Strategic Analysis
Introduction and Decision
Invitrogen’s corporate strategy focuses on growth and expansion. Acquisitions are thought to be the ultimate form of corporate growth. There is a significant amount of information that the management at Invitrogen taken into account before Invitrogen brings another company into their fold. With about ten years of experience acquiring companies, it is a process that has been entrenched into the way they do their business. Currently, 90 percent of the company’s revenue comes from research (the government agencies).
Situation Analysis (SWOT)
Internal Analysis
Invitrogen invested $83 million in IT and which helped the company to drive nearly two-thirds of its business through the web. Its e-commerce site has won several industry accolades. Also, the company’s pioneering work with the Supply Center gives it an edge over its rivals. The supply center has become handy because it gives scientists immediate access to the most commonly used molecular biology reagents round the clock. The company boasts of more than one thousand supply centers. However, the company has one key weakness: approximately ninety percent of its revenue comes from research, and which means that it would probably be doing things in the future at the whim of government funding (Hopkins, 2018).
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Opportunities and Threats
Opportunities exist in the Next -Generation Sequencing (NGS). This is widely seen as the path to personalized medicine. This refers to a family of new technologies that have drastically reduced the cost and time of sequencing, from a product that was initially developed for $3 billion is currently approaching a cost of $100. If every person in the world was sequenced, then Invitrogen is looking at a market that is valued at more than five trillion.
Threats include all the things that stand in the way of Invitrogen’s success. Currently, technological disruption of the industry is the greatest threat facing Invitrogen. There is no practice that is immune to threats. There are several threats that Invitrogen is currently facing. For instance, competitors in the area they are targeting have more innovative products, possible adverse changes in regulations governing reimbursement, and competitors having superior access to channels of distribution for the NGS products (Hopkins, 2018).
Strategic Options
The strategic options are manifold that can transform Invitrogen: instrumentation and technological disruption. The company believes that Next-generation sequencing (NGS) is the next big thing and that the acquisition of firms that deal with them could be a strategic goal away from its current business model. There are many strategic options available to the company: Roche, which is a $45 billion healthcare company (a strategic interest of Invitrogen), and a pioneer in the field. The Illumina introduced a cheaper version of the product and Applied biosystems who improved further on the product offering by producing another variant. The fourth, an unexpected player, is the Pacific Bioscience, who recently announced that they would commercialize a single molecule sequencer that would ultimately sequence the entire human genome for one-tenth of the price that the others charged.
Intra-Option Analyses
Status Quo Acquisition of any companies dealing with NGS
A strategic acquisition can emerge to be an important path towards the growth of the business. The most important factor affecting growth through acquisitions is for Invitrogen to take advantage of the underlying synergies that a cautiously and effectively orchestrated acquisition can generate. Because this has been Invitrogen’s strategy, they have found out that growth through acquisition is faster and less costly and even a much less risky path compared to organic growth method. The acquisition offers some advantages, which include easy financing for future undertakings and instant savings because of economies of scale. Besides, Invitrogen will benefit catching their competitors off guard and immediate market penetration. Also, Invitrogen will eliminate competition through acquisition. There are cons associated with Invitrogen’s acquisition and expansion into the NGS market. First, there could be a possible financial fallout. This is because returns cannot benefit stakeholders to the extent anticipated, and the expected cost savings may fail to materialize or may take quite a while to materialize because of several developing factors. Second, there are the hefty costs involved in an acquisition. Third, there will always be issues with integration, and finally, the partner may turn out to be poorly matched to Invitrogen in terms of culture and other important factors (James, 2018).
Failure to Acquire
There are benefits for Invitrogen when they do not acquire any of the companies dealing in NGS. For example, there is no financial fallout, costs that could have been used for acquisition is spent on in-house product development, unity within the company because no new people are coming with their alien culture, and there will be no distractions from operations. However, there are certain drawbacks and which include the following: a missed chance of speedily foraying into the NGS market, loss of market power, and a failure to meet stakeholder expectations (James, 2018).
Inter-Option Analysis and Recommendation
Entry into a potentially long-term market in the future =5
Product diversification =3
Integration issues =1
Implementation Plan
The acquisition should only proceed when the market for the products have determined with certainty. However, the implementation plan should proceed on a phase by phase basis rather than through a single big bang. This means that the process of acquisition should take place cautiously rather than in a single swoop of investment.
Plan for Assessing the Performance of the Firm after Implementation
The performance of the firm after implementation should be assessed using the earned value analysis. This is a method that relies on such techniques as planned value for the firm and earned value to determine the benefits on a real-time basis.
References
Hopkins, B. (2018). Invitrogen a porter five forces analysis. Essential Market Research. https://www.case48.com/porter-case/15342-Invitrogen-A
James, M. (2018). Invitrogen a SWOT analysis. Market Research. https://www.case48.com/swot-case/37653-Invitrogen-A