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The Philosophers Stone

Essay by   •  March 25, 2019  •  Exam  •  1,053 Words (5 Pages)  •  687 Views

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  • Uneasy internal environment
  • Demoralized, pessimistic employees, aftermath of CEO suddenly resigning
  • Employees loyal to the prior leadership
  • Uncertainty about effect of new foreign CEO
  • Trust issues (earning trust, Deepak has to prove himself), cultural issues (Avoiding social risks), language barrier, etc.


  • Employees: Show knowledge, experience, expertise, achievements of Deepak
  • Training for Deepak: mandarin course & Social, cultural business practices of Chinese people
  • New vision of company, leadership style, motivation amongst employees

  • Losing competitiveness in industry
  • AdNike has low market share
  • Low commercial presence in China
  • increasing competition (domestic & international)
  • Competition on price in the chronic disease segments (strength area of AdNike)
  • Counterfeit products
  • Lack of innovation
  • No new products in the pipeline
  • Stagnating growth
  • lack of forward thinking leadership in the existing company structure

→ Recommendations (Main problem here is innovation)

  • For more innovation:
  • High investment in Entrepreneurship (Role model: Johnson&Johnson)
  • Pharmerging (Buying small but highly valuable, tech-skilled Biotech startups, since they have not enough resources for large scale)
  • Look to universities, combine young chinese talents and experienced foreign scientists

  • CFDA made new regulations that threaten core product
  • Old existing core products are not positioned to meet new CFDA (Chinese Food & Drug Administration) regulations.
  • →  Investments needed for product growth and to save the core products.
  • Needed is investment in technology AND manufacturing
  • → Such investments need board approval!

→ Recommendations:

  • New investments:
  • As AdNike is a Global company, adjust product requirements and quality next to chinese standards also to global standards, branded products are
  • Competitive advantage compared to domestic competition that have non-tested products  by gaining more trust of clients (avoid scandals)
  • Also argument for high investments in technology and manufacturing process
  • Approval from board:
  • Overcome short term vision (cultural characteristic), convince of long-term strategy

  • External Uncertainty
  • Regulations change constantly (weekly!)
  • Long approval timelines for new products
  • Lack of relationships to regulators & key players in government (especially as a foreign CEO)
  • Bureaucracy: (Maze within a maze), expertise needed
  • Corrupt officials (CFDA chief in 2007) create mistrust and uncertainty
  • Anti-graft campaign leaves uncertainty how to react/ behave now
  • Drug approval process is given, not problem per se, but: Distribution
  • Relies on traditional distributors, "army" of sales representatives (huge costs!)

→ Recommendations:

  • Establish relationship with government departments (not too close → see Alibaba)
  • Process improvement of how information flows through the company, corporate entrepreneurship thought amongst employees (be flexible, adapt to changes)
  • Assume that new chinese regulations are not stronger than global regulations, so less fear of surprises
  • Strong chinese board of Lawyers, who know exactly what is allowed, grey zone, forbidden
  • Make use of Greyzone, as bribery still embedded in culture, careful to not lose reputation
  • Army of sales problem: Start from customer (Other end of value chain), instead of focus on doctors, let customer demand our products
  • Marketing & branding
  • Patient advocacy (new concept): Pharma world is changing, doctors are getting bombed from all sides with sales reps, new concept: instead of investing in sales representatives invest in relation with customer, (gives voice to patients, informing public, health care providers, insurances) → goes beyond focusing on one person


Value chain, Resources & capabilities, financial analysis)

  • External: (too little information for full 5F)
  • General environment: Pharma Industry China (Macro factors)
  • Main Trends in industry
  • News
  • Political: Corruption
  • Legal issues with regulations        
  • Short Analysis of competition in pharmaceutical industry in China
  • main players
  • Substitutes
  • Internal:
  • Value chain:
  • Consider drug approval process,
  • Outbound logistics: Distribution chain of drugs (Relationships needed)
  • Brand: Reputation as ethically correct and praised products by Ministry of Health
  • 100 Years of experience (global network), 40 years in China
  • Human capital: High investments were made in training (nurses, physicians)
  • Social capital: Relations to important hospitals
  • Sustainable resources of AdNike (Resource-based view see Table in Book)


  • Weaknesses & strengths of each solution
  • Can we afford it, enough capabilities etc.?
  • Employees reaction to change?
  • Culture changes?
  • Does it match vision of AdNike?
  • Other stakeholders reation / effect?
  • What needs to be done
  • On business level:
  • Cost leadership or differentiation?
  • More entrepreneurial orientation within firm
  • On corporate level:
  • Related or unrelated diversification?
  • M&A,
  • alliances
  • Why / how does it solve the problems in 1)?
  • How to implement solution?



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