42983918 merck strategic management report

8/13/2019 42983918 Merck Strategic Management Report

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JOURNEY TO MERCK CO

& INC

History of Merck Co & Inc

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Merck and Schering-Plough recently merged to create a new company. Today, It is the second-largestpharmaceutical company in the world. Merck is also a global leader inconsumer products and animal care.Both Merck and Schering-Plough hae a long and rich history o! workingto improe people"s health and well-being. Through the years, the

researchers hae helped to !ind new ways to treat and preent illness !romthe discoery o! itamin B1, to the !irst measles accine, to cold remediesand antacids, to the !irst statins to treat high cholesterol. Merck#s scientistsalso hae helped deelop many products to improe animal health,including accines and antibiotics.

How Merck Operate

$e beliee in operating openly, honestly and with the highest degree o! ethics and integrity. Thisincludes%

making sure that the company complies with all applicable laws and regulations globally

continually rein!orcing our oerall commitment to ethical business practices and behaior, ateery leel o! the company, through the Merck &!!ice o! 'thics and our company"s code o!conduct( and

Sa!eguarding indiidual priacy e)pectations through our global priacy program.

Diversity at Merck

Merck alues the dierse contributions o! its employees around the world, and is committed to creating aworkplace that is open, welcome and respect!ul o! all o! its employees.

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TIME LINE

Merck + o. traces its originsto riedrich acob Merck who purchased a drug store in /armstadt, 0ermany in 12

'manuel Merck who took oer the store seeral generations later, in 121.

'manuel and his successors gradually built up a chemical-pharmaceutical !actory that producedin addition to raw materials !or pharmaceutical preparations a multitude o! other chemicals.

In 1231, 0eorge Merck established his roots in the 4nited States and set up Merck + o. in 56as the 4S arm o! the !amily partnership, '. Merck 7named !or 'manuel Merck8, which is nowMerck 90a:.

Merck + o. was con!iscated in 131; during $orld $ar I and set up as an independent companyin the 4nited States.

Between the wars and during $orld $ar II, the company was led by 0eorge $. Merck, whooersaw :merica"s germ-war!are research at ort /etrick. Today, the 4S company has about1 !actories worldwide.

It is one o! the top ; pharmaceutical companies worldwide, much larger than its 0ermanancestor, which currently employs around >*,2== people in * countries.

In *==


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JOURNEY TO MERCK!KI"T!N

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HI"TORY O# MERCK !KI"T!N

MERCK TOD!Y

Merck runs its operating business in !our diisions% Merck Serono, onsumer Fealth are, GiDuidrystals, and Per!ormance + Gi!e Science hemicals.

The Merck Serono divisionmarkets prescription medicines. It discoers, deelops and manu!acturesboth chemical and biological molecules. Merck holds strong positions in neurodegeneratie diseases andoncology. In addition, the diision markets !ertility treatments, a !ield in which we are the market leader,growth hormones, as well as a broad port!olio o! classic products, especially !or cardioascular diseasesand metabolic disorders.The Consumer Health Care divisiono!!ers oer-the-counter products !or preentie health care andthe sel!-treatment o! minor ailments.Liquid Crystals division!ocuses on the deelopment o! molecules !or printable organic electronics, onthe use o! alternatie energy, as well as on lighting materials !or energy-saing G'/s 7light-emitting

diodes8 and &G'/s 7organic G'/s8. Merck is the global leader in the liDuid crystals market.Performance & Life Science Chemicals, the second diision within the hemicals business sector,mainly supplies specialty chemicals to regulated markets, !or e)ample the pharmaceutical, cosmetics and!ood industries. :nalytical and scienti!ic laboratories use our reagents and test kits. Moreoer, thediision is the market leader !or pearl luster e!!ect pigments a highly specialiEed niche within the

pigment market.

THE #UTURE

Merck will continue to operate in both Pharmaceuticals and hemicals and to !ocus on specialtyproducts. $e will also continue to inest signi!icantly in research and deelopment. $e want to grow

both organically and through acDuisitions. $e will adhere to our conseratie !inance policy.

MERCK RODUCT"

$ar%acetica's ro(cts

G&/&PI5 tablets contain amlodopine, which is widely used !or the treatment o! high bloodpressure and both stable and unstable angina. G&/&PI5 7:mlodopine8 is globally known !or itse!!icacy and long-term clinical use, and there!ore enHoys the con!idence o! medical pro!essionalsworldwide

e!omerc IM IA Broad-Spectrum Third generation ephalosporin inHection containse!ota)ime Sodium. '!!ectie against gram negatie and gram positie pathogens.

Chemical Products

Merck !or Pharma% Innoatie products !rom Merck support you in all phases o! pharmaceuticalmanu!acture - !rom research through industrial-scale production to Duality control.

Merck !or ood% &ptimum sa!ety and Duality !or all !oods% Mercksupplies cleaning and disin!ecting solutions, raw materials, products anddocumentation !or in-process and Duality controls.


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Merck !or G/s + 'merging Technologies% Merck makes communication isible - with high-tech chemicals and materials !or G/s and &G'/s, organic semiconductors, &G'/ componentsand etching pastes.

Merck !or Biosciences% State-o!-the-art li!e science products% our o!!er ranges !rom deelopmentto large-scale manu!acture o! many reagents !orresearch.

Merck !or osmetics% Beauty through Merck% $esupply a wide range o! special raw materials !or use inskin care and decoratie cosmetics.

Merck !or Printing, Plastics, and oatings% Packaging iscrucial. Merck supplies noel e!!ect pigments !or the

plastics, printing and coatings industries, with a wide rangeincluding decoratie and !unctional pigments

Intro(ction to Merck)rivate* +i%ite(, akistan

Merck 7Priate8 Gimited is a subsidiary o! Merck 90a: 0ermany in Pakistan. It has been working inPakistan since 13;@. The business in Pakistan is controlled by the Managing /irector, a nominee o!Merck 0ermany. Presently Mr! "! #aqy $hanis the Managing /irector. In Pakistan, Merck 7Priate8Gimited is looking a!ter * main business groups namely%

1. Pharmaceuticals*. hemicals

Pharmaceutical products are produced in Merck Juetta !actory and Merck Pharmaceuticals located at

S.I.T.', 9arachi. They are then distributed through a network o! dealers all oer Pakistan. hemicalbusiness group is called KPer!ormance and Gi!e Science hemicalsL 7PGS hemicals8 and is composedo! three main segments

:. hemicalsB. /iagnostics. Pigments

The products o! PGS hemicals are not produced in Pakistan but are imported and then supplied to ouralued customers through a network o! hemical and /iagnostic dealers. Some o! the products arecustomiEed and are only meant to cater customers need in Pakistan and are labeled under Merck

7Priate8 Gimited. The /ealers !or hemicals and /iagnostics are restricted to look a!ter the businessthey are assigned !or, howeer, in some cities the business o! hemicals/iagnostics is looked a!ter bythe same dealer.

-!+UE" O# MERCK


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&ur business is presering and improing human li!e. $e also work to improe animal health. :ll o! ouractions must be measured by our success in achieing these goals. $e alue, aboe all, our ability tosere eeryone who can bene!it !rom the appropriate use o! our products and serices, thereby proidinglasting consumer satis!action.

$e are committed to the highest standards o! ethics and integrity. $e are responsible to ourcustomers, to Merck employees and their !amilies, to the enironments we inhabit, and to thesocieties we sere worldwide. In discharging our responsibilities, we do not take pro!essional orethical shortcuts. &ur interactions with all segments o! society must be transparent and re!lect thehigh standards we pro!ess.

$e are dedicated to the highest leel o! scienti!ic e)cellence andcommit our research to improing human and animal health and the

Duality o! li!e. $e strie to identi!y the most critical needs o!consumers and customers, and we deote our resources to meetingthose needs.

$e e)pect pro!its, but only !rom work that satis!ies customerneeds and bene!its humanity. This depends on maintaining a!inancial position that inites inestment in leading-edge research

and that makes it possible to e!!ectiely delier the results o! thatresearch.

&ur ability to e)cel depends on the integrity, knowledge, imagination,skill, diersity and teamwork o! our employees. To this end, we strie

to create an enironment o! mutual respect, encouragement andteamwork. $e also strie to reward commitment and per!ormance

and be responsie to the needs o! our employees and their !amilies.

CODE O# CONDUCT"

Our values and standards are the

basis of our success. They always

have been. They always will be.

The people who use, recommend or prescribe our products haeplaced their trust in us. 5o matter how strong our reputation, we

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must re - earn that trust eery day by practicing the alues and standards that hae guided this company!or more than 1== years.

$e work hard to make sure that the integrity o! this company remains a priority !or eeryone at Merckeery day, at eery leel o! our company. &ur code o! conduct, which we publish !or employees underthe title Our Values and Standards, helps to make sure that our employees understand what is e)pectedo! them, and proides guidance on business standards and practices.

%ISC'E() "N% %E'ELPMENT

#rin*in* im+ortant medicines and vaccines to +eo+le around the ,orld

throu*h -reakthrou*h science! This is the heart of ,hat ,e do!

The work we do in our labs has helped to sae and improe countless lies. Thanks to our world-classresearchers, state-o!-the-art technologies and unrelenting !ocus on scienti!ic e)cellence, Merck is at the!ore!ront o! discoering and deeloping new ways to treat and preent disease.

Scienti!ic discoery and deelopment hae always been the cornerstones o!our company. Today, we conduct research in a broad range o! therapeuticcategories including cardioascular disease, in!ectious diseases, accines,cancer, neurology and women#s health. :nd, to help achiee our goal o!saing and improing lies around the world, we are e)panding ourcapabilities in new areas, such as biologics.

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PHASE-I

STRATEGIC FORMULATION

ST("TE.IC M"N".EMENT

:ccording to red ? /aid, KIt#s an art and science o! !ormulating, Implementing and ealuating cross!unctional decision making that enable an organiEation to achiee its obHectieL

"CC(%IN. T ME(C$ /P'T0 LIMITTE% P"$IST"N

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In M'?9 Pakistan Strategic Management is the most important thing !or them because they beliee i!company don#t hae any plan 7that is they were re!erring to mission + ision statement8 it cannot goanywhere. It is the need o! today#s world.

ST("TE.IC PL"NNIN. /INT1TIN ( "N"L)SIS0

:nalysis andintuition proide a basis !or making strategy !ormulation decisions. or Merck Pakistan, itis purely done on the basis o! analysis !or Merck there is no such thing as intuition because they areconcern with !act and !igure which they hae gathered !rom di!!erent sources. Being in pharmaceuticaland chemical business there is no chance o! being taking a risk in Duality and Duantity there!ore all thedecisions taking in Merck Pakistan are purely based on analysis. Specially, chemicals !rom Merck areimportant component o! process chain !rom drug deelopment to industrial production. Merck ensurereliable analysis in research and dependable production processes.

"TR!TE.IC +!NNIN. ROCE"" !T MERCK

Strategic planning process at Merck is a continuous process. Merck take its principle decisions annually.

6early meeting in a remote place with the 's and upper management is took place where the reialo! strategy as well as solution to the maHor problems are discussed. The issues regarding suppliers, rawmaterials need planning which is done annually. The decisions are team decisions and are taken byregional team haing 1=-1< members. Aision and mission o! Merck neer changes but codes o! conductsare changes according to strategy.

RE"ON"I/+ITIE" #OR "TR!TE.IC +!NNIN. IN MERCK

Ste+ Ty+ical #oard and Staff (oles

and (es+onsi-ilities

Consultant Contri-ution

1. Prepare to plan ull board makes commitment,establishes planning committeeto deelop approach and timeline

N ')perience in charting outplanning processesN 0uidance regarding typicaltimelines and best practicesN Board education regarding the

alue o! planning*. ?eiew ?eise alidateMission, Aision and Aalues

Board, usually with input !rom sta!!andor membership 7Board shouldapproe !inal ision and mission

N ')pert !acilitation o! processN 'ducation regarding thede!initions o! ision, mission and

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statements8 aluesN 0uidance regarding how to cra!te!!ectie statements

>. 0ather releant data andstakeholder input

Board and Sta!! N ')pertise regarding methods !orgathering inputN :ssistance in designing datacollection tools, conducting

outreach, gathering !eedbackN Independent third party to listen tostakeholders and synthesiEecommentsN ?esearch on peer organiEations ortrends

@. Set goalsdeelop plan!ramework

Board and ')ecutie Sta!! N ')pert !acilitationN ?etreat design to ensure time isused e!!icientlyN :ssistance in reaching consensusregarding strategic prioritiesN Template !or planning and

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:ssess Merck supplier satis!action !rom oer 1= global suppliers.

Measure oerall satis!action o! Merck suppliers.

Merck#s accessibility to the suppliers.

"HORT TERM O/JECTI-E"

Identi!y strengths and weaknesses in Merck#s negotiation processes.

To increase our sales.

Mission "tate%ent of Merck

$e, the management and employees, are striing !or entrepreneurial success. 'ntrepreneurial successstarts with people. &ur goal is to operate a worldwide business that produces meaning!ul bene!its !orconsumers, our market partners and our community.

Through e!!icient research and deelopment, production and marketing o! pharmaceutical and chemicalspecialties, we want to e)tend opportunities to our customers. To achiee this, we !ocus our endeaors

on business areas where we can achiee a competitie adantage through the e)cellent Duality o! ourproducts, systems and serices. &ur obHectie is to establish permanent business relationships and notmerely short term success.

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&n the basis o! these principles, we operate as an independent and pro!it oriented enterprise. $e e)pecta high leel o! per!ormance !rom each other, and reward this accordingly. $e wish to secure anacceptable return on capital !or our inestors.

$e respect the cultural distinctions and national interests o! allcountries in which we operate. $e strie to achiee positierecognition !or our company within the community. Merck attaches

particular importance to its responsibility !or sa!ety. $e hae anobligation to respect the enironment.

$e will deal honestly and constructiely with one another. $e regardopen communication, both internal and e)ternal, as a !undamental

prereDuisite !or reaching an understanding o! our common goals and!or giing meaning to what we do. $e shall not be constrained by

borders between business areas or countries. :ll employees, male or!emale, hae eDual opportunities to deelop their careers.

:ll o! us make a personal contribution to the companys entrepreneurial success through our mutualinitiatie, creatiity and sense o! responsibility.

EVALUATION OF MERCKMISSION STATEMENT

ustomer Product and Serice Market

yes yes yes

Technology oncern !or surial and growthand pro!itability

Philosophy

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no yes yes

Sel! oncept oncern !or Image oncern !or 'mployee

No yes yes

THE MERCK STRATEGY

SUSTAIN-CHANGE-GROWTH

Specialty businesses within Pharmaceuticals and hemicals will remain our !ields o! endeaor.

In both business sectors we will grow by means o! our own resources as well as throughacDuisitions. $e want to be among the !astest growing companies in our markets and strie !orKDuality growthL with reenue growth e)ceeding cost increases.

$e diersi!y our risks within an integrated company operating in two business sectors. :port!olio o! emerging businesses, highly success!ul products and cash cows as well as our globalpresence balances the risks o! our businesses.

&ur core competencies are a culture o! innoation, awareness !or high Duality products, customer!ocus and reliability.

&ur business is global. There!ore, the diisions, as units with operating responsibility, run theirbusinesses globally. Foweer, the countries retain a degree o! independence that !acilitates local

entrepreneurship. $e measure !inancial success by operating result and !ree cash !low as a percentage o! total

reenues. Maintaining an inestment-grade rating is a de!ining !actor !or our !inancing

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!ramework. &ur strong balance sheet enables us to !inance growth while maintaining a riskbu!!er.

$e enable our employees to share in the company#s success.

&ur claims regarding orporate ?esponsibility and ompliance do not stop at country borders asthey are deried !rom the Merck alues.

Pharmaceuticals

Pharmaceuticals consist o! Merck Serono and onsumer Fealth are. $e want to e)pand bothbusinesses.

$ithin Merck Serono we will achiee the key competitie edge by innoating !or the bene!it o!patients. &ur !ocus in research and deelopment is on oncology, neurodegeneratie diseases andon autoimmune and in!lammatory diseases.

$e want to strengthen our position as leading biotech innoator. $e will obtain a !urthercompetitie edge through our e)pertise in chemistry and through the cross-!ertiliEation o!

biotechnology and chemical know-how.

$e will improe our market position through targeted acDuisitions and an actie licensing policy.?egionally, we will !ocus on e)panding our businesses in the 4nited States and apan as well ashina and India.

onsumer Fealth are will be e)panded !urther organically and ia acDuisitions. &ur !ocus is on!our health themes% Mobility, 'eryday Fealth Protection, $omen#s and hildren#s Fealth aswell as ough and old. $e will e)tensiely inest into our strategic brands in scale marketswith growth potential, predominantly in Gatin :merica and :sia.

hemicals

$ith a port!olio o! dynamically growing businesses in strongly e)panding markets and a stablebusiness in mature market segments, hemicals contributes essentially to balancingentrepreneurial risk.

In the liDuid crystals market, our goal is to maintain our leading position in the long term. $ewant to play a similarly actie role in related and new display technologies in order to translate

our technological competence and our customers# e)pertise into new businesses. Per!ormance + Gi!e Science hemicals will continue !ocusing on pro!itable sub-segments in

markets where - due to goernmental regulations or high Duality standards - sa!ety and Dualityoutper!orm low-cost alternaties. ustomer-centric innoatie solutions are the key !actors !orthe continuously pro!itable growth o! this business. Special attention will be gien to e)pand ourmarket presence in biosciences and bio manu!acturing tools.

$e want to acDuire businesses that are complementary to e)isting customer relations ortechnology plat!orms. &ur regional !ocus is on hina, India and the 4nited States.

To address !uture growth !ields, we are deeloping new businesses and technology plat!ormswithin :danced Technologies. &ur !ocus is on technologies such as solid state lighting, organicelectronics, mobile energy and photo oltaics.

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EXTERNAL ENVIRONMENT

E"T !N!+Y"I"

1* O+ITIC!+2

Trade with India cause sometimes great trouble to Merck. India is one the supplier o! the Merckbut due to political conditions and Pakistan-India relationship it creates issues to transact.

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0oernment type and goernment stability also a!!ect Merck.Musharra!#s 'ra, political enironment was stable !or the growth o!

business.

?ules o! Gaws and regulations are also inoled in organiEation#sgrowth. The !ie-year anti-dumping duty imposed on Pakistanimanu!actured goods by the 'uropean 4nion came to an end. This was

opportunity !or the Merck.

/ue to unstable political condition and the tenure o! the goernment inPakistan, it has adersely a!!ected the !irm#s long term as well as shortterm strategy. rom Merck Pakistan perspectie, there are no such subsidies or leies that are

proided to this sector !rom the goernment, instead they hae increased the ta) rate.

3* ECONOMIC!+

0rowth, in!lation and interest rate all e!!ect per!ormance o!Merck.

0lobaliEation has become one o! the maHor opportunities !orMerck. 5ow Merck hae many suppliers !rom all oer theworld which has reduced the reasons o! being black mail bysuppliers.

There is a lot o! economical pressure on Merck( Merck can not increase their prices due to itsresponsibilities o! being in pharmaceutical business but the ta) by the goernment o! Pakistanis increasing day by day.

:ll these economic !actors hae a common theme that is increase in price, which willultimately hit the cost, the burden trans!erred on !inal consumer.

4* "OCIO5CU+TUR!+

Merck Pakistan is ery much concerned with issues related to cultural and social aspect. Because Merckconsiders Pakistani dierse culture as an opportunity, they always try to bring such products which alignwith cultural and social aspects.

6* TECHNO+O.IC!+

Merck is at the !ore!ront o! discoering and deeloping new ways to treat andpreent disease. Scienti!ic discoery and deelopment hae always been thecornerstones o! Merck. Today, Merck conduct research in a broad range o!therapeutic categories including cardioascular disease, in!ectious diseases,accines, cancer, neurology and women#s health. :nd, to help achiee theirgoal o! saing and improing lies around the world, they are e)panding theircapabilities in new areas, such as biologics.

Be!ore Merck deelop a new medicine or accine, they need to understand the

basics. Fow e)actly does the disease or condition workQ :nd whichmechanisms hae the potential to help preent or treat it. It takes a long time to identi!y a potential newtreatment. Teams o! scientists might screen thousands o! compounds to identi!y a promising lead. That

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compound will then need to be re!ined, optimiEed and tested in clinical trials be!ore Merck can apply !orregulatory approal.

/rug discoery is o!ten an e)pensie and high-risk undertaking. Merck spend billions o! dollars eachyear to discoer and deelop medicines and accines that can help people around the world.

Be!ore they may receie approal !or use, medicine and accine candidates undergo rigorous andsystematic testing in olunteers. This process is designed to ealuate whether a new product should beapproed !or use in the broader population. 'ach clinical trial is designed to answer certain researchDuestions. They !ollow strict, prede!ined protocols to ensure sa!e and accurate results.

COMETITOR"

Merck Pakistan is not operating in Pakistan as an indiidual entity !ocused on pharmaceuticals andchemicals. It has its operations in this nation along with many competent players, each trying to win thegame. Some !ocused in trying to gain a share, others are trying to become a market leader and enHoy the

bene!its attached to. Merck is a multinational corporation and Merck Pakistan is its operating company.It !aces competition !rom not only locals but as well as other multinationals. That is why Merck is erymuch concerned with it, and so they keep a thorough look out o! their competitors. They keepthemseles updated they usually !ace e)treme leel o! competition but this leel aries !rom onecategory to another. ompetitors o! Merck include the !ollowing%

0la)oSmith9line

P!iEer Inc.

In chemicals Merck has a competitie adantage at liDuid crystals. Merck has a copyright on making theliDuid crystal. Merck is the world"s leading liDuid crystal supplier !or the display industry. Merck is theleading supplier !or the two most adanced liDuid crystal technologies used in modern displays - Aertical:lignment 7A:8 and In-Plane Switching 7IPS8. 7PM is re!erred to appendi)8

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INTERNALENVIRONMENT

Merck Pakistan a!ter analyEing the e)ternal enironment then !ocuses on the good and weak points o! itsinternal !actors which in turn are assessed through !ree !low o! in!ormation !rom top to bottom and

bottom to top. Their interaction with their retailer and suppliers helps them assess their strengths andweaknesses accordingly. 'mployees o! Merck play an important part in order to ealuate and asses thein!ormation regarding the internal enironment.This section o! the strategic enironment is a realistic analysis o! Merck"s internal resources. The!ollowing internal traits portray a resource-based iew o! Merck"s core strengths and weaknesses.

1* RE"E!RCH !ND DE-E+OMENT

The !oundation o! Merck#s strength, and the engine o! its growth, has always been the noel medicinesMerck discoer and deelop to meet the healthcare needs o! patients, physicians and payers. Merck#s

!ranchises continue to drie growth, supported by new products, indications, !ormulations and clinicaltrials. :t the same time, they are rapidly building their capacity to success!ully compete in newtherapeutic areas such as diabetes, insomnia and cancer and new accine markets.

3* CON"UMER HE!+TH RODUCT"

Through Merck#s consumer health products, they strie to enhance the Duality o! li!e !or people and their!amilies around the world. 'ach day, millions count on one or more o! their industry leading brands thathelp preent or treat arious common conditions. These include household names such as G:?ITI5!or allergies, &PP'?T&5' !or sun care, /?. SF&GG"S !or !oot care, and many more.

4* +I7UID CRY"T!+

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Merck is the world"s leading manu!acturer o! G/ materials. Bycontinuously deeloping customer speci!ic liDuid crystal mi)tures,together with display manu!acturers Merck make the communicationtechnologies o! tomorrow possible. They o!!er innoatie materials !orsecurity, identi!ication and photooltaic. By innoation, creatiity and

entrepreneurial thinking Merck has become number &ne in GiDuidrystals worldwide with more than *


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INTENSIVE STRATEGY:

Merck Pakistan normally used all these strategies the proportion o! each diision aries !rom oneanother. Merck Pakistan will be looking out some past trend, secondly is there any space !or productinnoation or not. $hen it comes to product deelopment and penetration it is happening in all thecategories.

4EFENSIVE STRATEGY:

Merck Pakistan normally doesn#t use de!ensie strategy they usually !ollow aggressie strategy whichcalled as K:TT:9 or &45T'? :TT:9 ST?:T'06#. But past e)perience has state that theyhae used ?etrench and /iesture strategy.

RETRENCHMENT:

Merck Pakistan doesn#t use retrenchment strategy on their employee in order to reduce cost, they haeery tight policies oer their cost but they hae applied this thing on certain diisioncategory, this issomething that eery organiEation has to go through otherwise we will be !ar away !rom the market.:ccording to Merck Pakistan i! this type o! scenario occurs they usually implement two kind o!approach%

MinimiEe the cost.

/ouble the sale

DIVESTURE:

Merck Pakistan has diesture one o! its pharmaceutical products not because o! its low growth but it wasstrategy came !rom Merck 0lobal that this line should be diested. There!ore, to align their strategy withthe 0lobal strategy Merck was bound to diest it3

4IVERSIFICATION STRATEGY:

Merck Pakistan is currently using this strategy in two ways that is related diersi!ication strategy andunrelated diersi!ication as Merck is consider more toward sustainable growth and pro!it, it#s kind o!risk diersi!ication.

4IFFERENTIATION STRATEGIES:

Merck Pakistan is a huge organiEation that why they are implementing many strategies at the same time.urrently they are working on eleen strategies. /i!!erentiation strategy helps Merck Pakistan to keep anedge oer other competitors. They hae an edge on%

P?&/4T J4:GIT6.

G'A'?:0' $FIF 45IG'A'? IS F:AI50 /4' T& B'I50 M4GTI5:TI&5:G.

/IST?4B4TI&5 5'T$&?9

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HASE-II

IMPLEMENTATION

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STRATEGY IMPLEMENTATIONPOLICIES

Strategic /ocument is !ormulated at Merck 0lobal, and then it is diided into regions and subdiidedinto countries, sub clusters according to their regional strength. Then in to clusters 7that is Subcontinent8it is !urther diided into countries that is Pakistan, India, Philippines, Singapore, South 9orea, Taiwan,Thailand and Aietnam etc , then the '& o! these sub cluster discuss with the other '&s and then a!inal Strategic document !or each and eery country is declared. This strategic document is again!orwarded to the M'?9 0G&B:G !or approal. :!ter its approal, it is then receied in MerckPakistan leel. It is being split into !unctions, when this is split into !unction eery indiidual in thisorganiEation has his own document in which his contribution in that strategy is written clearly and at theend o! the year, each indiidual is being assessed in the middle and at the end o! the year on the basis o!

those target which lead them toward increment or bonuses. Implementing strategy practically is adi!!erent thing as it comes !rom document, Merck Pakistan is Duite concern about this !act because i! anyissue is raised by Merck Pakistan Gimited on strategy implementation this will go on sub cluster leelthen on cluster leel and lastly on Merck global.

CHANGING POLICIES:

0eneral policies regarding to strategy implementation or other issue remains the same but it does notmean that they will not change. 6es, Merck aligns them with the modern alues. In the past, it wastermed as code o! ethics but now it is termed as alues. Merck has


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only allocate according to the siEe o! the category and on the otherhand Merck annually pursues benchmarking e)ercise.

MANAGING CONFLICT:In Merck Pakistan eery person to whateer age group he or she

belongs to, has no tool as such !or con!lict management. In MerckPakistan, arise o! con!licts between * persons are sought amongstthemseles, i! it does not help then the !irst manager tries to resole it

between two or more indiidual who hae con!lict. I! this goes beyondhis control then they re!er to F? con!lict team Rthe person who hasgien the in!ormation is the AP o! this team, then action is being taken whether to moe that person outo! the department or not. :t pro!essional leel con!lict are di!!erent. on!lict also arises outside theMerck which are mainly with the suppliers. These are always sort out by the managers.

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HASE-III

EVALUATION

EVALUATION 5 CONTROLCONTROL PROBLEM:

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There is always a control problem in eery organiEation i! any organiEation denies this that there is nocontrol problem they are lying. &rganiEation goes on changing in term o! control i! any organiEation hasreduced its structure it means they are controlling oer their control problem. Merck Pakistan has a erylenient structure, they use to hae a ery !lat structure *-@ years ago, and this is something which eeryorganiEation has to go through otherwise they will be out o! market.

STRATEGIC FOCUS:

6es, Merck Pakistan keeps a tight strategic !ocus and all o! its control systemsuch as Rbudgeting system, per!ormance ealuation etc. support the strategic!ocus. In addition to that all agencies, partners + customers also gie anindication o! the responding strategies.

EVALUATION OF STRATEGIES:

In Merck Pakistan strategies are being ealuated through% SI: 7Strategies in:ction8, on !unctional leel it is being ealuated on monthly basis. :t a Merckglobal leel, it is done on Duarterly basis. inancial statements are the bestealuator !or them. They do not use balance scorecard system but they haeseparate tools and techniDue. Merck Pakistan ealuation mean getting a sense

o! direction.

CONTINGENCY PLANNING:

&n eery plan or strategy, there lies a contingency !or eery process, a!ter all this entire procedure is aman made and probability is that it might !ail not by one#s own personal !actor but !rom highly olatilee)ternal !actor7s8. Things, which are moing properly !rom last 1= years it, might !all down to ground,!or eery success!ul organiEation they should hae a contingency plan. :nd Merck does hae plans KBL.

STRATEGIES VISIBLE OR HI44EN:

:ccording to Merck Pakistan strategic management should be isible orhidden both, it totally depends upon the strategic process. I! organiEation doesnot hae an e!!ectie process then it should be hidden and on the other hand, i!

your organiEation really has an e!!ectie process such as Merck Pakistan limited then it should be isiblestrategic management process.

*


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*;


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PHASE-IV

RATIO ANALYSIS

P?&IT:BIGIT6 ?:TI&S

.ross Profit Mar*inindicates the relationship between net sales reenue and the cost o! goods sold.The 0ross Pro!it Margin o! 22!345shows that 66!785o! Sales becomes the part o! ost o! Sales. Thusshowing that the Product ost is ery low and ompany is ery e!!icient in managing ?aw Materials atlower cost.

Pre9Ta: Profit Mar*in is a measure o! the operating e!!iciency o! a company. Preta) margin is usuallye)pressed as a percentage o! reenues. Since preta) margin ealuates the relationship between operatingincome and reenues, it is also considered a measure o! the pro!itability o! the company. The margin o!;!625shows a good operating e!!iciency o! Merck 7Pt8 Gtd.

(eturn on "ssetsmeasures the company"s ability to utiliEe its assets to create pro!its. Merck 7Pt8 Gtd.is generating net income which is 65o! its total assets.

(eturn on Equityis a measure o! how well a company is able to return a pro!it using the shareholder#sinestment. ?&' o!

Net Profit Mar*inmeasures net pro!it as portion o! Sales. The net pro!it o! 3!4;5o! Sales.

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GIJ4I/IT6 ?:TI&S

Current (atioproides an indication o! the liDuidity o! the business by comparing the amount o!current assets to current liabilities. : business"s current assets generally consist o! cash, inentories,accounts receiable, and marketable securities. urrent liabilities include accounts payable, currentmaturities o! long-term debt, accrued income ta)es, and other accrued e)penses that are due within oneyear. In general, businesses pre!er to hae at least one rupee o! current assets !or eery rupee o! currentliabilities. The current ratio o! 8!4;shows a tremendous liDuidity position o! Merck 7Pt8 Gtd..

=uick (atioalso measures the liDuidity position o! the business in more deeper aspect. The Duick ratiocompares the cash plus cash eDuialents and accounts receiable to the current liabilities. The primarydi!!erence between the current ratio and the Duick ratio is the Duick ratio does not include inentory and

prepaid e)penses in the calculation. onseDuently, a business"s Duick ratio will be lower than its currentratio. It is a stringent test o! liDuidity. The liDuidity position Merck 7Pt8 Gtd. is at high satis!actory leelas shown by the Duick ratio o! 8!>;.

(einvestment (atiomeasures how much a company reinests its operating cash !lows into capitale)penditures. The ratio o!

%e-t Covera*e (atiodetermines the ability o! the company to generate cash !rom operations in order topay o!! its liabilities. The ratio o! 7!67shows that Total Giabilities are

higher number is desired because it indicates that each pound o! asset is producing a greater amount o!reenue. The ratio o!

"ccounts (eceiva-le Turnoveris similar to assets turnoer( howeer it !ocuses a more speci!ically onaccounts receiable and its e!!ect on reenue. This ratio shows how e!!ectie a company is withe)tending credit !or credit sales as well as collecting these debts !rom customers. The ratio o! 3!86indicates the company is e!!icient.

%ay@s Sales in "ccounts (eceiva-leis linked closely to accounts receiable turnoer. It indicates theaerage time in days that it takes to make a collection on a credit sale. The !ewer days needed to collect,the better the e!!iciency. The collection period is ?4 days appro) that should be made better by

producing e!!iciency in payment collection area.

Inventory Turnover

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Inentory turnoer is a measure o! how o!ten within a year that inentory is sold and replaced. It iscalculated by diiding cost o! goods sold by inentory. Merck 7Pt8 Gtd. should work in this area asinentories are sold and replaced Hust 8!3;times in a year.

%ay@s Sales in Inventory

The day#s sales in inentory ratio is closely related to inentory turnoer. It Duanti!ies how long yourinentory remains in storage. Gower numbers indicate higher turnoer and there!ore are considered moree!!icient. Inentory holding time is *>=


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HASE-VREFERENCES

>1


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REFERENCES

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http://www.merck-chemicals.pk/about-merckhttp://www.merck-chemicals.pk/about-merck


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42983918 merck strategic management report

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