Pharmaceutical Industry in 2005, The

John R. Wells; Elizabeth  Raabe

Case | HBS Case Collection | October 2005

Pharmaceutical Industry in 2005, The

by John R. Wells and Elizabeth Raabe

Abstract

The entire pharmaceutical industry faced uncertain times in 2005. Many of the industry's most pressing issues--patent expirations, new drug pipeline development, price pressures, regulatory issues, and political pressures--were long standing. Fundamentally new technologies were changing the way drugs were discovered, developed, and tested, allowing smaller, specialized competitors to enter the industry, compete in new ways, and grow to challenge the majors. Some observers were even questioning whether the blockbuster model on which the industry was based could continue. Blockbuster drugs, with sales of more than $1 billion a year, were becoming increasingly difficult and costly to develop. In this context, and with stock prices depressed, the industry majors were reflecting on their strategies.

Keywords: Strategy; Research and Development; Framework; Change; Competition; Technological Innovation; Pharmaceutical Industry;

Format: Print

21 pages

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Citation:

Wells, John R., and Elizabeth Raabe. "Pharmaceutical Industry in 2005, The." Harvard Business School Case 706-423, October 2005.

Case | HBS Case Collection | August 2015 (Revised May 2018)

Amazon.com, 2018

John R. Wells, Galen Danskin and Gabriel Ellsworth

On January 28, 2016, Amazon announced record 2015 operating profits of $2.2 billion on $107 billion of sales, and the markets responded with cautious optimism. For years, founder and CEO Jeffrey Bezos had prioritized growth and investment in new business areas over profits, but pressure from analysts was mounting as growth was slowing and profits were failing to materialize. In 2014, Amazon had recorded a net loss of $241 million on revenues of $89 billion, in stark contrast to China’s leading Internet player Alibaba, which reported $3.9 billion of net income on revenue of $12.3 billion. While Alibaba was a third-party marketplace with no distribution or inventory holding, Amazon’s business model was more diverse. Amazon was primarily an online retail department store, offering a wide range of product categories, but it also maintained a significant third-party marketplace where it offered shipping, customer service, payment processing, and return services to independent retailers. Amazon also offered software and cloud storage services, online video streaming, and its own line of electronic hardware (mobile, e-reader, and smart television products). In addition, Amazon published books, hosted its own app store, funded video content development, and operated Amazon Prime, an annual membership program with a wide range of benefits. Indeed, Amazon’s activities overlapped with those of Apple, Google, eBay, Alibaba, and many other companies. Amazon had proven itself to be aggressive and resilient during the dotcom crash and a revenue-focused, secretive corporation in the years after, providing little information on the profitability of its lines of business, many of which were believed to be unprofitable. Which businesses would drive Amazon’s future growth? Would the investments Amazon was making in market share eventually translate into profits? Or would another major competitor or business model replace Amazon? On a visit to the United States in June 2015, Jack Ma, chairman of Alibaba, stated, “We’re not coming here to compete.” Could Amazon or its investors afford to believe him?

Keywords: Strategic Analysis; retail; e-commerce; Amazon; internet; Amazon.com; AmazonFresh; Jeff Bezos; Cloud Computing; marketplaces; streaming; e-reader market; digital media; mobile app; online retail; shipping; database; Tablet; Kindle; Kindle Fire; smartphone; delivery; Market Platforms; Two-Sided Platforms; Competition; Internet; Corporate Strategy; Online Advertising; Business Growth and Maturation; Business Model; Business Organization; For-Profit Firms; Film Entertainment; Games, Gaming, and Gambling; Music Entertainment; Television Entertainment; Profit; Revenue; Global Strategy; Multinational Firms and Management; Taxation; Business History; Human Resources; Resignation and Termination; Books; Human Capital; Working Conditions; Business or Company Management; Goals and Objectives; Growth and Development Strategy; Growth Management; Management Practices and Processes; Industry Growth; Industry Structures; Media; Distribution; Distribution Channels; Order Taking and Fulfillment; Infrastructure; Logistics; Product Development; Supply Chain; Supply Chain Management; Organizational Culture; Public Ownership; Work-Life Balance; Problems and Challenges; Labor and Management Relations; Strategy; Adaptation; Business Strategy; Competitive Strategy; Diversification; Expansion; Integration; Horizontal Integration; Vertical Integration; Hardware; Information Technology; Mobile Technology; Online Technology; Technology Networks; Technology Platform; Web; Web Sites; Price; Software; Marketing; Marketing Strategy; Working Capital; Customer Focus and Relationships; Customer Value and Value Chain; Retail Industry; Advertising Industry; Distribution Industry; Electronics Industry; Entertainment and Recreation Industry; Information Technology Industry; Manufacturing Industry; Motion Pictures and Video Industry; Music Industry; Publishing Industry; Shipping Industry; Technology Industry; Video Game Industry; Web Services Industry; United States; Washington (state, US); Seattle;

Citation:

Wells, John R., Galen Danskin, and Gabriel Ellsworth. "Amazon.com, 2018." Harvard Business School Case 716-402, August 2015. (Revised May 2018.) View Details

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Launched in 2000, ASOS was one of the world’s largest online fashion specialists in 2018. Focusing on young consumers aged 16–25 years, the company offered over 85,000 items on its websites, many times more than the largest fashion stores, and added several thousand new lines every week. Based in the United Kingdom, ASOS shipped products to 230 countries and territories, and international sales represented more than 62% of total revenues. When new CEO Nick Beighton took over from founder Nick Robertson in September 2015, he faced some significant challenges. While ASOS was large by online standards, traditional fashion retailers were building their own online sales capabilities, and Amazon was expanding its apparel offering. Meanwhile, new online competitors were emerging at a rapid rate. After ASOS issued several profit warnings in 2014, its growth had slowed to 18% in 2015. Beighton was convinced that ASOS’s strategy was right and that the company needed to improve its execution to recapture its historical success. In 2018, the company’s performance under Beighton seemed to indicate that he was right, and the stock price was at record highs. However, the threat of Amazon remained.

On March 1, 2017, Best Buy Company, Inc., North America’s largest retailer of consumer electronics and appliances, announced a third year of comparable-store sales increases and a 20.8% increase in domestic comparable online sales. These results were in marked contrast to four years of declining comparable-store sales from 2010 through 2013. The stock price rose 17% in March, and on April 20, 2017, it surpassed $50 for the first time since January 2008. When CEO Hubert Joly took over in September 2012, Best Buy was losing share to Amazon.com, which was encouraging consumers to view products at Best Buy and other physical stores and then buy them for a lower price online, a practice known as “showrooming.” Undaunted, Joly had encouraged the practice, convinced that it presented an opportunity to sell to customers as long as Best Buy’s prices were competitive. Joly had committed the company to a multi-channel strategy in North America and exited struggling international operations. Operating margins had increased as a result, but growth was still proving elusive. In early 2017, Joly announced that his “Renew Blue” turnaround effort was complete and that he was now intent on creating the New Blue. Would the new strategy be enough to stop Amazon’s advances?

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