SWOT Analysis / TOWS Matrix for Dechra Pharma (United Kingdom)
Based on various researches at Oak Spring University , Dechra Pharma is operating in a macro-environment that has been destablized by – geopolitical disruptions, wage bills are increasing, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels,
increasing government debt because of Covid-19 spendings, technology disruption, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Dechra Pharma can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dechra Pharma, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dechra Pharma 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 Dechra Pharma can be done for the following purposes –
1. Strategic planning of Dechra Pharma
2. Improving business portfolio management of Dechra Pharma
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Biotechnology & Drugs sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Dechra Pharma
Strengths of Dechra Pharma | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dechra Pharma are -
Successful track record of launching new products
– Dechra Pharma has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dechra Pharma 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)
– Dechra Pharma has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Dechra Pharma staying ahead in the Biotechnology & Drugs industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Dechra Pharma has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Biotechnology & Drugs industry. Secondly the value chain collaborators of Dechra Pharma have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Dechra Pharma in the Healthcare sector have low bargaining power. Dechra Pharma has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dechra Pharma to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Dechra Pharma 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 Biotechnology & Drugs industry. The technology infrastructure of United Kingdom is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Dechra Pharma 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 Biotechnology & Drugs industry
- digital transformation varies from industry to industry. For Dechra Pharma digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dechra Pharma 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.
Sustainable margins compare to other players in Biotechnology & Drugs industry
– Dechra Pharma has clearly differentiated products in the market place. This has enabled Dechra Pharma to fetch slight price premium compare to the competitors in the Biotechnology & Drugs industry. The sustainable margins have also helped Dechra Pharma to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Dechra Pharma in Biotechnology & Drugs industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Dechra Pharma
– The covid-19 pandemic has put organizational resilience at the centre of everthing Dechra Pharma does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Dechra Pharma 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 Dechra Pharma is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Dechra Pharma emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Dechra Pharma is one of the most innovative firm in Biotechnology & Drugs sector.
Weaknesses of Dechra Pharma | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dechra Pharma are -
High bargaining power of channel partners in Biotechnology & Drugs industry
– because of the regulatory requirements in United Kingdom, Dechra Pharma 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 Biotechnology & Drugs industry.
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 Dechra Pharma supply chain. Even after few cautionary changes, Dechra Pharma is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Dechra Pharma vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– From the 10K / annual statement of Dechra Pharma, it seems that company is thinking out the frontier risks that can impact Biotechnology & Drugs industry. 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
Dechra Pharma has a high cash cycle compare to other players in the Biotechnology & Drugs industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Dechra Pharma has some of the most successful models in the Biotechnology & Drugs industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Dechra Pharma should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the Biotechnology & Drugs industry, Dechra Pharma needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Capital Spending Reduction
– Even during the low interest decade, Dechra Pharma 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 Biotechnology & Drugs industry using digital technology.
High dependence on Dechra Pharma ‘s star products
– The top 2 products and services of Dechra Pharma still accounts for major business revenue. This dependence on star products in Biotechnology & Drugs industry has resulted into insufficient focus on developing new products, even though Dechra Pharma has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Dechra Pharma is dominated by functional specialists. It is not different from other players in the Biotechnology & Drugs industry, but Dechra Pharma needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Dechra Pharma to focus more on services in the Biotechnology & Drugs industry rather than just following the product oriented approach.
Skills based hiring in Biotechnology & Drugs industry
– The stress on hiring functional specialists at Dechra Pharma 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.
Slow decision making process
– As mentioned earlier in the report, Dechra Pharma has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Biotechnology & Drugs industry over the last five years. Dechra Pharma 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.
Dechra Pharma Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Dechra Pharma are -
Developing new processes and practices
– Dechra Pharma can develop new processes and procedures in Biotechnology & Drugs 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Dechra Pharma is facing challenges because of the dominance of functional experts in the organization. Dechra Pharma can utilize new technology in the field of Biotechnology & Drugs industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions in Biotechnology & Drugs industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Dechra Pharma in the Biotechnology & Drugs industry. Now Dechra Pharma can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Dechra Pharma 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Dechra Pharma 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 Dechra Pharma to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Dechra Pharma can use these opportunities to build new business models that can help the communities that Dechra Pharma operates in. Secondly it can use opportunities from government spending in Biotechnology & Drugs sector.
Leveraging digital technologies
– Dechra Pharma 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 Dechra Pharma 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 Biotechnology & Drugs industry.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Dechra Pharma can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Biotechnology & Drugs industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Dechra Pharma 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. Dechra Pharma 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.
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. Dechra Pharma can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dechra Pharma 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Dechra Pharma 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 Dechra Pharma to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Dechra Pharma External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Dechra Pharma are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Dechra Pharma 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 Dechra Pharma prominent markets.
Shortening product life cycle
– it is one of the major threat that Dechra Pharma is facing in Biotechnology & Drugs sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Dechra Pharma business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Dechra Pharma needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Biotechnology & Drugs industry regulations.
Environmental challenges
– Dechra Pharma 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. Dechra Pharma can take advantage of this fund but it will also bring new competitors in the Biotechnology & Drugs industry.
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.
Easy access to finance
– Easy access to finance in Biotechnology & Drugs industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Dechra Pharma can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Dechra Pharma 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 Biotechnology & Drugs industry.
High dependence on third party suppliers
– Dechra Pharma 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.
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 Dechra Pharma in the Biotechnology & Drugs sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Dechra Pharma has witnessed rapid integration of technology during Covid-19 in the Biotechnology & Drugs industry. As one of the leading players in the industry, Dechra Pharma needs to keep up with the evolution of technology in the Biotechnology & Drugs 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 Dechra Pharma
– 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 Dechra Pharma.
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 Dechra Pharma.
Weighted SWOT Analysis of Dechra Pharma Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Dechra Pharma 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 Dechra Pharma 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 Dechra Pharma 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 Dechra Pharma 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 Dechra Pharma needs to make to build a sustainable competitive advantage.
