JOURNEY TO MERCK CO & INC

History of Merck Co & Inc

1

Merck and Schering-Plough recently merged to create a new company. Today, It is the second-largest pharmaceutical company in the world. Merck is also a global leader in consumer products and animal care. Both Merck and Schering-Plough ha e a long and rich history o! working to impro e people"s health and well-being. Through the years, the researchers ha e helped to !ind new ways to treat and pre ent illness !rom the disco ery o! itamin B1, to the !irst measles accine, to cold remedies and antacids, to the !irst statins to treat high cholesterol. Merck#s scientists also ha e helped de elop many products to impro e animal health, including accines and antibiotics.

How Merck Operate

$e belie e in operating openly, honestly and with the highest degree o! ethics and integrity. This includes% making sure that the company complies with all applicable laws and regulations globally continually rein!orcing our o erall commitment to ethical business practices and beha ior, at e ery le el o! the company, through the Merck &!!ice o! 'thics and our company"s code o! conduct( and Sa!eguarding indi idual pri acy e)pectations through our global pri acy program.

Diversity at Merck
Merck alues the di erse contributions o! its employees around the world, and is committed to creating a workplace that is open, welcome and respect!ul o! all o! its employees.

TIME LINE

Merck + ,o. traces its origins to -riedrich .acob Merck who purchased a drug store in /armstadt, 0ermany in 1112 'manuel Merck who took o er the store se eral generations later, in 1211. 'manuel and his successors gradually built up a chemical-pharmaceutical !actory that produced in 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 56 as the 4S arm o! the !amily partnership, '. Merck 7named !or 'manuel Merck8, which is now Merck 90a:. Merck + ,o. was con!iscated in 131; during $orld $ar I and set up as an independent company in the 4nited States. Between the wars and during $orld $ar II, the company was led by 0eorge $. Merck, who o ersaw :merica"s germ-war!are research at -ort /etrick. Today, the 4S company has about <1,===7S+P 5et:d antage8 employees in 1*= countries and >1 !actories worldwide. It is one o! the top ; pharmaceutical companies worldwide, much larger than its 0erman ancestor, which currently employs around >*,2== people in 1* countries. In *==<, ,'& ?aymond 0ilmartin retired at the age o! 1@ !ollowing Merck"s oluntary worldwide withdrawal o! Aio)). -ormer president o! manu!acturing ?ichard ,lark was named ,'& and President o! the company. In 5o ember *==3, Merck merged with Schering-Plough in a 4SB@1 billion deal. :s a result o! the merger, the company will use the trade name Merck in the 4nited States and ,anada and elsewhere use the trade name MS/. /uring the early months o! *=1=, Merck"s stock began a slow slide downward. The stock peaked at @1.=> on .anuary *=, *=1=. By :pril **, *=1=, the stock had !allen to >>.;;, a loss o! 1;.;C. This loss o! stock is almost eDual to the loss o! 1;.1C the :merican pharmaceutical company P!iEer had during this same time period. The slide is most likely caused by the speculation o! passage and the e entual passage o! the Fealth ,are and 'ducation ?econciliation :ct o! *=1= on March *1, *=1=.

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JOURNEY TO MERCK !KI"T!N

HI"TORY O# MERCK
MERCK TOD!Y

!KI"T!N

Merck runs its operating business in !our di isions% Merck Serono, ,onsumer Fealth ,are, GiDuid ,rystals, and Per!ormance + Gi!e Science ,hemicals. The Merck Serono division markets prescription medicines. It disco ers, de elops and manu!actures both chemical and biological molecules. Merck holds strong positions in neurodegenerati e diseases and oncology. In addition, the di ision 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 cardio ascular diseases and metabolic disorders. The Consumer Health Care division o!!ers o er-the-counter products !or pre enti e health care and the sel!-treatment o! minor ailments. Liquid Crystals division !ocuses on the de elopment o! molecules !or printable organic electronics, on the use o! alternati e energy, as well as on lighting materials !or energy-sa ing 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 di ision 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. Moreo er, the di ision 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 specialty products. $e will also continue to in est signi!icantly in research and de elopment. $e want to grow both organically and through acDuisitions. $e will adhere to our conser ati e !inance policy.

MERCK
$ar%ace&tica's

RODUCT"

ro(&cts

G&/&PI5 tablets contain amlodopine, which is widely used !or the treatment o! high blood pressure and both stable and unstable angina. G&/&PI5 7:mlodopine8 is globally known !or its e!!icacy and long-term clinical use, and there!ore enHoys the con!idence o! medical pro!essionals worldwide ,e!omerc IM I IA Broad-Spectrum Third generation ,ephalosporin inHection contains ,e!ota)ime Sodium. '!!ecti e against gram negati e and gram positi e pathogens.

Chemical Products
Merck !or Pharma% Inno ati e products !rom Merck support you in all phases o! pharmaceutical manu!acture - !rom research through industrial-scale production to Duality control. Merck !or -ood% &ptimum sa!ety and Duality !or all !oods% Merck supplies cleaning and disin!ecting solutions, raw materials, products and documentation !or in-process and Duality controls.

<

Merck !or G,/s + 'merging Technologies% Merck makes communication isible - with hightech chemicals and materials !or G,/s and &G'/s, organic semiconductors, &G'/ components and etching pastes. Merck !or Biosciences% State-o!-the-art li!e science products% our o!!er ranges !rom de elopment to large-scale manu!acture o! many reagents !or research. Merck !or ,osmetics% Beauty through Merck% $e supply a wide range o! special raw materials !or use in skin care and decorati e cosmetics. Merck !or Printing, Plastics, and ,oatings% Packaging is crucial. Merck supplies no el e!!ect pigments !or the plastics, printing and coatings industries, with a wide range including decorati e and !unctional pigments

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

Merck 7Pri ate8 Gimited is a subsidiary o! Merck 90a: 0ermany in Pakistan. It has been working in Pakistan since 13;@. The business in Pakistan is controlled by the Managing /irector, a nominee o! Merck 0ermany. Presently Mr! "! #aqy $han is the Managing /irector. In Pakistan, Merck 7Pri ate8 Gimited 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 o er Pakistan. ,hemical business group is called KPer!ormance and Gi!e Science ,hemicalsL 7PGS ,hemicals8 and is composed o! three main segments :. ,hemicals B. /iagnostics ,. Pigments The products o! PGS ,hemicals are not produced in Pakistan but are imported and then supplied to our alued customers through a network o! ,hemical and /iagnostic dealers. Some o! the products are customiEed and are only meant to cater customers need in Pakistan and are labeled under Merck 7Pri ate8 Gimited. The /ealers !or ,hemicals and /iagnostics are restricted to look a!ter the business they are assigned !or, howe er, in some cities the business o! ,hemicalsI/iagnostics is looked a!ter by the same dealer.

-!+UE" O# MERCK
1

&ur business is preser ing and impro ing human li!e. $e also work to impro e animal health. :ll o! our actions must be measured by our success in achie ing these goals. $e alue, abo e all, our ability to ser e e eryone who can bene!it !rom the appropriate use o! our products and ser ices, thereby pro iding lasting consumer satis!action.

$e are committed to the highest standards o! ethics and integrity. $e are responsible to our customers, to Merck employees and their !amilies, to the en ironments we inhabit, and to the societies we ser e worldwide. In discharging our responsibilities, we do not take pro!essional or ethical shortcuts. &ur interactions with all segments o! society must be transparent and re!lect the high standards we pro!ess.

$e are dedicated to the highest le el o! scienti!ic e)cellence and commit our research to impro ing human and animal health and the Duality o! li!e. $e stri e to identi!y the most critical needs o! consumers and customers, and we de ote our resources to meeting those needs.

$e e)pect pro!its, but only !rom work that satis!ies customer needs and bene!its humanity. This depends on maintaining a !inancial position that in ites in estment in leading-edge research and that makes it possible to e!!ecti ely deli er the results o! that research.

&ur ability to e)cel depends on the integrity, knowledge, imagination, skill, di ersity and teamwork o! our employees. To this end, we stri e to create an en ironment o! mutual respect, encouragement and teamwork. $e also stri e to reward commitment and per!ormance and be responsi e 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 ha e placed their trust in us. 5o matter how strong our reputation, we ;

must re - earn that trust e ery day by practicing the alues and standards that ha e guided this company !or more than 1== years. $e work hard to make sure that the integrity o! this company remains a priority !or e eryone at Merck e ery day, at e ery le el o! our company. &ur code o! conduct, which we publish !or employees under the title Our Values and Standards, helps to make sure that our employees understand what is e)pected o! them, and pro ides guidance on business standards and practices.

%ISC&'E() "N% %E'EL&PMENT

#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 sa e and impro e countless li es. Thanks to our world-class researchers, state-o!-the-art technologies and unrelenting !ocus on scienti!ic e)cellence, Merck is at the !ore!ront o! disco ering and de eloping new ways to treat and pre ent disease. Scienti!ic disco ery and de elopment ha e always been the cornerstones o! our company. Today, we conduct research in a broad range o! therapeutic categories M including cardio ascular disease, in!ectious diseases, accines, cancer, neurology and women#s health. :nd, to help achie e our goal o! sa ing and impro ing li es around the world, we are e)panding our capabilities in new areas, such as biologics.

PHASE-I STRATEGIC FORMULATION

ST("TE.IC M"N".EMENT
:ccording to -red ? /a id, KIt#s an art and science o! !ormulating, Implementing and e aluating cross !unctional decision making that enable an organiEation to achie e its obHecti eL

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

3

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

ST("TE.IC PL"NNIN. /INT1TI&N &( "N"L)SIS0

:nalysis and intuition pro ide a basis !or making strategy !ormulation decisions. -or Merck Pakistan, it is purely done on the basis o! analysis !or Merck there is no such thing as intuition because they are concern with !act and !igure which they ha e gathered !rom di!!erent sources. Being in pharmaceutical and chemical business there is no chance o! being taking a risk in Duality and Duantity there!ore all the decisions taking in Merck Pakistan are purely based on analysis. Specially, chemicals !rom Merck are important component o! process chain !rom drug de elopment to industrial production. Merck ensure reliable 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 re i al o! strategy as well as solution to the maHor problems are discussed. The issues regarding suppliers, raw materials need planning which is done annually. The decisions are team decisions and are taken by regional team ha ing 1=-1< members. Aision and mission o! Merck ne er changes but codes o! conducts are changes according to strategy.

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

Ste+ 1. Prepare to plan

+!NNIN. IN MERCK
Consultant Contri-ution N ')perience in charting out planning processes N 0uidance regarding typical timelines and best practices N Board education regarding the alue o! planning
N ')pert !acilitation o! process N 'ducation regarding the de!initions o! ision, mission and

Ty+ical #oard and Staff (oles and (es+onsi-ilities -ull board makes commitment, establishes planning committee to de elop approach and timeline

*. ?e iewI ?e iseI alidate Mission, Aision and Aalues

Board, usually with input !rom sta!! andIor membership 7Board should appro e !inal ision and mission

1=

statements8

>. 0ather rele ant data and stakeholder input

Board and Sta!!

@. Set goalsIde elop plan !ramework

Board and ')ecuti e Sta!!

<. $rite the strategic plan

1. ?e iew dra!t plan

Sta!! andIor rele ant board committees. :t this point, the de elopment o! more re!ined obHecti es and action steps is typically delegated to those who will be doing the work. Board has primary responsibility to see that the plan hangs together, is realistic and re!lects board priorities.

alues N 0uidance regarding how to cra!t e!!ecti e statements N ')pertise regarding methods !or gathering input N :ssistance in designing data collection tools, conducting outreach, gathering !eedback N Independent third party to listen to stakeholders and synthesiEe comments N ?esearch on peer organiEations or trends N ')pert !acilitation N ?etreat design to ensure time is used e!!iciently N :ssistance in reaching consensus regarding strategic priorities N Template !or planning and education regarding terminology N Template N 'ducation regarding how to write measurable obHecti es N ,oaching N &utside accountability to keep the process mo ing N -acilitation and guidance N ?eality check% an outside re iewer who can comment on use o! Hargon or areas where the plan is unclear N :sk some o! the same Duestions your !unders will ask youOidenti!y plan weaknesses in time to correct

;. :ppro al o! !inal strategic plan

Board

-ision of Merck
#oc&se( on to(ay, positione( for to%orrow0

+ON. TERM O/JECTI-E"

Multiple sourcing and !orm it !rom di!!erent regions. To increase the market share o! the Merck. 11

:ssess Merck supplier satis!action !rom o er 11= global suppliers. Measure o erall 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 stri ing !or entrepreneurial success. 'ntrepreneurial success starts with people. &ur goal is to operate a worldwide business that produces meaning!ul bene!its !or consumers, our market partners and our community. Through e!!icient research and de elopment, production and marketing o! pharmaceutical and chemical specialties, we want to e)tend opportunities to our customers. To achie e this, we !ocus our endea ors on business areas where we can achie e a competiti e ad antage through the e)cellent Duality o! our products, systems and ser ices. &ur obHecti e is to establish permanent business relationships and not merely short term success. 1*

&n the basis o! these principles, we operate as an independent and pro!it oriented enterprise. $e e)pect a high le el o! per!ormance !rom each other, and reward this accordingly. $e wish to secure an acceptable return on capital !or our in estors. $e respect the cultural distinctions and national interests o! all countries in which we operate. $e stri e to achie e positi e recognition !or our company within the community. Merck attaches particular importance to its responsibility !or sa!ety. $e ha e an obligation to respect the en ironment. $e will deal honestly and constructi ely with one another. $e regard open communication, both internal and e)ternal, as a !undamental prereDuisite !or reaching an understanding o! our common goals and !or gi ing meaning to what we do. $e shall not be constrained by borders between business areas or countries. :ll employees, male or !emale, ha e eDual opportunities to de elop their careers. :ll o! us make a personal contribution to the companyPs entrepreneurial success through our mutual initiati e, creati ity and sense o! responsibility.

EVALUATION OF MERCK MISSION STATEMENT

,ustomer yes Technology

Product and Ser ice yes ,oncern !or sur i al and growth and pro!itability 1>

Market yes Philosophy

no Sel! ,oncept No

yes ,oncern !or Image yes

yes ,oncern !or 'mployee yes

THE MERCK STRATEGY SUSTAIN-CHANGEGROWTH

Specialty businesses within Pharmaceuticals and ,hemicals will remain our !ields o! endea or. In both business sectors we will grow by means o! our own resources as well as through acDuisitions. $e want to be among the !astest growing companies in our markets and stri e !or KDuality growthL with re enue growth e)ceeding cost increases. $e di ersi!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 global presence balances the risks o! our businesses. &ur core competencies are a culture o! inno ation, awareness !or high Duality products, customer !ocus and reliability. &ur business is global. There!ore, the di isions, as units with operating responsibility, run their businesses globally. Fowe er, 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 re enues. Maintaining an in estment-grade rating is a de!ining !actor !or our !inancing 1@

!ramework. &ur strong balance sheet enables us to !inance growth while maintaining a risk bu!!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 as they are deri ed !rom the Merck alues. Pharmaceuticals Pharmaceuticals consist o! Merck Serono and ,onsumer Fealth ,are. $e want to e)pand both businesses. $ithin Merck Serono we will achie e the key competiti e edge by inno ating !or the bene!it o! patients. &ur !ocus in research and de elopment is on oncology, neurodegenerati e diseases and on autoimmune and in!lammatory diseases. $e want to strengthen our position as leading biotech inno ator. $e will obtain a !urther competiti e edge through our e)pertise in chemistry and through the cross-!ertiliEation o! biotechnology and chemical know-how. $e will impro e our market position through targeted acDuisitions and an acti e licensing policy. ?egionally, we will !ocus on e)panding our businesses in the 4nited States and .apan as well as ,hina 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 as well as ,ough and ,old. $e will e)tensi ely in est into our strategic brands in scale markets with growth potential, predominantly in Gatin :merica and :sia. ,hemicals $ith a port!olio o! dynamically growing businesses in strongly e)panding markets and a stable business in mature market segments, ,hemicals contributes essentially to balancing entrepreneurial risk. In the liDuid crystals market, our goal is to maintain our leading position in the long term. $e want to play a similarly acti e 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 go ernmental regulations or high Duality standards - sa!ety and Duality outper!orm low-cost alternati es. ,ustomer-centric inno ati e solutions are the key !actors !or the continuously pro!itable growth o! this business. Special attention will be gi en to e)pand our market presence in biosciences and bio manu!acturing tools. $e want to acDuire businesses that are complementary to e)isting customer relations or technology plat!orms. &ur regional !ocus is on ,hina, India and the 4nited States. To address !uture growth !ields, we are de eloping new businesses and technology plat!orms within :d anced Technologies. &ur !ocus is on technologies such as solid state lighting, organic electronics, mobile energy and photo oltaics.

1<

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 Merck but due to political conditions and Pakistan-India relationship it creates issues to transact. 11

0o ernment type and go ernment stability also a!!ect Merck. Musharra!#s 'ra, political en ironment was stable !or the growth o! business. ?ules o! Gaws and regulations are also in ol ed in organiEation#s growth. The !i e-year anti-dumping duty imposed on Pakistani manu!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 go ernment in Pakistan, it has ad ersely a!!ected the !irm#s long term as well as short term strategy. -rom Merck Pakistan perspecti e, there are no such subsidies or le ies that are pro ided to this sector !rom the go ernment, instead they ha e 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 !or Merck. 5ow Merck ha e many suppliers !rom all o er the world which has reduced the reasons o! being black mail by suppliers. There is a lot o! economical pressure on Merck( Merck can not increase their prices due to its responsibilities o! being in pharmaceutical business but the ta) by the go ernment o! Pakistan is increasing day by day. :ll these economic !actors ha e a common theme that is increase in price, which will ultimately 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 Merck considers Pakistani di erse culture as an opportunity, they always try to bring such products which align with cultural and social aspects.

6* TECHNO+O.IC!+
Merck is at the !ore!ront o! disco ering and de eloping new ways to treat and pre ent disease. Scienti!ic disco ery and de elopment ha e always been the cornerstones o! Merck. Today, Merck conduct research in a broad range o! therapeutic categories including cardio ascular disease, in!ectious diseases, accines, cancer, neurology and women#s health. :nd, to help achie e their goal o! sa ing and impro ing li es around the world, they are e)panding their capabilities in new areas, such as biologics. Be!ore Merck de elop a new medicine or accine, they need to understand the basics. Fow e)actly does the disease or condition workQ :nd which mechanisms ha e the potential to help pre ent or treat it. It takes a long time to identi!y a potential new treatment. Teams o! scientists might screen thousands o! compounds to identi!y a promising lead. That 1;

compound will then need to be re!ined, optimiEed and tested in clinical trials be!ore Merck can apply !or regulatory appro al. /rug disco ery is o!ten an e)pensi e and high-risk undertaking. Merck spend billions o! dollars each year to disco er and de elop medicines and accines that can help people around the world. Be!ore they may recei e appro al !or use, medicine and accine candidates undergo rigorous and systematic testing in olunteers. This process is designed to e aluate whether a new product should be appro ed !or use in the broader population. 'ach clinical trial is designed to answer certain research Duestions. They !ollow strict, prede!ined protocols to ensure sa!e and accurate results.

COM

ETITOR"

Merck Pakistan is not operating in Pakistan as an indi idual entity !ocused on pharmaceuticals and chemicals. It has its operations in this nation along with many competent players, each trying to win the game. 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 ery much concerned with it, and so they keep a thorough look out o! their competitors. They keep themsel es updated they usually !ace e)treme le el o! competition but this le el aries !rom one category to another. ,ompetitors o! Merck include the !ollowing% 0la)oSmith9line P!iEer Inc.

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

12

INTERNAL ENVIRONMENT
Merck Pakistan a!ter analyEing the e)ternal en ironment then !ocuses on the good and weak points o! its internal !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 and weaknesses accordingly. 'mployees o! Merck play an important part in order to e aluate and asses the in!ormation regarding the internal en ironment. This section o! the strategic en ironment 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+O MENT

The !oundation o! Merck#s strength, and the engine o! its growth, has always been the no el medicines Merck disco er and de elop to meet the healthcare needs o! patients, physicians and payers. Merck#s !ranchises continue to dri e growth, supported by new products, indications, !ormulations and clinical trials. :t the same time, they are rapidly building their capacity to success!ully compete in new therapeutic areas such as diabetes, insomnia and cancer and new accine markets.

3* CON"UMER HE!+TH

RODUCT"

Through Merck#s consumer health products, they stri e 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 that help pre ent or treat arious common conditions. These include household names such as ,G:?ITI5 !or allergies, ,&PP'?T&5' !or sun care, /?. S,F&GG"S !or !oot care, and many more.

4* +I7UID CRY"T!+
13

Merck is the world"s leading manu!acturer o! G,/ materials. By continuously de eloping customer speci!ic liDuid crystal mi)tures, together with display manu!acturers Merck make the communication technologies o! tomorrow possible. They o!!er inno ati e materials !or security, identi!ication and photo oltaic. By inno ation, creati ity and entrepreneurial thinking Merck has become number &ne in GiDuid ,rystals worldwide with more than *<== patents in the !ield o! liDuid crystals, their mi)tures and display applications. 7I-' re!erred in appendi)8.

"TRATEGY IN !CTION
LONG TERM OBJECTIVE:
-or Merck Pakistan long term obHecti e means a step towards their ision. In 4nile er Pakistan strategy documents is done !or minimum < to 1 years. &n &P,& !unctional documents based on * years because !or them < to 1 years is the ma)imum period to achie e the long term obHecti es.

INTEGRATION STRATEGY:
Merck Paki !a" i #$%%&"!'( $ i") !%*") +*%,a%- i"!&)%a!i*" .$! +*% .a#k,a%- i"!&)%a!i*"
/a *0& 'a#ki") .&#a$ & !/&( -*"1! *," !/&i% $22'i&%3

FORWARD INTEGRATION:

Merck Pakistan has a strong control on o er their distributor or agents. Merck Pakistan uses Hoint businesses plan with their distributor, this is basically a written document which contain all in!ormation regarding to their distributor strength and weaknesses. :!ter analyEing the strength and weaknesses o! distributors, Merck Pakistan assigns the distribution task according to their strength( Secondly Merck Pakistan holds the contract with their distributor which bound their distributor to dispatch product o! Merck Pakistan only.
BACKWARD INTEGRATION:

Merck Pakistan does not control their supplier because at the same time they are interacting with the arious suppliers, but they want to make a long term relationship with their supplier, i! any supplier wants to dictate their price to Merck Pakistan, Merck Pakistan starts to !ind out new endor.

*=

INTENSIVE STRATEGY:
Merck Pakistan normally used all these strategies the proportion o! each I di ision aries !rom one another. Merck Pakistan will be looking out some past trend, secondly is there any space !or product inno ation or not. $hen it comes to product de elopment and penetration it is happening in all the categories.

4EFENSIVE STRATEGY:
Merck Pakistan normally doesn#t use de!ensi e strategy they usually !ollow aggressi e strategy which called as K:TT:,9 or ,&45T'? :TT:,9 ST?:T'06#. But past e)perience has state that they ha e used ?etrench and /i esture strategy.

RETRENCHMENT:

Merck Pakistan doesn#t use retrenchment strategy on their employee in order to reduce cost, they ha e ery tight policies o er their cost but they ha e applied this thing on certain di isionIcategory, this is something that e ery 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 di esture one o! its pharmaceutical products not because o! its low growth but it was strategy came !rom Merck 0lobal that this line should be di ested. There!ore, to align their strategy with the 0lobal strategy Merck was bound to di est it3

4IVERSIFICATION STRATEGY:
Merck Pakistan is currently using this strategy in two ways that is related di ersi!ication strategy and unrelated di ersi!ication as Merck is consider more toward sustainable growth and pro!it, it#s kind o! risk di ersi!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 ele en strategies. /i!!erentiation strategy helps Merck Pakistan to keep an edge o er other competitors. They ha e an edge on% P?&/4,T J4:GIT6. G'A'?:0' $FI,F 45IG'A'? IS F:AI50 /4' T& B'I50 M4GTI5:TI&5:G. /IST?4B4TI&5 5'T$&?9

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HASE-II IMPLEMENTATION

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STRATEGY IMPLEMENTATION POLICIES

Strategic /ocument is !ormulated at Merck 0lobal, and then it is di ided into regions and subdi ided into countries, sub clusters according to their regional strength. Then in to clusters 7that is Subcontinent8 it is !urther di ided 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 e ery country is declared. This strategic document is again !orwarded to the M'?,9 0G&B:G !or appro al. :!ter its appro al, it is then recei ed in Merck Pakistan le el. It is being split into !unctions, when this is split into !unction e ery indi idual in this organiEation has his own document in which his contribution in that strategy is written clearly and at the end o! the year, each indi idual 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 a di!!erent thing as it comes !rom document, Merck Pakistan is Duite concern about this !act because i! any issue is raised by Merck Pakistan Gimited on strategy implementation this will go on sub cluster le el then on cluster le el and lastly on Merck global.

CHANGING POLICIES:
0eneral policies regarding to strategy implementation or other issue remains the same but it does not mean that they will not change. 6es, Merck aligns them with the modern alues. In the past, it was termed as code o! ethics but now it is termed as alues. Merck has < di!!erent alues which are discussed e ery year. There are di!!erent terminology uses at di!!erent le el !or employee sa!ety and it is one such e)ample o! the term as KAalueL. Merck general policies such as F? policies, :ccounting Policies etc. are in line with the general policies o! Merck 0lobal which, in turn, are localiEed to Pakistan perception due to Merck o! arious countries ha e di!!erent legal structures and policies.

RESOURCE ALLOCATION:
?esources are being allocated !or di!!erent category according to their span o! the brand because there is a possibility that !or a small brand there may be one brand manager and !or other brand, many managers and working sta!!. There is no speci!ic tool used !or allocation o! resources in Merck Pakistan. They *>

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

MANAGING CONFLICT:
In Merck Pakistan e ery person to whate er age group he or she belongs to, has no tool as such !or con!lict management. In Merck Pakistan, arise o! con!licts between * persons are sought amongst themsel es, i! it does not help then the !irst manager tries to resol e it between two or more indi idual who ha e con!lict. I! this goes beyond his control then they re!er to F? con!lict team Rthe person who has gi en the in!ormation is the AP o! this teamS, then action is being taken whether to mo e that person out o! the department or not. :t pro!essional le el con!lict are di!!erent. ,on!lict also arises outside the Merck which are mainly with the suppliers. These are always sort out by the managers.

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HASE-III EVALUATION

EVALUATION 5 CONTROL
CONTROL PROBLEM:
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There is always a control problem in e ery organiEation i! any organiEation denies this that there is no control problem they are lying. &rganiEation goes on changing in term o! control i! any organiEation has reduced its structure it means they are controlling o er their control problem. Merck Pakistan has a ery lenient structure, they use to ha e a ery !lat structure *-@ years ago, and this is something which e ery organiEation 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 system such as Rbudgeting system, per!ormance e aluation etc.S support the strategic !ocus. In addition to that all agencies, partners + customers also gi e an indication o! the responding strategies.

EVALUATION OF STRATEGIES:
In Merck Pakistan strategies are being e aluated through% SI: 7Strategies in :ction8, on !unctional le el it is being e aluated on monthly basis. :t a Merck global le el, it is done on Duarterly basis. -inancial statements are the best e aluator !or them. They do not use balance scorecard system but they ha e separate tools and techniDue. Merck Pakistan e aluation mean getting a sense o! direction.

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

STRATEGIES VISIBLE OR HI44EN:

:ccording to Merck Pakistan strategic management should be isible or hidden both, it totally depends upon the strategic process. I! organiEation does not ha e an e!!ecti e process then it should be hidden and on the other hand, i! your organiEation really has an e!!ecti e process such as Merck Pakistan limited then it should be isible strategic management process.

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PHASE-IV RATIO ANALYSIS

P?&-IT:BIGIT6 ?:TI&S
.ross Profit Mar*in indicates the relationship between net sales re enue and the cost o! goods sold. The 0ross Pro!it Margin o! 22!345 shows that 66!785 o! Sales becomes the part o! ,ost o! Sales. Thus showing that the Product ,ost is ery low and ,ompany is ery e!!icient in managing ?aw Materials at lower cost. Pre9Ta: Profit Mar*in is a measure o! the operating e!!iciency o! a company. Preta) margin is usually e)pressed as a percentage o! re enues. Since preta) margin e aluates the relationship between operating income and re enues, it is also considered a measure o! the pro!itability o! the company. The margin o! ;!625 shows a good operating e!!iciency o! Merck 7P t8 Gtd. (eturn on "ssets measures the company"s ability to utiliEe its assets to create pro!its. Merck 7P t8 Gtd. is generating net income which is 65 o! its total assets. (eturn on Equity is a measure o! how well a company is able to return a pro!it using the shareholder#s in estment. ?&' o! <!;7 is a satis!actory as shareholders perspecti e. Net Profit Mar*in measures net pro!it as portion o! Sales. The net pro!it o! 3!4;5 o! Sales. *2

GIJ4I/IT6 ?:TI&S
Current (atio pro ides 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, in entories, accounts recei able, and marketable securities. ,urrent liabilities include accounts payable, current maturities o! long-term debt, accrued income ta)es, and other accrued e)penses that are due within one year. In general, businesses pre!er to ha e at least one rupee o! current assets !or e ery rupee o! current liabilities. The current ratio o! 8!4; shows a tremendous liDuidity position o! Merck 7P t8 Gtd.. =uick (atio also measures the liDuidity position o! the business in more deeper aspect. The Duick ratio compares the cash plus cash eDui alents and accounts recei able to the current liabilities. The primary di!!erence between the current ratio and the Duick ratio is the Duick ratio does not include in entory and prepaid e)penses in the calculation. ,onseDuently, a business"s Duick ratio will be lower than its current ratio. It is a stringent test o! liDuidity. The liDuidity position Merck 7P t8 Gtd. is at high satis!actory le el as shown by the Duick ratio o! 8!>;. (einvestment (atio measures how much a company rein ests its operating cash !lows into capital e)penditures. The ratio o! <!86 shows that 1*C o! the cash!lows !rom operating acti ities were used !or capital e)penditures in *==3. %e-t Covera*e (atio determines the ability o! the company to generate cash !rom operations in order to pay o!! its liabilities. The ratio o! 7!67 shows that Total Giabilities are <.*< times the &perating ,ash !low. Cash flo,s (&" measures how much operating cash !lows a company is generating !rom its assets. Merck 7P t8 Gtd. is generating operating cash !lows o! <!<? +ound !rom each pound o! its assets.

:,TIAIT6 M':S4?'S
"sset Turnover takes an o erall !ocus on how the company uses all o! its assets to generate re enues. : higher number is desired because it indicates that each pound o! asset is producing a greater amount o! re enue. The ratio o! <!3; shows that each pound o! asset is generating =.@1 pound re enue. "ccounts (eceiva-le Turnover is similar to assets turno er( howe er it !ocuses a more speci!ically on accounts recei able and its e!!ect on re enue. This ratio shows how e!!ecti e a company is with e)tending credit !or credit sales as well as collecting these debts !rom customers. The ratio o! 3!86 indicates the company is e!!icient. %ay@s Sales in "ccounts (eceiva-le is linked closely to accounts recei able turno er. It indicates the a erage 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 *3

In entory turno er is a measure o! how o!ten within a year that in entory is sold and replaced. It is calculated by di iding cost o! goods sold by in entory. Merck 7P t8 Gtd. should work in this area as in entories are sold and replaced Hust 8!3; times in a year. %ay@s Sales in Inventory The day#s sales in in entory ratio is closely related to in entory turno er. It Duanti!ies how long your in entory remains in storage. Gower numbers indicate higher turno er and there!ore are considered more e!!icient. In entory holding time is *<= days which shows huge cost incurring at storage and insurance too.

G'A'?:0' ?:TI&S
%e-t (atio The debt ratio indicates how much debt a company has relati e to its assets. Merck 7P t8 Gtd. has T=.@> relati e to assets o! T1. %e-t to Equity (atio The debt to eDuity ratio is a measure o! what proportions o! debt and eDuity are used in its !inancing. It is also a measure o! a company#s !inancial le erage. Merck 7P t8 Gtd. is depending much on debts and hence the ratio is 86!2> which show that the debt !inancing is 1*.;> times more than eDuity !inancing.

Levera*e (atio The le erage ratio indicates the e)tent o! asset !inancing !rom the shareholder#s. Merck 7P t8 Gd. depends largely on debts. The assets are 64!72 times more than eDuity. Times Interest Earned (atio The times interest earned ratio gi es shows how well a company is able to pay its interest e)penses with earnings be!ore ta)es. The ratio 3!;6 represents that @.1* times o er the interest e)pense can be paid with the earnings be!ore interest. Times Interest Cash Alo, from &+eratin* "ctivities Covera*e (atio Times interest cash !low is similar to the times interest earned ratio. Fowe er, instead o! comparing the company#s ability to pay interest with 'BIT, this ratio compares how well the company can pay interest with operating cash !lows. Interest can be paid 8<!6< times !rom &perating ,ash -lows. 7 Income statement, balance sheet and other !inancial schedule are enclosed in appendi)8.

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HASE-V REFERENCES
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REFERENCES
/!!2:66,,,3+!3#*06#0 6 676&.-+89:8-;<=<-99-+->;;.-77988+&a.8=a3/!0' /!!2:66,,,30&%#k-#/&0i#a' 32k6a.*$!-0&%#k 2aki !a"6#?9Aa.3 9OV@>AAAE0*U ABJ'XCI L*#a'Ca!&)*%(D!%$& /!!2:66,,,30&%#k32k6&"6i"-&@3/!0' /!!2:66,,,30&%#k32k6&"6#*02a"(6#*02a"(3/!0' /!!2:660a)aEi"&30&%#k3-&6&"6i"-&@3/!0' /!!2:66,,,30&%#k3-&6&"6i"-&@3/!0' ,,,30&%#k3#*062%*-$#!6/*0&3/!0' /!!2:66,,,30&%#k32k6&"6#*02a"(60&%#k?i"?2aki !a"60&%#k?i"?2aki !a"3/!0' /!!2:662/a%0&@&#3+i"-2/a%0a3#*062/a%0&@&#6N&, FA"a'( i 6P+iE&%-a"--M&%#kB$''&! -4*-)&-6A%!i#'&S!a"-a%-6A%!i#'&6-&!ai'6::>>A>C#*"!&@!Ca!&)*%(I-D8G<;G /!!2:66&"3,iki2&-ia3*%)6,iki6M&%#k?5?C*H?I"#3

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HASE VII

!PPEN4IX

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