Analysis of Company X - Case Study Example

Table of Content

Contents

SWOT Analysis4

Strengths4

Weaknesses5

Opportunities6

Threats7

Pestle Analysis8

Political Factors8

Economic Factors9

Social Factors9

Technological Factors10

Legal Factors10

Environmental Factors11

Use of the Balanced Scorecard at Company X11

Financial Strategy12

Customer-Related Strategy13

Internal Business Processes13

Learning and growth (Employee-related Strategy)14

7-S Framework14

Hard Elements15

Soft Elements16

Recommendations for Change18

Recommendations on the Company’s Organizational Culture18

Recommendations to Minimize the Company’s Weaknesses20

Recommendations on the Company’s Leadership Style21

Conclusion21

Analytics Tools Analysis in Healthcare: A Case Study of Company X

Introduction to Company X

Company X is a drug wholesale firm whose location is in America. The company was formed in 2001 after a merger process. This corporation offers services such as the distribution of drugs and other business solutions designed to improve access to care, reduce costs, and boost the overall patient outcomes. The corporation is also involved in the distribution of over-the-counter drugs, healthcare supplies, and generic pharmaceuticals to various healthcare providers in the United States. Some of the institutions that benefit from Company X’s distribution include retail pharmacies, clinics, and acute care hospitals among others (Company X, 2017). Additionally, the healthcare firm is also known for offering pharmacy services to specialty drug patients. Many healthcare providers trust Company X as their partner within the pharmaceutical supply chain. Working as an intern in this company has greatly boosted my knowledge in healthcare products, especially in regards to various types of drugs. Precisely, I worked in the Company X Drug Corporation (ABDC) business unit. Overall, Company X is one of the leading corporations in the healthcare industry since it is in charge of 20% of all the sold and distributed pharmaceuticals in the United States. In 2015, the firm recorded more than $100 Billion in its annual revenue.

This proposal aims to provide a complete assessment of the company through an in-depth analysis. Firstly, the research paper will provide a SWOT Analysis of Company X by analyzing the firm’s strengths, weaknesses, threats, and opportunities. Second, it will conduct a PESTLE Analysis by discussing the political, economic, social, technological, legal, and environmental factors that the operations of Company X and other firms in the healthcare industry. The proposal will then analyze the company’s strategy performance using the balanced scorecard. Fourth, it will use the 7-S Framework model to understand the shared vision of Company X. Lastly, the research will provide recommendations for change in regards to the firm’s current operation and organizational structure.

• SWOT Analysis

Kurttila et al. (2013) define a SWOT analysis as a strategic planning tool that most business firms and organizations use to identify their strengths and weaknesses as well as the opportunities and strengths that exist within a given business setting. Using this tool, a firm can understand its operation and position in the industry. Below is a SWOT analysis for Company X.

Figure 1: SWOT Analysis Tool

Source: (Kurttila et al. 2013)

• • Strengths

The strengths of a company help in boosting its overall operation and performance. One of the main strengths for Company X is that it has an independent pharmacy market share (Pickton & Wright, 2011). This implies that the pharmaceutical has access to a large number of customers who purchase the medical products. By acting independently, the firm has managed to exist as a reliable distributor of healthcare products to retailers, clinics, and other healthcare providers.

Another key strength of the company is the existence of an innovative culture at Company X. Through innovation, the pharmaceutical has managed to manufacture a wide variety of healthcare supplies and drugs; hence increasing a range of customers and retaining the already existing ones. Thirdly, the corporation also has an effective Enterprise resource planning (ERP) system, which enables it to manage its core business processes effectively.

Fourth, Company X has a strong cash flow and financial position. Through financial stability, the firm has managed to enhance innovation and recruit qualified employees. Additionally, there is the presence of highly efficient distribution network at Company X. The company has registered a reliable outflow of the manufactured medical products to various healthcare providers in the United States. As a result, the firm has become the leading distributor of healthcare products to acute care hospitals, retail pharmacies, clinics, and assisted living centers among others.

Company X is also known for having a strong employee base of more than 10,000 employees (Pickton & Wright, 2011). These employees ensure that the firm can provide high-quality services and products to customers. Lastly, the company integrates advanced technology in most of its internal operations. Through modern machinery and medical equipment, the firm has managed to produce unique and well research products; hence, boosting its brand image.

• • Weaknesses

The weaknesses of an organization tend to negatively affect and slow down its main internal operations and overall performance. One of the main weaknesses facing the company is that the company is only present in a limited number of markets and it does not have an adequate global presence (Pickton & Wright, 2011). Precisely, the firm’s main operations are based in the United States, and lack of a global presence has restricted the firm from obtaining customers from other countries.

Another major weakness at Company X is that the firm operates in a high volume low margin business such that the impact on the cost pressure is quite high. Therefore, the firm is forced to sell its products at a high price; hence, recording low sales volume.

Thirdly, another weakness is that Company X experiences cases of product recall whereby customers return some medical products due to safety issues or product defects. Such cases are known to negatively affect the firm’s brand image as a provider of pharmaceutical products.

• • Opportunities

Opportunities refer to the favorable external factors that a firm can use to gain a competitive edge in the market (Kurttila et al. 2013). There are various opportunities that Company X is presented within the market and are likely to improve the firm’s overall position in the industry. Firstly, there is increasing access to healthcare as a result of the new healthcare reforms in the United States. Therefore, Company X will be in a position to widen its customer base since most patients will have the opportunities to access the healthcare products.

Second, there is an expansion of the generic markets in the United States. These markets are expanding with the advancement in technology in regards to the field of medical research. This expansion will provide Company X with the opportunity to boost its sales and create overall product awareness.

In addition, another opportunity is that the increasing cost pressures of other pharmaceutical corporations will make them suitable clients for the Company X. This is because the American company offers products at a wholesale price. Fourth, acquisition strategy and tie-ups of global pharma brands can present Company X with a chance to acquire well-performing healthcare firms; hence creating a strong partnership. Lastly, an understanding of the demographic trends can enable Company X to understand its range of target customers.

• • Threats

According to (Kurttila et al. (2013), threats are the factors that have the potential to harm a business firm. One of the major threats facing the Company X is intense competition from other pharmaceutical corporations. Specifically, some of the main competitors that threaten the market of Company X are McKesson Corp, Patterson Companies Inc, and Cardinal Health Inc. The existence of these competitors has reduced the firm’s market share in the healthcare industry since customers are distributed amongst the firms. Second, with the advancement in technology, the introduction of subsistent and cheaper drugs by other producers could negatively affect the financial performance of Company X (Kurttila et al. 2013). The other threats likely to harm the firm include strict government policies that relate to the pharma industry and government regulation of the healthcare industry.

• Pestle Analysis

Pestle analysis is a marketing tool that firms used to understand the nature of the environment in which it operates on (Gorgenländer, 2014). This tool mainly comprises an analysis of the political, economic, social, technological, legal, and environmental factors. The figure below shows a framework for pestle analysis.

Figure 2: PESTEL Analysis Tool

Source: (Gorgenländer, 2014)

• • Political Factors

The US government is considered to be the most stable government worldwide. This has created a conducive environment for the operation of pharmaceutical firms such as Company X. However, the existing political pressures in the United States have negatively affected both the drug makers and drug distributors in the United States. Precisely, the government has introduced their drug regulatory authorities and regulations that firms such as Company X have had to observe (Gorgenlander, 2014). The government aims to make the pharmaceutical industry safe for use by patients. To cope with such pressures, Company X has had to regulate the number and types of drugs manufactured by the firm. The corporation is currently in the limelight in regards to the health products it sells to customers. This form of pressure has caused healthcare firms to moderate the rate of drug production within their premises.

• • Economic Factors

The economic position of a given country has a major impact on the development of the pharmaceutical industry. The United States economy is such that it has recorded a tremendous growth for the past five years, leading to reduced tax rates, reduced tax rates, an increase in the rate of unemployment (Daidj, 2015). As a result, the purchasing power of most consumers, including those targeted by healthcare corporations has increased. Therefore, healthcare firms such as Company X have managed to boost their sales and increase the overall production. In addition, the flow of income within the US economy has resulted in the introduction of mergers and acquisitions within the pharmaceutical industry. Using the acquisition and merging strategies, many healthcare firms have worked on boosting their operations on the booming US economy. Company X has acquired several companies as well (Daidj, 2015). The stable economy in the US provides a conducive environment for the company to expand its operations.

• • Social Factors

Social issues have also affected the pharmaceutical industry in the United States. Precisely, there has been a rise in the number of health issues, such as cases of obesity within the US population. The main reason for these health problems is due to the development of poor eating habits in the contemporary society. As a result, to meet the needs of the new generation, Company X and other healthcare firms have intensified on research and development (R&D) (Daidj, 2015). These pharmaceutical companies are coming up with new. drugs that treat the arising health problems, thus boosting their level of innovation. For example, the healthcare corporations joined efforts to form the “liptor” product, which was used to minimize the level of cholesterol within the body. The invention of this drug has greatly helped in the diagnosis of diabetes, which is increasing epidemic amongst children in particular. Therefore, it is evident that the healthcare firms have benefited from this through increased sales and innovation. Also, Company X is also working towards fulfilling its corporate social responsibility (CSR) to the society within which it operates.

• • Technological Factors

Technological developments and new products and innovation has been the primary drivers in the pharmaceutical industry in the United States. The healthcare industry has seen key modern advances in the scientific technology since firms such as the Company X have had to adapt to the markets they participate in (Moore, 2014). Through investment and spending on extensive research and development (R&D), Company X has boosted its level of innovation. With the advancement in technology in the United States, the types of products do not define the pharmaceutical industry, but rather, the technology it employs. Through modern technology, there has been an increase in the industry’s pace. Companies such as Company X are currently ensuring that they keep up with these technological changes to avoid becoming vulnerable.

• • Legal Factors

The legal environment in the United States has also had a major impact on the internal operations of Company X and other firms within the industry. To ensure that drug companies offer safe products to customers, the US government has introduced certain health regulations (Suder, 2009). For example, through the FDA, most of the healthcare firms are expected to perform clinical tests on their drug products in a bid to meet the health expectations of the body. In addition, the United States has established legal issues and policies involved in the importation and exportation of the drugs. For example, the firms have to pay a certain level of taxes to take part in trading. The management at Company X ensures that the firm can meet the legal expectations set by the US government and other recognized health bodies (Suder, 2009). Adhering to these legal demands has helped to ensure the proper use of medicines and a reduction in cases such as the provision of sensitive medicines to unauthorized persons.

• • Environmental Factors

Customers within the US healthcare industry are demanding high-quality products of the medical products at an attractive price (Daidj, 2015). Therefore, to maintain customer loyalty and gain a competitive edge Company X has minimized its cost of production such that it can set affordable prices for its various distributors. Maintaining the quality of its products helps to boost the customer’s level of trust. Second, firm in this industry are expected to fulfill their CSR responsibility to the society. Precisely, Company X ensures that its operations are incorporated within its corporate social responsibility programs. Overall, it is imperative for pharma companies to understand how their businesses and marketing plans are related to the environmental issues.

• Use of the Balanced Scorecard at Company X

A Balanced Scorecard is a strategy-performance management tool that the management uses to keep track on how staff members executive activities within their control. The other key uses of this tool include a firm communicating their goals and objectives, alignment of day-to-day activities with a company’s strategy, and monitoring of progress towards achievement of strategic targets (Norreklit, 2016). To maintain an effective balance scorecard, the Company X has implemented certain strategic objectives that help to boost the firm’s overall performance. Precisely, the firm’s balance scorecard views Company X’s business strategy from four key perspectives as shown below.

Figure 3: Balance Scorecard at Company X

Source: (Norreklit, 2016)

• • Financial Strategy

Firstly, the financial strategy of Company X is currently such that the American firm focuses on trying to maximize the wealth of its shareholders and trying to meet their needs first. For many years now, the firm’s stakeholders have been the main source of the firm’s support in regards to financial stability. As a result, the company focuses boosting their profits by increasing the stock price. Second, the company has also been working on ways to reduce its prices since it acts as the main distributor of healthcare products and drugs to other medical firms and retailers (Kaplan & Norton, 2015). By reducing their prices, the firm ensures that the wholesale products sold to acute care hospitals, retail chain pharmacies, clinics, and mail-order facilities are affordable. This is a key strategy that has enabled the company to be the key player in the pharmaceutical market. Thirdly, the firm has also tried to increase its operating profits by ensuring that it produces top-notch medical products that outdo those of its main competitors. The main measures of the above strategies include an increase in share price, higher profit margins, and a reduction in the publishing cost.

• • Customer-Related Strategy

Company X is known to value its customers since they are the main source of income and they ensure continued operation of the corporation. One of the key strategies that help to boost the firm’s performance is to ensure fast delivery of products to the customers (Kaplan & Norton, 2015). The company has improved its distribution system to ensure that products get to customers in time. The measurement of this objective has been the establishment of more distribution centers and stores in the United States. Second, the company has a user-friendly website from where customers can receive key information about its main operations. To achieve this objective, the company has invested in site maintenance by selecting qualified experts who deal with the website. Thirdly, Company X has also worked on enhancing brand loyalty by boosting the level of customer satisfaction. The frequent customer visits and increased customer ratings are the main measures of the strategic objective.

• • Internal Business Processes

The processes that occur at Company X are quite vital in determining the company’s overall position in the market through perceived performance. Firstly, Company X is known to ensure that the speed of processing orders is swift and reliable (Norreklit, 2016). However, the corporation still ensures that customers can follow all the production processes. As a result, the company has managed to reduce its processing time and ensure that activities and tasks do not overload the workers. Additionally, to boost its performance, the company ensures that its medical products, especially those manufactured for complex health issues such as cancer are well-branded and label. This strategy has helped to reduce unethical cases such as selling of counterfeit products, a practice that tends to affect the overall brand reputation. Therefore, the measurement for this strategy is a reduction in customer complaints about the existence of fake products in the market.

• • Learning and growth (Employee-related Strategy)

Boosting the overall competence of the firm is a key strategy that has enabled the Company X to enhance its long-term growth and sustainability. Firstly, in regards to this strategy, the corporation ensures that it has a highly-skilled staff (Norreklit, 2016). The firm’s management recognizes that the competence of employees enables it to gain a competitive edge in the market. Since the company deals with highly-sensitive products, the expertise of workers is a key requirement. To achieve this strategy, the firm has been engaging in the training and employment of high expertise staff. Another strategy maintained at the firm is a high level of innovation (Norreklit, 2016). Through research and development, the company has managed to come up with new premium medical products for the market. The company works towards maintaining the culture of innovation by incorporating modern and advanced technology.

• 7-S Framework

The 7-S framework is a model that illustrates the manner in which a firm can unite the seven business elements in a bid to increase the level of effectiveness (Waterman, 2016). The business model is such that the hard elements include strategy, structure, and systems, whereas the soft elements are shared values, skills, style and staff. The figure 4 below shows a basic structure of a 7-S framework model.

Figure 4: 7-S Framework Model

Source: (Michalski, 2011)

• • Hard Elements

Strategy: As stated earlier, Company X tries to maintain the cost-leadership business strategy by maintaining its low prices for its products. Since the company mainly works as a distributor of wholesale medical products, it has a responsibility to ensure that retailers receive the products at a relatively lower price (Waterman, 2016). This strategy has enabled Company X to become the leading distributor in the US market. By focusing on price reduction, the company has managed to gain a competitive edge in the market, compared to its competitors such as Patterson Companies Inc and Cardinal Health Inc. Overall, maintaining the cost-leadership business strategy has enabled the company to operate profitably as a distributor.

Structure: The structure of Company X is such that although it is currently working on modifying the culture, it has, for several years, maintained the hierarchical organizational structure. According to the management, the company is too large to adopt another form of organizational structure. The company has one CEO, Steven H Collis, and a Vice President named Michael Kilpatric (Waterman, 2016). The other staff members report directly to both the CEO and the Vice president. For more than three years now, the company’s shareholders have debated on whether this structure can be modified to a more cohesive one in a bid to boost performance and overall cooperation amongst all workers.

Systems: The systems at Company X have played a key role in shaping the firm’s operations and internal performance (Michalski, 2011). Precisely, the pharmaceutical corporation has established a wide variety of systems that assist in facilitating its activities. Firstly, the company has a training system for boosting the production skills and medical expertise of employees. Second, a customer relationship management system has enabled the firm to enhance its relationship with customers, especially the drug retailers in the United States. For effective operation, the management ensures that it evaluates each of the two systems frequently to increase efficiency and enable the firm to gain a competitive edge in the market.

• • Soft Elements

Shared values: The business culture at the Company X is such that the company maintains the culture of innovation (Chakravarthy, 2014). To survive in the competitive market, the pharmaceutical has invested in the production of new medical products through integration of technology into research and development (R&D). Employees at the firm are encouraged to enhance creativity since it boosts the company’s overall performance. Second, the company is known for observing its ethical values and practices, especially when dealing with its customer. To maintain this shared value, the firm’s top priority has been to ensure that it produces drugs that are safe for consumption without focusing too much on making profits while forgetting its responsibility to its customers.

Skills: To boost its overall performance in the pharmaceutical market, the Company X ensures that its employees possess certain skills. For example, most employees are impacted with research skills during training, which enables them to conduct thorough studies before coming up with new products (Michalski, 2011). The firm also enhances effective communication skills to ensure that the level of interaction amongst employees and the management is healthy. Thirdly, a large group of workers, especially those in the warehouse department are imparted with packaging skills to help in labeling and packing the manufactured medical products. These three skills have made the operation at the firm easier.

Style: The style of leadership adopted by Company X is the transactional leadership style (Chakravarthy, 2014). This style, which is also known as managerial leadership, mainly focuses on supervision, organization, and overall performance. Although the corporation is profit-oriented, this style of leadership is gauged as ineffective by most since it only promotes compliance and punishments. Through transactional leadership, Steven H Collis the CEO maintains the overall mandate to control the subordinates. Although the company has been performing tremendously in regards to making profits, transactional leadership style has affected the level of cohesion at the firm.

Staff: The company operates with more than 10,000 employees who are distributed within various business units (Pickton & Wright, 2011). One of the main expectations of the staff members by the management is to ensure that they can interact with customers; hence maintaining a healthy customer-business relationship. The Company X has also worked hard to ensure that the staff members are paid a highly considerable wage to boost their motivation and reduce cases of employee turnover, which can negatively affect the firm’s operations.

• Recommendations for Change

Based on the above analysis, there are certain areas that the company needs to improve on in regards to its overall operations.

• • Recommendations on the Company’s Organizational Culture

As the company’s CEO, one of the key areas that I would change is the company’s organizational culture. The company’s current organizational culture appears as below:

“Before” Organizational Structure of Company X:

Figure 5: “Before” Organizational Structure

Source: Author

Based on the above table, it is evident that the firm’s organizational culture is based on a hierarchical arrangement. The other employees and staff members are in the lowest rank, and they are under the leadership of the executive vice president. Although this organizational structure is well organized, it tends to focus more on hierarchical arrangement instead of the activities of the organization. As the CEO of the company, I would focus on implementing an organizational product structure. This structure would be quite effective for surviving in the competitive environment, especially in the pharmaceutical industry (Miles et al. 2016). This organizational structure is such that the managers will report to the company’s president by product type Retail and wholesale companies such as Company X mainly use the structure. Each store for the drugs and other medical products should have a marketing department to make the sales more effective. Using this structure, each of the identified managers can evaluate the work of more than one field-marketing employees (Miles et al. 2016). The organizational product structure will appear as below:

“After” Organizational Structure of Company X:

Figure 6: “After” Organizational Structure

Source: (Waterman, 2016)

• • Recommendations to Minimize the Company’s Weaknesses

To work on its weaknesses, the corporation firstly needs to widen its market operations to other countries. Although the company operates profitably in the United States, its sales are mainly limited to the market in the country. This means that the firm has not yet maximized on its potential in regards to having a large customers base. Alternatively, the company could open a branch in another country such as the United Kingdom. Although Company X is also involved in the exporting of its products, having a premise in another country can help in boosting the level of customer awareness. The management could decide to merge with other pharmaceutical firms in the country. This will enable the firm to have support for a customer base since the merging partner will be more familiar. All in all, it is important for the company to consider widening its operations.

To overcome the competition, the company should present its customers with added advantages such as a discount on wholesale purchases. The high level of competition has significantly reduced the market share of the company. As a result, the firm has a responsibility to ensure that it can regain its customers, through effective innovation strategies. It is also important to ensure that there is the high quality of customer service.

• • Recommendations on the Company’s Leadership Style

Although transactional leadership works for the company, it is not the most effective leadership style. The firm should consider implementing the transformational leadership style, which embraces change and diversity t the workplace. With the aim of expanding shortly, it will need to recruit leaders who can work in a diverse environment. Transformational leadership is not coercive, but rather a system whereby the leaders interact freely with employees. Implementing this leadership skill will enable the corporation to gain a competitive edge in the market through effective internal operations.

• Conclusion

In summary, Company X is one of the most successful pharmaceutical corporations in America. The company is involved in the provision of medical products to hospitals, clinics, acute care settings, and retail pharmacies among others. The company currently employs more than 10,000 employees. Based on the SWOT analysis, it is evident that the company has certain strengths such as having an independent pharmacy market share, an innovative culture, a strong cash flow and financial position, and a reliable based on competent employees. The firm also has weaknesses such as limited market, operating in a high volume low margin business, and cases of a product recall. The main threat facing the firm is competition from other corporations such as McKesson Corp, Patterson Companies Inc, and Cardinal Health Inc. in regards to the PESTEL analysis, it is evident that the company operates in a conducive US environment, which has a stable economy and political stability. However, the analysis shows that there are still expectations that it has to achieve, for example, observing the set regulations and policies, paying taxes, and fulfilling its corporate social responsibility to the society. Based on the company’s balance scorecard, it is evident that most of the strategies focus on customers, financials, internal business processes, learning, and growth. The 7-S framework also defines the system of the firm, and one of the evident systems is the implementation of the transactional style of leadership. Although there are some adjustments that the company needs to make, it is evident that it has operated successfully within the pharmaceutical industry. Overall, conductive an effective analysis of the company has helped in creating a better understanding of its main operations and strategies in regards to the contemporary market.