Lilly New Zealand
Introduction The current market situation in the pharmaceutical industry of New Zealand is very turbulent, with margins falling. Lilly New Zealand is a small affiliate from an American company, doing business in this industry. ... If Lilly New Zealand wants to survive in the future it has to implement a new structure and a new strategy. The main question in this paper is which structure and strategy are most appropriate for Lilly New Zealand. ... Current situation In 1992 Lilly is one of the leading companies in the pharmaceutical industry of New Zealand. Until then Lilly heavily dependent on their competitive advantages, achieved through quality products and continuous product innovation. ... Unfortunately, the business environment has been changing during the last few years and a change in structure is needed to survive and maintain Lilly’s current market position. ... Lilly is about to lose the Prozac patent (=>50% sales loss). ... Lilly has a functional structure and as already mentioned above this current structure is not appropriate for the current market situation the company in which the company is operating. There are four disadvantages of a functional strategy that are also applicable on Lilly and its current market situation. ... Requirements for new organization Strategy Because of the changing environment in New Zealand, the new strategy has to support critical success factors in order to sustain the competitive advantage. In order to remain the number one pharmaceutical company in New Zealand, Lilly has already identified the following market requirements: 1. Lilly wants to deliver the best quality products for lowest prices. ... Lilly wants a flexible, speedy response to change 3. Lilly wants a strong focus on service delivery 4. Lilly wants profitable partnerships in the future Employees Because of the reason that the affiliate is quite small, the employees have very strong personal and working relationships with each other. ... The reasons why Lilly’s personnel might resist change are (Kinicki, Kreitner, 2003): 1. ... Fear of failure To overcome the resistance and to deal with these problems Lilly has to make sure that it is very patient with implementing the new structure and strategy. ... It is very important to inform the workforce what is happening and how their future will look like, which Lilly recognized as open communication and full information in the key strategies for change. ... With the comparing of performance with competitors, Lilly is able to show the employees that the company has to change to secure a healthy future for the company. ... As written before, a functional structure is at the moment unsuitable for Lilly. ... The right structure for Lilly seems to be a Matrix structure (see appendix 1). ... This division in products makes it possible for Lilly to respond better to the demands of the various clients. ... For Lilly, integration is a vital strategic aspect to keep the bureaucratic costs low, and that will lead to lower prices eventually. The team structure helps adaptation and learning for the whole organization, which comes back in one of the key strategies of the new structure; Lilly wants open communication and full information. ... For Lilly, this aspect is one of the key market requirements. ... This improves the personal relationships between Lilly’s employees and it supports the flexibility of the company. ... And this is very important for Lilly. ... These advantages clearly strike with the main requirements for the market and strategy, which were recognized before by Lilly. ... Furthermore, Lilly recognized that in the current situation, it is very important to focus on sales and marketing.