Entries in the Category "MGMT 250"
Expanding Expansion
The goal of every manager is to develop a company that is capable to effectively compete against the other companies within the industry. Managers can manipulate their practices and employees to have the most successful and efficient company possible. What happens when your company becomes too successful and grows too quickly? If the company expands faster than the management anticipates then the management will run into a whole new set of problems. A problem some of the best companies have is the fact that they are too big and they stretched themselves to the point where some areas of the company will become lost. MGMT 250 stresses the importance of strong management in an expanding company and how to deal with the changes that a dynamic environment forces onto the company. Every article we have read in the class, whether it was business ethics, training priorities, or even motivating employees, supports the idea that the role of a manager has to be thoroughly understood.
What Do You Do When The Unexpected Happens?
Our group just received the results from the 6th Quarter HR Simulation in our MGMT 250 class, and we were rather surprised with the results. It turns out that our productivity decreased immensely, not because we didn't have sufficient training methods, but because we had too many employees. How does this work? I would think the more employees hired, the more work would get done. However, in a world with limited space and responsibilities, employees are restricted to the production parameters that they are given. In other words, if you need to produce 50 bottles of Ambesol (a common oral numbing medicine) and each employee can produce 10 bottles an hour, it would be most beneficial to hire 5 employees. If you hire any more than that, the production of each employee will be limited to how many need to be produced. Ten employees will only produce five bottles each not because they aren’t as efficient as the average employee, but why should they produce 10 bottles when the goal is only 5? It also could be due to limited space. An office that holds 100 people will be overcrowded if 120 employees are working, creating bottlenecks within the workplace and therefore decreasing production.
Executive Compensation: Why the best should be paid the best
The drama with Enron and World Communications in 2001, unveiled a cover on the travesty of exuberant executive compensation existing universally throughout large corporations within the financial industry. According to the article, "Getting a Grip on Executive Compensation" by Eric Krell (an article read within out MGMT 250 class), it was proven that in the financial services industry, CEO's were being paid an average of $11,936,000 a year. At the same time, the average employees of those companies were being paid less than .5% of that amount. In the pharmaceutical industry, the executive compensation average is a lot less (averaging around $1 million).
Although there are some exceptions to that norm: William C. Steere, Jr., Pfizer's Chairman, who made $40.2 million and C.A. Heimbold, Jr., Bristol-Myers Squibb's Chairman and CEO, who held $227.9 million including stock options.
From a Business Prospective:
These CEO's have accomplished all those goals, with enough money left over. If the employees are working efficiently at the wages they are being paid, then there is no reason to pay them any more money. These CEO's have also played the supply and demand model to an exact science. They are aware that their products are at an extremely high demand, so they can charge a colossal amount. As long as the consumers pay for it, they can charge it. They are maximizing their profits just like every single businessman tries to do, except they are doing it better and more efficient and are getting criticized for doing it. Don't fault the CEO; fault the non-competitive industry that allows this business practice to exist.
Brand Yourself: its all about image
In MGMT 250, there is an article entitled; "Brand Yourself" that discusses a man named Tavis Smiley. He talks about many steps that people can take to make themselves an active participant in the company they are in. I found that the steps he uses to market himself and his talents can also be used to market a product. A pharmaceutical company can use these steps to effectively create and distribute a product to the public.
STEP 1: FIND YOUR NICHE
Find the group of people that will most likely use the product. Selling Viagra to 16-30 year olds will probably not be very effective because not to many of those people will have the need for the product.
STEP 2: IS YOUR BRAND MARKETABLE?
Is it a product that people would actually want to buy? If it looks to be useless, then it probably is. However, if you have a drug that people might really have the need for, then you can move to the next step.
STEP 3: SEEK PROFESSIONAL HELP
Normally the drug company itself doesn't market their own products. Instead they hire a professional marketing/advertising company that is skilled enough to effectively create an image for the market.
STEP 4: PROMOTION, PROMOTION, PROMOTION
Doctors use it, patients use it, friends use it, and everybody (that should use it) is using it! Once you create the perception that this drug is being used by everyone, the fear of it will diminish. Once the fear of it is gone, people usually have no problem spending money on something that will improve their health.
STEP 5: BRANCHING YOUR BRAND
Extend the product to as many places possible. For a drug product, there is a large sunk cost, but small variable costs. The more products you sell, the faster you will be able to cover the fixed costs.
STEP 6: GOING BEYOND THE BRAND
Many drug products offer other related products. They figure since they already have the trust of the consumer, then that trust can be converted to more sales. A cholesterol reducing drug might offer other drugs that strengthen the walls of the arteries or increase cardiovascular circulation.
Why Any Feedback Is Good
When developing a product, it is necessary that all the flaws the product has are sorted out before it reaches the market. Any large imperfection that still exists once the product is being used by the public could create a large financial burden for that company. In a technology industry, you commonly hear about a recall occurring; where they simply announce a defect with the product and they provide a replacement at no cost. However, in the pharmaceutical industry, you can't recall the medicine already given out. If the medicine was ingested and there is a problem with it, then the damage will have already been done, and the company will face lawsuits (probably class action lawsuits). In MGMT 250, we focus on receiving feedback and how to manage the criticism. A drug company would prefer to have negative feedback while the drug is still in development, that way they don't have to incur the large costs commonly found from a lawsuit. Any feedback is great feedback for them because information is power. They know how the drug works, the benefits of it, and also the side effects. With this knowledge, they can provide almost perfect knowledge to the consumer so it can benefit them, while at the same time protecting the company as well.
Which Do you Prefer: Long or Short?
In case you were confused with the title, this is referring to goal setting again. In class, we were told to write down a bunch of our long-term goals on note cards and analyze them. I noticed that any of those long term goals, for me, seemed almost unreachable at this point in my life. It was almost overwhelming. I put on one of the cards that I wanted to be a CEO, which one day I would like to be a CEO of a Pharmaceutical company, but that would be of an example of a goal that I wouldn't even strive for because it seems to far in the distance. I compare it similar to a connect the dots puzzle. You have to have a long term goal in mind, but you set very many short term goals one after the other until eventually, it creates a picture. This picture is your long term goal, and all the tiny dots along the way showed you what you had to accomplish to make that picture. So for me, I would prefer to have short term goals.
Morale or Productivity?
The goal of every company around the world is to become the most efficient in that industry. There are so many factors in business that are out of a manager's control, but efficiency is something that can be addressed and controlled. In order to have an efficient company, the manager has to be able to increase morale and productivity. There are other types of efficiency (like cost efficiency), but in MGMT 250, we assume that having an efficient company as a whole will reduce the other extraneous factors. Also, through the HR simulation we are taught that resources are always limited. Given that a manager has limited resources, should he focus those resources to improve the productivity of the company, or the morale? If he pushes to much productivity, then the company will lose morale and efficiency and will collapse. An example of this was back in the 1980's, Steve Jobs, CEO of Apple computer Systems, was working on a computer known as the Macintosh. This computer was supposed to revolutionize the computer industry, but ended up failing to a dominant IBM computer because the programmers and developers were pushed too hard and they fell behind.
Feedback
In business, feedback is a very important tool to encourage improvement. It enables individuals or even companies as a whole to analyze themselves and critique the problems so that they can become successful. The best feedback a pharmaceutical company can receive while developing a product is negative feedback. This might sound unusual to expect negative feedback to actually be useful, but there needs to be problems in order to fix them. If the process of development ran smoothly throughout all the production stages, there might be unexpected problems later on that might be too hard or expensive to manipulate. This negative feedback is crucial because it allows them to see all the current problems with the product and gives them the option to implement a viable solution while change is still possible. Pharmaceutical companies receive feedback through empirical analysis and organized experiments. "It's better to receive failure early before it's too late." -Phil Sczeponik.
Goal Setting
Goal Setting. It is one of the most important (if not the most important) tools business can use. Goal setting can be very effective if it is used in the correct way. The best way to set goals would be to choose a topic that is within reach. The mind only operates when it believes success is obtainable. For example, if the CEO of Pfizer set a goal that he wanted to improve efficiency by 300%, he might realize that it cannot be done and he won't even try to work for that goal. However, if he sets a goal of 30%, now he has something to work with. He can now develop a structured plan to effectively meet that goal. The plan may include a primary plan along with several backup plans, in case things were to deviate from the goal. Without structure and a goal that is within reach, the goal setting strategy is completely useless.
http://www.selfhelpgoals.com/Goals38165.aspx
Biological Wars
With all the terrorists’ attacks that are going on today, a main concern for our government is the imminent threat of biological terrorism. Unlike previous wars, these attacks don't require guns, tanks, planes, or even bombs. A small aerosol can containing a lethal toxin is all it takes to kill a population within a few city blocks, and if the toxin happens to be contagious, many more casualties could be a result. The government and our nation is well aware of this problem, but the question is: How do you provide treatment/cures for an entire nation from thousands of biologically manufactured diseases? Preparation and efficiency are two important keys these companies need to perfect when so many American lives are at stake. If they are not prepared to manufacture a treatment at an incredibly efficient pace, this nation will suffer an attack that will consume many civilian casualties. In MGMT 250, we are running an HR simulation that focuses on building morale so that efficiency will increase. In this competitive world, having an efficient company is a necessary component if they want to be successful. And ultimately, efficiency is dictated by the management that exists within a company. If that management team cannot perform during a time of crisis, like a terrorist attack, enormous consequences will be a result.
Incentives
The idea of incentives in a company was a hot topic on Wednesday. A lot of questions and comments were thrown around regarding what incentives would best fit their company. For a sales company, commission and customer satisfaction would be appropriate; a finance company might want to have a base salary with bonuses on profitability. A Pharmaceutical company would probably pay their employees a base salary with a major bonus if their product gets approved by the FDA. This way the employees will get paid regardless of whether the product succeeds or fails, plus it would encourage a little extra effort to be exerted from them. Remember there's no "bonus points" for trying. If the product fails, that company loses all of its investment and they have to start all over again. Incentives are extremely important in this industry.
Should Information Be Free to the World?
In class we talk about how businesses have to work together to compete in an industry. Some workers in a company might think of something really innovative and it usually reflects positively on the company as a whole. In a medical company, individual scientists have amazing discoveries and this improvement reflects positively on the scientist (that is how they succeed). This blog post tries to analyze if the freedom of information would advance the Biotechnology industry.
Scientific research has fueled the growth of man since we have existed on Earth. It provides knowledge that is a valuable necessity to the development of our society. Many scientists argue that scientific knowledge is “free to the world.” Recently, there has been a debate on whether this statement is true, or whether biotechnological organizations have the power to secure this information in order to produce a scientific innovation. In their article, “Does good science lead to valuable knowledge? Biotechnology firms and the evolutionary logic of citation patterns,” Bruce Kogut and Michelle Gittelman effectively analyze and display the growing problem that is affecting epistemic communities.
First we need to investigate whether innovation is created by scientific research patents, or if a revolutionary idea is only supported by these discoveries. In this article they prove that, “The evidence strongly supports the conclusion that patent citations contain information about a patent's technological importance.” By stating the technological importance, the scientist would actually be providing an incentive for these biotechnological companies to incorporate this information to make a positive financial investment off of it. In a very competitive industry like a bio-tech industry, hundreds of patents are produced every month and each discovery is just an expansion of a previous discovery. This proves that the development of an innovative product only exists with the progressive and consecutive discoveries by scientists related to the field.
The next step would be to examine whether the collaboration of scientists within research organizations like startup companies or universities creates opportunities for innovation, or whether it competitively inhibits the development of successful scientific advancements. They prove that the more competitive a field is, more patents are produced and discovery occurs at a faster rate. Although the production of a relevant product is created, this competitiveness increases the financial investment of the bio-tech company. In other words, discovery runs rampant, but the cost of production increases because of the patents that exist.
Finally, we need to investigate whether the companies with the “smartest scientists” and most advanced technology actually produce more innovative discoveries. By the research gathered in their experiments they showed that there was no correlation between richer or smarter firms and innovation. This might seem a little confusing since every product produced in the medical industry seems to come from a mega firm like Pfizer or Synergetics. It means that innovation can’t depend on a specific firm or company, but rather it is created from the collective efforts of mankind as a whole, and to patent a discovery rather than publish one only inhibits the growth of this industry.
Science doesn’t lead to valuable knowledgeable, but rather it depends on it for its maturation. Knowledge should be the asset of the world to be used to promote innovation. Without the collective collaboration of these scientists in their epistemic community, the advancement of biotechnology would not be able to exist.
Copyrights on Genetic Codes
An old saying goes, "The best way to cure a problem is to prevent it from ever occurring." -Steve Young, Sophomore at Case Western Reserve University. This tactic is one that medical companies are turning to in order to 'cure' the debilitating diseases that exist today. Genetic engineering is a tool these companies are putting into their arsenal to combat these diseases. The entire human genome was successfully mapped in 2003 thanks to the efforts of many organizations (including Washington University in St. Louis, St. Louis Post-Dispatch). Now that the genome has been mapped, it allows the information to be experimented with to see what the information really means. This is great except for the fact that the organizations that invested millions of dollars to buy equipment to map the genetic codes are able to secure copyrights on those sequences. For example, if a company mapped the first three genes, they can copyright that information and it cannot be used by any medical company unless they buy the 'rights' to that information. (This isn't always the case, some companies are not selfish and they make the information available to be the knowledge of the world). These copyrights are inhibiting the process of finding the 'cures' for these diseases because companies aren't allowed to search in those copyrighted areas to find the solution to that problem without a copyright purchase. They are sometimes too expensive to buy, plus there’s no guarantee that the solution will even be in that gene (http://www.siu.edu/~ebl/issue1/psimon.htm).
Cost Efficiency
Every nation around the world is facing a similar disease that is starting to decimate their population. This disease affects poorer countries more than it does wealthier countries like America, but it is starting to become prevalent worldwide. AIDS is the golden cure every medical company in the world is striving to achieve, right? Well, not exactly. Most people don't know that the cure for AIDS has already been discovered and it worked over 90% of the cases that were given the treatment. Why hasn't this miracle cure been marketed to the millions of desperate, infected people across the world? There is one simple explanation for this, the miracle cure cost over $1,000,000 per treatment and that meant that 99.97% of the people in the world couldn't afford to buy it. http://post.queensu.ca/~forsdyke/aids.htm The life expectancy for a person who is HIV+ is about 7 years. Many of you remember when Magic Johnson made the announcement back in the early 90's that he has acquired this devastating disease, however he is still alive today. A major problem pharmaceutical companies are having is not finding a cure for a ravaging disease, but rather to make it affordable for their customers to buy.
Structure Related to Producing a Product
Many people believe that a medical company is organized like any other business. Although many aspects of a pharmaceutical company may be similar to a business like: generating profits, reporting to a higher authority, and responsibility of assignments, there are several characteristics that a pharmaceutical company has that no other industry does. In order to produce a successful final product, it has to successfully pass five different stages of approval. This poses many problems, at each stage, which these companies have to overcome. If the organization does not have a proper structure to effectively manage its employees at each and every stage stage, the product will fail, and millions of dollars in R&D will be lost. Hundreds of newly emerging companies that had a revolutionary idea that “will change the face of the world” failed because they couldn't maintain an efficient management structure.
How Does Medicine Apply to Business?
Management 250 was designed and intended to help its students better understand how to manage and make decisions within a company. When people think of a 'business', Merrill Lynch, A.G. Edwards, Microsoft, and even Amazon.com are many of the businesses that come to mind. Although these are many extremely profitable and successful companies, everyone overlooks one of the fastest growing industries in the world: the pharmaceutical industry (over 200 billion dollars per year). The increasing costs of medicine and health care are attracting many new pharmaceutical companies to arise. With about 300 million people in America and growing, how do these businesses find an appropriate balance between business and medicine? If they focus too much on the business, the medical industry will go down the tubes and millions of lives could be lost. But if they focus too much on finding a cure, there would be no way keep their business running. This is why it is so important for these medical companies to be run efficiently and in an organized fashion, because not only are people's jobs on the line, but lives are on the line as well.