SWOT Analysis / TOWS Matrix for Menlo Therapeutics (United States)
Based on various researches at Oak Spring University , Menlo Therapeutics is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, geopolitical disruptions, there is backlash against globalization, there is increasing trade war between United States & China,
competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Menlo Therapeutics
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Menlo Therapeutics can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Menlo Therapeutics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Menlo Therapeutics 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 Menlo Therapeutics can be done for the following purposes –
1. Strategic planning of Menlo Therapeutics
2. Improving business portfolio management of Menlo Therapeutics
3. Assessing feasibility of the new initiative in United States
4. Making a Biotechnology & Drugs sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Menlo Therapeutics
Strengths of Menlo Therapeutics | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Menlo Therapeutics are -
Sustainable margins compare to other players in Biotechnology & Drugs industry
– Menlo Therapeutics has clearly differentiated products in the market place. This has enabled Menlo Therapeutics to fetch slight price premium compare to the competitors in the Biotechnology & Drugs industry. The sustainable margins have also helped Menlo Therapeutics to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Menlo Therapeutics has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Menlo Therapeutics 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.
Strong track record of project management in the Biotechnology & Drugs industry
– Menlo Therapeutics is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Menlo Therapeutics in the Healthcare sector have low bargaining power. Menlo Therapeutics has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Menlo Therapeutics to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Biotechnology & Drugs
– Menlo Therapeutics is one of the leading players in the Biotechnology & Drugs industry in United States. Over the years it has not only transformed the business landscape in the Biotechnology & Drugs industry in United States but also across the existing markets. The ability to lead change has enabled Menlo Therapeutics in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Menlo Therapeutics is one of the most innovative firm in Biotechnology & Drugs sector.
Ability to recruit top talent
– Menlo Therapeutics is one of the leading players in the Biotechnology & Drugs industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Menlo Therapeutics has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Menlo Therapeutics to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Menlo Therapeutics has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Menlo Therapeutics 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 switching costs
– The high switching costs that Menlo Therapeutics 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.
Cross disciplinary teams
– Horizontal connected teams at the Menlo Therapeutics 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.
Operational resilience
– The operational resilience strategy of Menlo Therapeutics comprises – understanding the underlying the factors in the Biotechnology & Drugs 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.
Weaknesses of Menlo Therapeutics | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Menlo Therapeutics are -
High cash cycle compare to competitors
Menlo Therapeutics 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.
Ability to respond to the competition
– As the decision making is very deliberative at Menlo Therapeutics, in the dynamic environment of Biotechnology & Drugs industry it has struggled to respond to the nimble upstart competition. Menlo Therapeutics has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners in Biotechnology & Drugs industry
– because of the regulatory requirements in United States, Menlo Therapeutics 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.
Lack of clear differentiation of Menlo Therapeutics products
– To increase the profitability and margins on the products, Menlo Therapeutics needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– From the outside it seems that Menlo Therapeutics needs to have more collaboration between its sales team and marketing team. Sales professionals in the Biotechnology & Drugs industry have deep experience in developing customer relationships. Marketing department at Menlo Therapeutics can leverage the sales team experience to cultivate customer relationships as Menlo Therapeutics is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Menlo Therapeutics is dominated by functional specialists. It is not different from other players in the Biotechnology & Drugs industry, but Menlo Therapeutics needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Menlo Therapeutics to focus more on services in the Biotechnology & Drugs industry rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee of Menlo Therapeutics is just above the Biotechnology & Drugs industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Menlo Therapeutics 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.
Interest costs
– Compare to the competition, Menlo Therapeutics 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.
Products dominated business model
– Even though Menlo Therapeutics 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. Menlo Therapeutics should strive to include more intangible value offerings along with its core products and services.
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 Menlo Therapeutics supply chain. Even after few cautionary changes, Menlo Therapeutics is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Menlo Therapeutics vulnerable to further global disruptions in South East Asia.
Menlo Therapeutics Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Menlo Therapeutics are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Menlo Therapeutics in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Biotechnology & Drugs industry, and it will provide faster access to the consumers.
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. Menlo Therapeutics can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Menlo Therapeutics can improve the customer journey of consumers in the Biotechnology & Drugs industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Loyalty marketing
– Menlo Therapeutics 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Biotechnology & Drugs industry, but it has also influenced the consumer preferences. Menlo Therapeutics can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Menlo Therapeutics 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.
Creating value in data economy
– The success of analytics program of Menlo Therapeutics has opened avenues for new revenue streams for the organization in Biotechnology & Drugs industry. This can help Menlo Therapeutics to build a more holistic ecosystem for Menlo Therapeutics products in the Biotechnology & Drugs industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Menlo Therapeutics has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Biotechnology & Drugs sector. This continuous investment in analytics has enabled Menlo Therapeutics to build a competitive advantage using analytics. The analytics driven competitive advantage can help Menlo Therapeutics to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Menlo Therapeutics can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Menlo Therapeutics in the Biotechnology & Drugs industry. Now Menlo Therapeutics can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Menlo Therapeutics can use the latest technology developments to improve its manufacturing and designing process in Biotechnology & Drugs sector. 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.
Building a culture of innovation
– managers at Menlo Therapeutics 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Menlo Therapeutics is facing challenges because of the dominance of functional experts in the organization. Menlo Therapeutics 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.
Threats Menlo Therapeutics External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Menlo Therapeutics are -
Technology acceleration in Forth Industrial Revolution
– Menlo Therapeutics has witnessed rapid integration of technology during Covid-19 in the Biotechnology & Drugs industry. As one of the leading players in the industry, Menlo Therapeutics 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.
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 Menlo Therapeutics in the Biotechnology & Drugs sector and impact the bottomline of the organization.
Increasing wage structure of Menlo Therapeutics
– 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 Menlo Therapeutics.
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. Menlo Therapeutics needs to understand the core reasons impacting the Biotechnology & Drugs industry. This will help it in building a better workplace.
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 Menlo Therapeutics 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 Menlo Therapeutics in Biotechnology & Drugs industry. The Biotechnology & Drugs 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.
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 Menlo Therapeutics.
Regulatory challenges
– Menlo Therapeutics 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.
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.
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. Menlo Therapeutics can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Menlo Therapeutics 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 Biotechnology & Drugs industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Menlo Therapeutics 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 Menlo Therapeutics prominent markets.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Biotechnology & Drugs industry are lowering. It can presents Menlo Therapeutics with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Biotechnology & Drugs sector.
Weighted SWOT Analysis of Menlo Therapeutics Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Menlo Therapeutics 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 Menlo Therapeutics 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 Menlo Therapeutics 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 Menlo Therapeutics 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 Menlo Therapeutics needs to make to build a sustainable competitive advantage.
