...ADMN417 Assignment 2: Eli Lilly in India: Rethinking the Joint Venture Strategy Executive summary: Eli Lilly entered into a joint venture with Ranbaxy in India in 1992. A decade later both must decide whether this relationship remains mutual beneficial. Both companies have enjoyed a strong working relationship with identical value system as well as strong growth. Ranbaxy has become international and thus needs to concentrate more on generics and growth in US and UK; the joint venture with Eli Lilly no longer seems to be central to Ranbaxy’s current goals. With major changes in India’s regulation and patent protection, Eli Lilly can now enter the Indian market independently and soon would enjoy product patent protection. Dr. Lorenzo Tallarigo, president of Intercontinental Operations at Eli Lilly should end the joint venture with Ranbaxy in India. Eli Lilly will purchase all outstanding shares held by Ranbaxy at a fair market value, rebrand its name in India to simply Eli Lilly, and maintain current staff from the joint venture. The current operation from the previous joint venture should be maintained without any additional major changes since profits are already assured beyond 2005. Ranbaxy will be able to focus on the international markets with additional capital and Eli Lilly to continue growth in India. Problem statement: A decade after the formation of the joint venture, several changes have occurred in both the external environment as well as the expectation of...
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...CASE 6-3 “Eli Lilly in India: Rethinking the Joint Venture Strategy” 1. I think Eli Lilly pursued the right strategy joining Ranbaxy Laboratories to enter the Indian market. While companies were using the global market to amortize the huge investments required to produce a new drug, they were hesitant to invest in countries where the intellectual property regime was weak. During the 1990s both companies had a strong reason for the joint venture. Ranbaxy wanted to make its presence globally and Lilly wanted to get their feet on Indian grounds. In 1992, Ranbaxy approached Lilly to investigate the possibility of supplying certain active ingredients or sourcing of intermediate products to Lilly in order to provide low cost sources of intermediate pharmaceutical ingredients. Based on the strategic alliance, Ranbaxy would supply certain products to the joint venture from its own portfolio that were currently being manufactured in India and then formulate and finish some of Lily’s products locally. From the beginning, both companies had a lot in common, they both believed in high ethical standards, technology and innovation, and future of patented products. They created the joint venture with $7.1 million capital and an initial subscribed equity capital of $3 million, with equal contribution from Lilly and Ranbaxy, leading to an equity ownership of 50 percent each. India, with an 800 million population had about 300 million of people that were considered to...
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...Assignment 2 —Eli Lilly in India: Rethinking the Joint Venture Strategy Executive summary Eli Lilly entered the Indian market in a joint venture with Ranbaxy, in order to capitalize on increasingly favourable market conditions, low costs and to gain a foothold for entering other Asian markets. This move succeeded because of a commitment to values for the two partners, cooperation and excellent management. Ranbaxy smoothed the way with existing distribution networks, government contacts and local market knowledge. Lilly provided foreign expertise, competent managers and capital. The venture earned both firms significant advances in market share and earnings, and the relationship remained positive throughout. As the Indian economy has become increasingly liberalized and open to foreign investment, there is great potential in the market. Other foreign firms are entering the market, and as a well-established powerful player in the market Lilly no longer needs to use Ranbaxy as an intermediate. Lilly seeks continued, stable growth in the region and needs to consolidate and refocus its business in niche drugs to remain competitive in a changing global business environment. Ranbaxy wants to move away from generics to become a more internationalized and R&D based company like Lilly, but needs significant cash flow in order to grow abroad. Both firms are considering options for the future. Problem statement Eli Lilly-Ranbaxy, a joint venture in India must re-evaluate...
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...CASE 6.3 ELLY LILLI IN INDIA: RETHINKING THE JOIN VENTURE STRATEGY Summary: The case consists of two major pharmaceutical companies that joint to collaborate their research and pharmaceutical technologies to start a joint venture in India. Both have valuable resources that have benefited both companies during the joint venture. Now both are questioning if there is still any value in maintaining the joint venture in India and will be deciding what will be the best route to take. Ranbaxy Laboratories wants to be bought out, but Eli Lilly is worried of the financial implications of such move. There were two pharmaceutical companies that were looking for ways to expand globally to position themselves in a competitive advantage from their competitors. One was located in the United States, which was Eli Lilly and Company and the other one was located in India, which was Ranbaxy Laboratories. Research and development was crucial to Lilly’s long-term success. Ranbaxy Laboratories was a firm that was evolved into a serious research-oriented firm. With the change, in the government, India was attracting foreign investors in the pharmaceutical industry. Lilly decided to form the joint venture in India to focus on marketing Lilly’s drugs there, and a formal JV agreement was signed in November 1992. The main key issues of this case are as follow. The pharmaceutical industry had come about through both forward integration from the manufacture of organic chemicals and a backward integration...
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...Eli Lilly in India : Rethinking the Joint Venture Strategy Pharmaceutical companies spend more than 20% of their sales on research and development (R &D). Patents for product ( for 20 years) and process were essential means by which a firm protected its proprietary knowledge and they could command higher prices for their products. Many multinational pharmaceutical firm subsidiaries in India imported drugs from their country of origin and made a huge profit. However in 1970¶s, the patents for all pharmaceutical and agricultural products were abolished and process patents permitted for 5 to 7 years. The Drug Price Control Order (DPCO) instituted price controls by government, multinationals market share dropped from 80% in 1970 to 35% in mid 1990s so they were forced to exit from India due to lack of patent protection in India. In November 1984 Dr. Manmohan Singh , the finance minister encouraged foreign direct investment and increased the maximum limit of foreign ownership from 40% to 51%. Colonel Eli Lilly founded Eli Lilly and Company in 1876. It was a world leader in injectable antibiotics and in supplying insulin. Ranbaxy in early 1990¶s was India¶s largest manufacturer of bulk drugs and generic drugs. Ranbaxy approached Lilly to supply certain active ingredients or sourcing of intermediate products to Lilly in order to provide low cost sources of intermediate pharmaceutical ingredients. Success of Joint Venture i) Lilly used Ranbaxy¶s help for getting government approvals...
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...ELI LILLY IN INDIA RETHINKING THE JOINT VENTURE STRATEGY Abhay Kishore – 01 Abhishek Kunal – 05 Anil Kumar Jadli – 11 J.Harish – 25 Khushal Malik – 28 Sharad Singh – 49 PHARMACEUTICAL INDUSTRY – Global Trend • • • • Mainly concentrated in the United States, Europe, and Japan Developing a drug from discovery to launch took 10 to 12 years. Cost of development of drug is between $500-$800 million. Drugs were strictly controlled by government agencies: o o o o Food and Drug Administration (FDA) – USA, CPMP – Europe 12% 8% North America Europe 38% 18% Asia Japan MHW – Japan DPCO & Indian Patent Act - India • • Size of industry : USD 960 billion in 2012. Few Firms control entire market (Oligopoly). 24% ROW • 4 Firms – Control 20% , • 20 Firms – 50-60%, • 50 Firms – 65-75% PHARMACEUTICAL INDUSTRY – Global Trend • Covered the chemical substance itself • Offered typically 20 years of protection • Usually a lag time of 1012 years by the time the patent was obtained and the launch date • Covered the method of processing or manufacturing the product • Very little protection because it was easy to slightly modify the process Global Issues in Pharma Sector • Prices in of the drugs varied in developed countries • US & Canada by factor 1.2 to 2.5. • Europe by factor 1.1 to 2.5. Parallel Trade: an outside company sells a patented product in a market not designated to sell the drug. o • Independent firm exploited parallel trade by using the differentials...
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...Indonesia Course Name : Managing International Business (MIB) Class : Executive Program, July 2008 Facilitators : Handry Satriago (Course Leader) Guest Speakers : Subject to confirmation from the guest speakers - Riri Riza/Mira Lesmana, MILES Film (Session 5) Topic: Indonesia Movie Industry - Richard Matalon, President Director L’Oreal Indonesia (Session 12) Topic: L’Oreal strategy entering Indonesia - Vikram Reddy, GM Four Seasons Hotel Jakarta (Session 16) Topic: Four Seasons Global Strategy Background Companies today confront an increasing array of choices of markets, of locations for value adding activities, and of modes of crossing borders. This course focuses on the international dimensions of strategy and organization, and provides a framework for formulating strategies in an increasingly complex world economy, and for making those strategies work effectively. Operation in an international environment gives the manager access to new markets, additional natural resources, and low-cost-factor endowments. More importantly, it opens up new sources of ideas and knowledge to stimulate future innovation. Above all, global markets provide a vast new source of the scarcest of all corporate resources: management talent. On the other hand, these new opportunities present the challenges of managing in more complex, diverse...
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...Chapter 1 expanding abroad: motivations, means, and mentalities Case 1-1 Cameron Auto Parts * Alex Cameron got the family biz when graduated in 2001, when the American economy fell into a recession * History * Auto Pact, big three ship car parts between Canada & US, with tariff free * Cameron focus on small engine parts and auto accessories * Car Sales dropped in 2000, because declining North America and entry of Japanese * High pressure for modernization and cost reduction * Operational survival: cut workforce, overtime, part-time, subcontracting * Recovery and diversification * The short-term future seemed positive, but the popularity of Japanese car forced it to diversify * Working as an OEM Cameron did little to be innovative * Alex brought in a team of designers, concentrating on developing products with a wider ‘non-automotive’ market appeal * The first year no progress, Alex lured away a key engineer from the Canadian firm, and mid-2003, developed its own line of flexible couplings * Marketing the new product * Hired eight field sales representatives, stress product quality, service and speed of delivery, but not price. * Financing plant capacity * Increasing sales of flexible couplings required a new separate plant, but the financial position is not strong enough to support it * Foreign markets * Took a European Patent * A licensing opportunity ...
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...magazine’s survey of Most Admired Companies. Yet within a year, Enron’s image was in tatters and its stock price had plummeted nearly to zero. Exhibit 1 lists some of the critical events for Enron between August and December 2001—a saga of document shredding, restatements of earnings, regulatory investigations, a failed merger and the company ling for bankruptcy. We will assess how governance and incentive problems contributed to Enron’s rise and fall. A well-functioning capital market creates appropriate linkages of information, incentives and governance between managers and investors. This process is supposed to be carried out through a network of intermediaries that include professional investors such as banks, mutual funds, insurance and venture capital rms; information analyzers such as nancial analysts and ratings agencies; assurance professionals such as external auditors; and internal governance agents such as corporate boards. These parties, who are themselves subject to incentive and governance problems, are regulated by a variety of institutions: the Securities and...
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...magazine’s survey of Most Admired Companies. Yet within a year, Enron’s image was in tatters and its stock price had plummeted nearly to zero. Exhibit 1 lists some of the critical events for Enron between August and December 2001—a saga of document shredding, restatements of earnings, regulatory investigations, a failed merger and the company filing for bankruptcy. We will assess how governance and incentive problems contributed to Enron’s rise and fall. A well-functioning capital market creates appropriate linkages of information, incentives and governance between managers and investors. This process is supposed to be carried out through a network of intermediaries that include professional investors such as banks, mutual funds, insurance and venture capital firms; information analyzers such as financial analysts and ratings agencies; assurance professionals such as external auditors; and internal governance agents such as corporate boards. These parties, who are themselves subject to incentive and governance problems, are regulated by a variety of institutions: the Securities and...
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...transformation initiatives - for instance, improving service quality and safety standards, technology integration, upgrading pilot training, better business focus; putting in place a professional management team, improving corporate image through sponsorship marketing, etc. He gave a new corporate direction in the form of '10,10,10' goal. However, Korean Air is held up by a slew of challenges. Among which are inefficiencies of - Chaebol system of management, possible clash of its cargo business with its own shipping company, limited focus on the domestic market and growing competition from LCCs. How would Korean Air manage growth as a family-owned conglomerate? The case offers enriching scope for analysing a family business’s turnaround strategies, with all the legacy costs involved. Pedagogical Objectives • To discuss the (operational) dynamics of Korean Chaebols - their influence/ effects on the country’s industrial sector and the economy as a whole • To analyse how family-owned businesses manage the transition phase - from a supplier-driven economy to a demanddriven economy • To identify all the possible reasons for Korean Air ’s turbulent times and assessing whether they are controllable or not • To critically evaluate Korean Air ’s transformation efforts - in terms of growth, productivity and cost cuts, especially the efficacy of '10,10,10' goal in a family-run business • To identify various challenges to Korean Air in...
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...This text was adapted by The Saylor Foundation under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License without attribution as requested by the work’s original creator or licensee. Organization The overarching logic of the book is intuitive—organized around answers to the what, where, why, and how of international business. WHAT? Section one introduces what is international business and who has an interest in it. Students will sift through the globalization debate and understanding the impact of ethics on global businesses. Additionally, students will explore the evolution of international trade from past to present, with a focus on how firms and professionals can better understand today’s complex global business arena by understanding the impact of political and legal factors. The section concludes with a chapter on understanding how cultures are defined and the impact on business interactions and practices with tangible tips for negotiating across cultures. WHERE? Section two develops student knowledge about key facets of the global business environment and the key elements of trade and cooperation between nations and global organizations. Today, with increasing numbers of companies of all sizes operating internationally, no business or country can remain an island. Rather, the interconnections between countries, businesses, and institutions are inextricable. Even how we define the world is changing. No longer classified into simple and neat...
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...STRATEGIC MANAGEMENT UNIT- I STRATEGY AND PROCESS 9 Conceptual framework for strategic management, the Concept of Strategy and the Strategy Formation Process – Stakeholders in business – Vision, Mission and Purpose – Business definition, Objectives and Goals - Corporate Governance and Social responsibility-case study. Concept, Meaning, Definition: Strategy is the determination of the long-term goals and objectives of an enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out these goals. Strategy is management’s game plan for strengthening the organization’s position, pleasing customers, and achieving performance targets. Types of strategy Strategy can be formulated on three different levels: • corporate level • business unit level • functional or departmental level. [pic] Corporate Level Strategy Corporate level strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of businesses. Corporate level strategy is concerned with: • Reach - defining the issues that are corporate responsibilities; these might include identifying the overall goals of the corporation, the types of businesses in which the corporation should be involved, and the way in which businesses will be integrated and managed...
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...An Integrated Approach to Strategy Running Case Featuring Wal-Mart Wal-Mart’s Competitive Advantage (Chapter 1) ● Working Conditions at Wal-Mart (Chapter 2) ● Wal-Mart’s Bargaining Power over Suppliers (Chapter 3) ● Human Resource Strategy and Productivity at Wal-Mart (Chapter 4) ● How Wal-Mart Became a Cost Leader (Chapter 5) ● Wal-Mart’s Global Expansion (Chapter 6) ● WalMart Internally Ventures a New Kind of Retail Store (Chapter 8) ● Sam Walton’s Approach to Implementing Wal-Mart’s Strategy (Chapter 9) Strategy in Action Features A Strategic Shift at Microsoft (Chapter 1) ● The Agency Problem at Tyco (Chapter 2) ● Circumventing Entry Barriers into the Soft Drink Industry (Chapter 3) ● Learning Effects in Cardiac Surgery (Chapter 4) ● How to Make Money in the Vacuum Tube Business (Chapter 5) ● The Evolution of Strategy at Procter & Gamble (Chapter 6) ● Diversification at 3M: Leveraging Technology (Chapter 7) ● News Corp’s Successful Acquisition Strategy (Chapter 8) ● How to Flatten and Decentralize Structure (Chapter 9) Practicing Strategic Management Application-based activities intended to get your students thinking beyond the book. Small-Group Exercises Short experiential exercises that ask students to coordinate and collaborate on group work focused on an aspect of strategic management. Exploring the Web Internet exercises that require students to explore company websites and answer chapter-related questions. Designing a Planning System (Chapter 1) Evaluating...
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...An Integrated Approach to Strategy Running Case Featuring Wal-Mart Wal-Mart’s Competitive Advantage (Chapter 1) ● Working Conditions at Wal-Mart (Chapter 2) ● Wal-Mart’s Bargaining Power over Suppliers (Chapter 3) ● Human Resource Strategy and Productivity at Wal-Mart (Chapter 4) ● How Wal-Mart Became a Cost Leader (Chapter 5) ● Wal-Mart’s Global Expansion (Chapter 6) ● WalMart Internally Ventures a New Kind of Retail Store (Chapter 8) ● Sam Walton’s Approach to Implementing Wal-Mart’s Strategy (Chapter 9) Strategy in Action Features A Strategic Shift at Microsoft (Chapter 1) ● The Agency Problem at Tyco (Chapter 2) ● Circumventing Entry Barriers into the Soft Drink Industry (Chapter 3) ● Learning Effects in Cardiac Surgery (Chapter 4) ● How to Make Money in the Vacuum Tube Business (Chapter 5) ● The Evolution of Strategy at Procter & Gamble (Chapter 6) ● Diversification at 3M: Leveraging Technology (Chapter 7) ● News Corp’s Successful Acquisition Strategy (Chapter 8) ● How to Flatten and Decentralize Structure (Chapter 9) Practicing Strategic Management Application-based activities intended to get your students thinking beyond the book. Small-Group Exercises Short experiential exercises that ask students to coordinate and collaborate on group work focused on an aspect of strategic management. Exploring the Web Internet exercises that require students to explore company websites and answer chapter-related questions. Designing a Planning System (Chapter 1) Evaluating...
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