Novartis: A Case Study on Case Study

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As is often the case, early implementation trials have show that personnel feel threatened by new technologies overhauls and will generally attempt to passively prevent the success of dramatic organizational change.

Porter's Five Forces:

Rivalry:

In spite of the threat of resistance, it is important for Novartis to remain aggressive in its pursuit of modernization. The improvements in efficiency are necessary in the face of a challenging. The pharmaceutical business is fiercely competitive. Greater efficiency means a wider availability of resources for research & development. Thus, Novartis selected SAP as its it provider, drawing on the firm amongst its rivals for the resume of successes already reported. Consideration of Swiss Post, Schlumberger Limited and Saudi Aramco denoted that SAP has been selected and performed well for other very large accounts.

Threat of Substitutes:

Still, the threat of substitutes remains high, and is directly correlated to the impending danger of overall implementation failure. As the project expands from one country to the next, it has been confronted with clear obstacles, particular in the form of national policy and culture differences. The case assessment tells that "it is important for the project team not to lose momentum when determining how each country, region, business unit, or function does things (the 'as is'). It is also important to recognize that, at some point, this process must end and a standardized, global process must be defined." (p. 8) Until that point, the threat that this contract may be deemed unsuccessful and alternate plans may be executed does exist.

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Buyer Power:

Novartis is identified in the case assessment as having conducted roughly $20.9 billion in sales in 2002 through its two divisions of Novartis Pharmaceuticals and Novartis Consumer Health. As a world leader in research and the development of medical products, Novartis has an expansive and unrestrained buying power. This is further dictated by the generous budget granted to the project for HRIS implementation.

Supplier Power:

SAP is also in a place of considerable power as a supplier with a resume that includes several firms that are of yet a larger scale than Novartis. This suggests that a firm such as SAP may be uniquely capable of providing the type of global consistency demanded in the Novartis overhaul. It is thus that there may be few competitor that can truly accomplish that which Novartis requires.

Threat of New Entrants and Entry Barriers:

The threat of New Entrants into the pharmaceutical industry is relatively low. This is because there are prohibitively high costs for obtaining certain licenses, for conducting the necessary research & development and for addressing all the legal liabilities that are implicit to the field. It is also the case that most participants in this industry are scaled similarly to Novartis, meaning that the accumulation of basic capital is a substantial barrier preventing new entrants.

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