetics Compound in the Leadership & Managing People sector and impact the bottomline of the organization.
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 Connetics Compound.
Technology acceleration in Forth Industrial Revolution
– Connetics Compound has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Connetics Compound 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 Connetics Compound
– 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 Connetics Compound.
Weighted SWOT Analysis of Connetics and Relaxin 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 Connetics and Relaxin 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 Connetics and Relaxin 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 Connetics and Relaxin 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 Connetics and Relaxin 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 Connetics Compound needs to make to build a sustainable competitive advantage.
