CASE STUDY

Laguna State Polytechnic University

Los Baños Campus

College of Business Management and Accountancy

Case No. 1:  David Pyott: CEO striving for effective marketing strategy towards highest
satisfaction of profitability

Submitted by:

BS Accountancy/III-A

Group 2

Aragones, Jamie Rose S.

Decena, Rona Mae M.

Militante, Christian Justin

Submitted to:

Mr. Romnick E. Pascual

Subject Teacher

CBME 2 Strategic Management

Date of Submission
October 29, 2020
I.  Point of View (P.O.V)
The group of analysts decided to take the point of view of Mr. David Pyott, CEO of
Allergan Company.

Mr. Pyott work is the basis of decision making as well as his responsibility includes
making the company profitable at their highest satisfactory. Mr. David Pyott is in charge and
accountable on any outcome of the company's decisions. His important duty is to overlook the
aspects including planning, execution, monitoring, and controlling time management and ensure
costumers satisfaction. In line with this, analysts found out the problem occurs on the product
they use in Botox injections to the public, consequently it gives domino effect for them
becoming a major player or becoming the top rank in pharmaceutical industry, as what they want
to strive and aim for in the next three years, therefore, the analysts take the perspective of Mr.
David Pyott’s to focus on the case study.

II. Synopsis/Overview of the Case

On the past few years, Allergan Company had made its mark in pharmaceutical Industry
by selling their products in the public which is the Botox Cosmetics and as times goes by their
product occur some side effects such as loss of expression, dropping eyelids, and slurred speech
and so on. Allergan company created a marketing strategy to promote their Botox Cosmetic and
it cost $50 million by their advertisement on TV and magazine, expanding their (Research and
Development) R&D expenditures by 26%, as a result to hire more people and this effect high
cost higher price in Botox treatment. Due to this high demand of Botox treatment the
competition on the pharmaceutical industry become a lucrative, as well as CEO David Pyott felt
that there is a need of new competitive strategy. Thus, Allergan company experience a severe
problem in terms of reaching their goal to become the major player or becoming top rank in
pharmaceutical industry, which is now the analysts would find appropriate marketing principles.

III. Statement of the Problem (S.O.P)

The aim of this case analysis is to discover what’s appropriate strategy David Pyott needs
to choose.
Specifically, the study will answer the following questions:
General Question:
1. What actions does David Pyott could do to reach the highest satisfactory in the
profitability of Allergan pharmaceutical company, as it is expecting to be top
management within next three years?

Specific Questions:
1. What strategic decision David Pyott must conduct in making the company cost-
effective on the standard acquisition of new formula and/or creating new production
line?
2. What market trends, communication strategies would be used to encourage
customer in the acquisition that could also excel and differ them from their
competitors?

IV. Areas of Consideration (S.W.O.T. Analysis)

Table No. 1: The S.W.O.T. Analysis of Allergan Pharmaceutical company

The table above represents the SWOT Analysis Allergan Company. It will serve as the
study undertaken by the organization of Allergan Company to identify its internal strength and
weaknesses as well as its external opportunities and threats.
Strengths Weaknesses Opportunities Threats
1. The company, 1. Large amount of 1. Development of 1. High market
throughout the years expenditures when it wholesale distribution competition
have been profitable comes to Research and relationship
Development as well as
advertising the product.

2. Feedbacks from 2. Their product or old 2. Expand more service 2. The bargaining power
customers specifically formula had said to have products of buyers or consumers
sales representative side effects making
consumers have been them not quite
well for the past years competitive for the
making them loyal current market.
consumers.
3. Through successful 3. High selling price due 3. Ability to sell the 3. Possible loss of
product it gained its to high cost of products online consumers
popularity. advertisement and
Research and
Development
expenditures
V. Problem Flow Diagram
Allergan Company striving highest
satisfactory in terms of profitability

Offers Botox Cosmetics

No
Did they create marketing Conduct alternative
strategy? solution

Yes

The treatment was supported by marketing efforts. Moreover, it

also offered in a party atmosphere such as Tupperware party.

In 2002, Allergan Company spends $50 million on marketing composed

of advertisement and R&D expenditures.

No
Did it contribute to company’s “It should be a medical
popularity? treatment not a social
gimmick”-some doctors
Yes

People such as actors and sales representative enjoyed and undergo this
kind of cosmetic.

Yes

Does the said product occur to It was explained clearly by

have side effects? the company that those
effects are temporary and
will disappear eventually.
No

Encourage more consumers.

Different competitors arise in terms of ophthalmologic and

dermatology.

Strategic Decision of David Pyott to capture

number one position in the pharmaceutical
industry
 Figure 1: Allergan Company striving highest satisfactory in terms of profitability

This figure indicates the case problem wherein Allergan Company encounters different aspects
of business problem and how David Pyott as a CEO handled these kinds of circumstances.

VI. Presentation of Alternative Solutions (provide at least three alternative solutions)

Alternative Solutions:
1. Make the policy in the acquiring of new formula that would be based on consumer's
perspective and could lessen side effects, through hiring of high standard scientists,
physicians and engineers, for wide various range pharmaceutical marketing strategies in
which could attract and build relationships.
2. Establish branches that could reach more customers in the cities and where competitors
would realize that Allergan was the first ones started there. Creating new formula of their
own that could comprise and lay loyal customers by making the company's weakness into
solutions.
3. Creating new formula of their own that could comprise and lay loyal customers by
making the company's weakness into solutions.

VII. Evaluation of Alternative Solutions

Table No. 2: Alternative Solution 1: Make the policy in the acquiring of new formula that
would be based on consumer's perspective and could lessen side effects, through hiring of high
standard scientists, physicians and engineers, for wide various range pharmaceutical marketing
strategies in which could attract and build relationships.

Advantages Disadvantages

(Pros) (Cons)

1. The company could achieve newly 1. The company could wait years for the
competitive production line by hiring result for the new formula.
experts such as scientists and engineers that
 could relate to market trends and improve
their communication strategies towards
customers.

2. As well as the relationship they could 2. They will need a lot of funds on acquiring
have with physicians and doctors, they new formula.
could also create harmonious reliability
from consumers.

3. The new formula will results for a long 3. The effectiveness of the new formula is
term benefit for the company. still uncertain.

The table above shows the first distinguished alternative solution together with its
advantages and disadvantages. The analysts believe that this alternative can open opportunities
for the company.

Table No. 3: Alternative Solution 2: Establish branches in different places.

Advantages Disadvantages

(Pros) (Cons)

1. Competitors would be threatened, and 1. The company could face greater

somehow realize that Allergan would be expenditure at their present standing.
the first ones there.

2. Wide range of source of income. 2. Developing new branches would bear

additional expenses as they are require hiring
more professional doctors and pharmacist.

3. It could reach more costumers in 3. The effectiveness of the new marketing

different location. strategy is uncertainly.
 The table above shows the second distinguished alternative solution together with its
advantages and disadvantages.

Table No. 4: Alternative Solution 3: Creating new formula of their own that could comprise
and lay loyal customers by making the company's weakness into solutions.

Advantages Disadvantages

(Pros) (Cons)

1. It will increase profitability of the 1. It would again increase Research and

company as it will have loyal customers It Development expenditures that the company
would again increase Research and would risk again.
Development expenditures that the
company would risk again.

2. Long term benefits to the company. 2. Make additional investment to create a

new formula.

3. It could create trademark that can add 3. Greater possibility that the same conflict
value to the company. would happen.

The table above shows the third distinguished alternative solution together with its
advantages and disadvantages.

VIII. Decision
After analyzing the current situation in the company, the analysts chose to suggest
alternative no 1. : “Make the policy in the acquiring of new formula that would be based on
consumer's perspective and could lessen side effects, through hiring of high standard scientists,
physicians and engineers, for wide various range pharmaceutical marketing strategies in which
could attract and build relationships.” In order to build an empire, there could be times that
companies try to challenge its capability as well as being exposed to globally competitive market
like Allergan Company they want to become number one position in the next three years. The
analysts believe that no entity exist perfectly but still strive to greatness. This chosen alternative
could open different opportunity and if this conducts successfully the other alternatives would
follow. As the first step, they have suggested to work with acquisition of new product formula
that could lessen their expenditures instead of creating their own new formula. To further
analyze next situations to be resolved, the group of analysts dive in to different issues occurred in
the company such as expenditures, side effects, and high market demand in the existence of
competitors. Although, side effects might consider weakness of the product but in the sense
major formulated products have side effects, but it could be reduced, by incorporating with
strategic principle that David Pyott or the CEO should have. Developing a strategy for product
launches requires knowledge of the target customers, the channels for reaching them, the
competitive and overall market environment, and an up-to-date, working knowledge of effective
marketing and communications tactics. This strategic principle that Pyott would do implicates
policies and guidelines company must have to achieve better results. In the acquisition of new
formula, even though it would be another expenditure it would not be considered waste for the
company to invest as it will improve its product through coalition with scientists, physicists, and
engineers. The expertise of those professionals would guarantee the high quality and
opportunities of making new devices not just for botox injections but also other health related
medical treatment. For instance, botox is proven to help reduce migraine, it sounds ironic to
product’s weaknesses, but it is a good advantage.
Secondly, through the concept of coalition, it would answer the first specific question,
that being cost-effective is also taking a part from the future, meaning, strategic decision could
better for the long run if allocation and utilization of the resources they already have, are
combined, as well as directed to the said decision. Through this method and creation of
relationship between the manpower they have, the physicists, scientists and engineers could
influence other consumers in their industry, according to marketing strategies suggested by
linchpinseo.com it is a great opportunity that those professionals can develop a domino effect in
terms of social capacity to influence others in their professions which are the doctors, the major
buyers of the Allergan. As well as, this kind of marketing strategy could resolve expenditure
issue of the company in the advertisement, as the analysts have noticed the company releases $50
million dollars for the advertisement and to compare Research and Development expenditures of
26%, just 2% lower from the income percentage of 28%. Simply because they have already hired
these influential experts, from them they would create loyal consumers that will surely raise the
company’s profitability. Then, it would again result to a domino effect to society, as per what
would loyal customers capability to influence, and possibly encourage those other targeted
consumers how they would enjoy their new line of products, due to this it would create more
loyal consumers. Moreover, targeted consumers of botox are those hardworking men and women
that in their 40s to 50s, by the alternative given, the consumers would imply that the famous tag
lines in the industry of botox, “to make you feel relaxed and stressed.” And “let them feel how
beautiful they already are.” Therefore, resolved the second specific question.
As the reader can notice, the alternative chosen is not something that specify imaginary
future but instead focused on the opportunities it would result, which can much forecast visible
future.

IX. Implementation

Table No. 5: Gantt Chart of Allergan Company

20x1 20x2 20x3
Ju Ju
Ja Ja
l- -
n- n-
D D
Ju Ju
ec ec
Action Items n n
October November December . .
W W W W W W W W W W W W
e e e e e e e e e e e e
ek ek ek ek ek ek ek ek ek ek ek ek
1 2 3 4 1 2 3 4 1 2 3 4
Strategic Marketing Planning process        
1. Clarify the objective.                                
2. Communicate the
plans.                                
3. Build out timeline and
tasks.                                
4. Hire professional
doctors and pharmacist.                                
5. Conduct research
regarding the acquired
formula.                                
6. Test the capability and
effects to users of the
acquired formula.                                
7. Set up a dashboard for
tracking success.                                
8. Evaluate the results of
the test conducted.                                
Designing Marketing Strategy        
9. Introduce to the
market using certain
taglines rather than costly
advertisement.                              
Marketing Situation Analysis        
10. Analyzing
competition.                                
11. Assessments of
reports.                                

Table 2: Actions of Allergan Company led by their CEO David Pyott

This table shows the time frame of the step by step process of the chosen solution to the problem
of Allergan Company.

Strategic Decision of Allergan Company

 Clarify the chosen alternative solution.

Focus on strategic alternative.

1st alternative: Acquisition of formula based on consumers’ perspective.

Incorporating strategic management principle

Coalition with professional doctors and pharmacists.

Design the new medical devices.

No
Does it meet the criteria in a Improve the
competitive market? design.

Yes

Start production using Total Quality Management.

Test the capability of the new formula and new medical production line.

Evaluate the result.

No
Does FDA approve the new Improve
product? strategic
planning.
Yes

Introduce taglines.

Analyze competition.

Effectiveness of taglines

Build relationship with buyers such as doctors.

 Gather feedbacks.

Assessment of reports

No
Does they attain highest Application of
satisfactory of profitability? contingency plan

Yes

Attained company’s objectives

Figure No. 2: Flowchart of the Strategic Decision of Allergan Company

This figure shows the process of implementing the chosen alternative solution to the problem of
Allergan Company.
X. Contingency Plan
In case that the best alternative solution does not work, the analyst decided to use the
third alternative solution which is to create new formula of their own that could comprise and lay
loyal customers by making the company's weakness into solutions. This will not be the best
decision in terms of expenditures as developing new formula would bare additional cost such as
hiring new employees to assign to develop the new formula, salaries of new hired employees as
well as the provision of new materials that they needed to develop the formula. Although, the
additional costs don’t limits to the monetary value itself, also to the time to spend in creating a
new formula. However, this contingency plan will allow the Allergan Company to showcase a
new formula or product line that would increase and widen their standing to the market. It will
also serve as a long term investment for the company that will help them to achieve their aim.

XI. Management Concepts/Business Ethics/Strategic Management/Strategic Marketing

Management/Financial Management/Managerial Economics Manifested in the Case
The case manifested through gathering of principle and/or theories from respective
authors of Strategic Management Principle that include wide range of policies, guidelines, and
best practices to strategic management and it is used to lead the company in better results, faster
development and strong market position. Principles it composes are connected to strategic goals
of the CEO, David Pyott, such as principle of expediency, principle of system approach,
principle of strategic choice, principle pf situational approach, principle of global business
planning, principle of globalization, and principle of strategic complementarity. The principles
mentioned have helped the group of analysts to come up with the best alternative solution that
relates to specific situation the company wherein, those principles explained the connection of
mission and vision, the principle of business ethics, multi-dimensional system, conflicts and
adaptation in situation like competitions, the procurement in research and development plans, the
behavior the company should have, creativeness, knowledge and continuous improvement. In
short, all strategic factors that could benefit the company in making their selves competitive and
well planned.

In terms of production, the researchers have used the idea from Total Quality
Management it influences them to come up with the decision to lessen side effects, its principles
tells that as manufacturing of medical devices, as what the company aim for, it is important to
take note of its utilization of other lean processes such as Kaizen, Kanban and 5S. of Total
Quality Management. If a company is a going concern it must adapt processes for continuous
improvement by aligning its plan, and make proper schedules of those activities like Allergan
company. And it would soon have better results if done according to the goals in each step of
process. According to 5S today, at its core, TQM is a management approach to long-term success
through customer satisfaction and this is achieved by ensuring conformance to internal
requirements. TQM works to integrate all functions (such as the marketing department, the
accounting department, the design team, etc.) to create customer satisfaction. Customer
satisfaction is the most important concept in total quality management because the customer
determines the level of acceptable quality.

On the other hand, implementation can be challenging for company which the analysts
chose the Principles of Management of Henri Fayol in terms of division of work, authority, unity
of command, unity of directions, discipline and so on. The group of analysts believed that such
principles would improve the procedures that the point of view, David Pyott could do. In this
way, the production and actual operation would align to tasks given in a systematic way.
Furthermore, the analysts believe that a company applying strategic cost management would
help their marketing strategy like Matrix Marketing article composed that environmental
turbulence affects organizational effectiveness, creating new organizational design requirements.

Thus, the marketing organization must be flexible to respond to changing conditions and
strategy needs. The organizational design should be evaluated regularly to access its adequacy
and identify necessary changes.

References:

https://www.mindtools.com/pages/article/henri-fayol.htm

https://www.casequiz.com/statement-of-problem-27049/

https://www.chiefoutsiders.com/strategic-services/marketing-strategy-implementation

https://matrixmarketinggroup.com/strategy-implementation-marketing-management/

https://flybluekite.com/how-to-implement-your-marketing-plan/

https://www.5stoday.com/total-quality-managemen

https://ceopedia.org/index.php/Strategic_management_principles

https://specialties.bayt.com/en/specialties/q/101283/what-is-a-quot-strategic-principle-quot

https://disruptit.wordpress.com/2007/12/01/difference-between-strategic-principle-and-mission-
statement/

https://www.mindtools.com/pages/article/henri-fayol.htm

https://creately.com/blog/business/business-contingency-plan-templates/

https://www.casequiz.com/statement-of-problem-27049/