Reevaluating Business Strategy to Succeed: Merck & Co.

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Table of Contents

Introduction
What are the most important elements of Merck’s strategy?
What are the challenges that this strategy had faced during implementation?
Give an example of a Kuwaiti company regarding this topic
References

Introduction

Before we analyze the case in detail it is important to first take a look at a definition of corporate strategy so we know what we are analyzing.

‘Strategy is the direction and scope of an organization over the long term: which achieves advantages for the organizations through it configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholders’ expectations.’( Tutor2U, 2009)

The case analyzes how external pressures forced Merck to reevaluate its business strategy and how they managed to evolve and actually implement a strategy that would bring them long-term success and success and enable it to see through economic downturns like the one affecting the global economy at the moment. Basically, their focus was on implementing policies that would make their organization more flexible and also leaner (Johnson and Nisita, 2009). The example of a company from the pharmaceutical sector is extremely appropriate since that industry is struggling with problems beyond those attributable to the downturn. The following questions allow us to analyze the Merck strategy and discuss the main challenges faced by it in the implementation of a new strategy and also discuss the application of strategy development and implementation with respect to a Kuwaiti company.

What are the most important elements of Merck’s strategy?

One of the most important elements regarding Merck’s strategy was the creation of a Strategy Realization Office. This move created an entire department focused on the successful implementation of strategies. Line managers tend to get bogged down with daily work or get tied to traditions to reevaluate what they are doing and consider doing things in a different way. This makes it very advantageous to have a separate unit that is focused totally on strategy implementation and seeks to bring together the different departments such as sales, marketing, and finance amongst others on one page so that there is an asymmetry in what each of the departments is doing. This focus on unifying the goals of each department is also a key element of their strategy. Each department needs to work together and achieve synergy if the organization’s goals are to be successfully achieved. Another element to this unification is the centralization of the different units of Merck in different countries. Although there is a small compromise on flexibility in any effort of centralization, however a unified focus for all units can serve to work well in the sense that the units are focused on the entire organization’s well-being rather than their own unit. Also, it is important to make each department feel that there are keys to the organization but need to work together for success. For example, for Merck, the case indicates that the R&D department and marketing department have not always worked together. This lack of unity creates an environment where the R&D department is focusing on making products for which there is not a viable demand in the market. So an important and major element of their strategy was to create this unity amongst various departments and units. The strategy cycle of the Strategy office was key in bringing the goals of different departments into one line (Johnson and Nisita, 2009).

Strategy implementation encounters a major pitfall in terms of employee attitude. Very frequently employees do not understand the strategy and see it as bureaucratic nonsense which will not contribute positively to organizational efficacy and success (Business Balls, 2007). To cope with this problem Merck did two important things. One was that senior-level managers were involved with explaining strategies to employees. Research has repeatedly indicated that the involvement of senior managers is important for the implementation of any real change in the organization. This is simply because when serious managers are involved they are able to explain strategy better in the broader context of the organization and also it indicates to employees that the company is taking the new strategy seriously and their future in the organization is linked to the implementation of the strategy. Another tool used by Merck was to tie compensation to the successful achievement of strategic goals. This helps keep employees motivated and driven to achieve goals. It is the combined impact of both these elements that can help keep employees motivated and passionate about change. Another key element implemented by Merck was creating an environment in which it was acceptable to make some mistakes or to give negative feedback about projects. This kind of culture allowed bad decision’s to be identified immediately and for unsuccessful projects to be scrapped immediately before they grow bigger and become a major problem for the organization. Another strategy implemented by Merck was to differentiate between initiating new projects and measures and the success of various projects and measures. This allows the organization to pick out wrong measures which may have been’ installed’ but have failed to take off or provide any return to the organization (Johnson and Nisita, 2009).

What are the challenges that this strategy had faced during implementation?

A key problem faced when any change is coming to an organization is the opposition that comes from employees because of the increased uncertainty that change brings (Businessball.com, 2009). Merck faced this challenge as well, however dealt with this by keeping employees informed about the real goals of the strategy and also by tying employee compensation to success in strategy implementation. An example of attitude change provided by the case is that of changing perceptions regarding communication of failures. This attitude was gradually changed into one in which it was acceptable and in fact encouraged to criticize and identify failings of the organization. Another challenge is the temporary pain or struggles that an organization has to face to achieve success in implementation. For example providing investors detailed information about projects turned out to be a good move in the long term but was hard in the short term in the sense that more information was also shared with competitors and this practice also required more rigorous auditing and tighter budgets (Johnson and Nisita, 2009).

Give an example of a Kuwaiti company regarding this topic

An example of a Kuwaiti company trying to bring about a strategic change is that of the telecom operator Zain. This company was initially know as Mobile Telecommunication but in changed its brand name in order to capture more market and become a more significant player in the global telecom market. When a company is going for aggressive growth like Zain was planning to this requires planning and development and implementation of key strategic goals. While Zain changed its strategic direction to achieve growth and capture a more significant chunk of the global market Merck already a huge company was looking for more unification in its processes. Although the tools used for implementation and also its ultimate goals may have been different but each company’s transformation falls into the category of strategic development (Wireless Federation, 2007).

References

Business Balls. (2009). Strategy Implementation and Realization.

Johnson K. L, Nisita V. (2009). “Driving Transformational Change: Strategy Execution at Merck.” Balanced Score Card Report. 11(4), 1-6.

Tutor2you.com (2009). What is strategy.

Wireless Federation. (2007). Kuwait telecom giant MTC changes brand name to Zain (Kuwait).

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Reevaluating Business Strategy to Succeed: Merck & Co.

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