THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) Description

DARMSTADT, SEPTEMBER 2006. The Serono deal was long in the making; it had eluded the Merck Group, a 338-year-old German global pharmaceutical and chemical enterprise, for months. So much so that last March, the Merck Group and its family owners had hopped onto the Schering AG acquisition train to ensure the growth it needed to remain competitive in the cutthroat pharmaceutical business. When the a??14.6 billion hostile offer they made for Schering was rejected in favor of a friendly offer from Bayer, it was difficult not to feel despondent.For months, Jon Baumhauer, the Chairman of the Family Board and influential member of the Executive Board of E. Merck OHG, had sustained the commitment of the family owners to a transformational merger that would define the future of Merck. Maintaining such secrecy among the 120-plus family partners representing the 10th to the 12th generations of Merck family owners was no small feat, but the absence of a deal was starting to create tensions on all levels. The offer from Ernesto Bertarelli, the largest shareholder of Serono, a Swiss-listed, family-controlled biotechnology firm, was hardly a surprise. Ernesto, through the company's investment bankers, had peddled the firm for months to all major pharma companies in the world, but had found few takers. The surprise was the newfound willingness of Serono to consider a negotiated deal. Merck's Executive Board, the family and Merck's advisers had kept an eye on Serono throughout the year. The company was attractive for its family culture, strong R&D capabilities, significant US presence, a rich product pipeline and of course world-class biotechnology manufac-turing competencies. Its size would give Merck much needed critical mass, but the deal was not cheap. It required extensive leverage and new equity injections from the family, its risk profile was higher than Merck's and cultural differences ran deep. Now the deal was within reach. Was this the transformational opportunity the Merck family sought? It was time to put the "courage and pioneering spirit" of the family firm to the ultimate test. Learning objectives: Managing a family business for sustainability; sophisticated family and business governance structures; managing growth; technology innovation; maintaining the entrepreneurial spirit; multi-generation family business; critical size and growth issues in the pharma business; managing incentive systems for executives.

Case Description THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Strategic Managment Tools Used in Case Study Analysis of THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

STEP 1. Problem Identification in THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study

STEP 2. External Environment Analysis - PESTEL / PEST / STEP Analysis of THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study

STEP 3. Industry Specific / Porter Five Forces Analysis of THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study

STEP 4. Evaluating Alternatives / SWOT Analysis of THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study

STEP 5. Porter Value Chain Analysis / VRIO / VRIN Analysis THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study

STEP 6. Recommendations THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study

STEP 7. Basis of Recommendations for THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study

Case Analysis of THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) is a Harvard Business (HBR) Case Study on Leadership & Managing People , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Leadership & Managing People, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A), is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Leadership & Managing People Solutions

In the Texas Business School, THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Step 1 – Problem Identification of THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) - Harvard Business School Case Study

The first step to solve HBR THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Family Merck is facing right now. Even though the problem statement is essentially – “Leadership & Managing People” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Family Merck, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A).

The external environment analysis of THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study. PESTEL analysis of " THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

To do comprehensive PESTEL analysis of case study – THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Policy Making Impact on THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Government policies have significant impact on the business environment of any country. The firm in “ THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Family Merck is operating, firms are required to store customer data within the premises of the country. Family Merck needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Family Merck in case study THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Family Merck in case study “ THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Family Merck in case study “ THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Taxation & Regulation Impact on THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Family Merck can compete against other competitors.

Government Scheme & Subsidies Impact on THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System & Stability, and its Impact on THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Family Merck needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Social Factors that Impact THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Technological Factors that Impact THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Environmental Factors that Impact THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Legal Factors that Impact THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)

Step 3 – Industry Specific Analysis

What is Porter Five Forces Analysis

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study. PESTEL analysis of " THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A)" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

Step 4 – SWOT Analysis / Internal Environment Analysis

Step 5 – Porter Value Chain / VRIO / VRIN Analysis

Step 6 – Evaluating Alternatives & Recommendations

Step 7 – Basis for Recommendations

References :: THE MERCKS OF DARMSTADT: WHAT FAMILY CAN DO (A) case study solution