Swot Analysis of American Home Products

SWOT ANALYSIS

STRENGTHS

* The company had an almost debt-free balance sheet and growing cash reserves. At the end of 1980, AHP had almost no debt and a cash balance equal to 40% of its net worth. Being debt-free gives AHP an advantage in pricing that competitors will find challenging.

* AHP had a commendable marketing expertise in their prescription drugs. Because of this, they are the preferred choice of consumers over their competitors.

* AHP's managerial philosophy was frugality and tight financial control. It is precisely because of this philosophy that they are debt-free and all expenditures greater than $500 are personally approved by Laporte even if authorized on the corporate budget.

WEAKNESSES

* AHP's culture of conservatism and risk aversion can be seen as strengths but it can also be considered as weaknesses. In business, there should be a calculated risk in venturing into expansion or into new products. But if a business is too hesitant in taking risks, there is a possibility that their products can stagnate and do not have innovation anymore.

* A substantial portion of AHP's new products were clever extensions of existing products from competitors. Personally, since I work for Pfizer, I am aware of the millions of dollars that pharmaceutical companies invest on research, development, and patents. Once a patented product goes generic, these companies lose a substantial amount in sales because cheaper versions of their products come out, while these companies didn't invest as much in R&D. AHP can do well to take risks and invest on R&D in developing new products, so that its reputation as an innovator can also be known.

OPPORTUNITIES

* AHP's financial performance is stable,

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