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LundBeck Korea Case Solution & Answer

Introduction

Lundbeck was operating publically since 1915 as a pharmaceutical company which had its central location at Denmark.Lundbeck was particularly specialized in Central Nervous System (CNS) pharmaceuticals’ drugs. Lundbeck initially captured the market by conductingextensive research and development pertaining to pharmaceutical industry, being specific to central nervous system, before developing, manufacturing, distributing and selling neurological disorder drugs.

Lundbeck had a global resource structure employing 5500 personnel all over the world out of which a major portion belonged to Denmark that was their central hub. Although the research center of Lundbeck was in United States and Denmark, the manufacturing of these drugs was conducted in Italy and Denmark. From these manufacturing sites the drugs were distributed and sold in 90 different countries on the globe which were legally registered for conducting sales and operations.

Lundbeck specializes in neurological drugs which treat, schizophrenia, neurological disorders, Alzheimer’s disease, insomnia and Parkinson’s disease. Lundbeck regularly conducts researches in order to continue manufacturing of next generation drugs. Furthermore the strategy of Lundbeck is to improve the quality of living of the population at large. Lundbeck ensures that it achieves their goal of continuous improvements in development of new and improvised drugs pertaining to neurologicaldiseases.

LundBeck Korea Case Solution & Answer

Corporate Strategy

Lundbeck’s corporate strategy is based on four fundamental forces that are specialization, integration, speed and results.Lundbeck has specialized in the category of central nervous system. Therefore Lundbeck has to ensure that it continues to grow in their specialized field of central nervous system drugs.  In order to gain competitive advantage in this particular segment, Lundbeck focuses on simplifying the production and distribution process of these drugs. This simplicity in processes would enable the company to gain competitive advantage via cost cutting measures in the production and development process. Apart from this promotional activities is carried on by the company to advertise its new and innovative drugs launched in relation to old and new generation diseases.

Lundbeck is moving towards the option of globalizing as it aims to grow beyond the national boundaries. This would require the company to create added value in all its operations. This could be achieved by conducting extensive research in terms of demand prevailing in the pharmaceutical industry. The demand for Lundbeck’s drugs were increasing significantly all over the globe, hence the company decided to integrate its operations by finding new workplace, locations and investors internationally instead of just restricting their operations to their central hub i.e. Denmark.

Lundbeck core strategy was to focus on shortened decision making and operation process. This focus and concentration on short and simple process of operations helps the company to gain competitive advantage via responding positively and adapting easily with the fluctuations in the demands of a perfect competition market. Lundbeck ensure that strong monitoring and controlling internal business process systems were developed in order to work effectively according to the demands of the pharmaceutical market and objectives of the senior management.

This strong internal control system helped the company to focus on the key issues and minimize the risks associated to the business nature of the company. While operating on a small manufacturing and development process, it was easier for the company to identify and rectify the risks before time. The identification of the risks pertaining to competition, ethical issues, legal issues, regulatory issues, environment issues, compliance issues, and marketing issues became easier. Thus all these risks could be responded quickly and effectively.

Lundbeck main strategy was to link short terms operating cycle with the long term values and objectives of the company’s stakeholders. Lundbeck was not wholly owned by their directors or sole trader, instead a major portion was owned by the scientific research community and were not traded publically making it a semi-private organization. In order to achieve their goals and respective results the company has to re-invest their profits into the retained earnings reserves as the researcher would not divest their money.

Reporting Structure in Korean market

The subsidiaries were highly dependent on the decisions taken by the headquarters. As it is known the business is experiencing extensive growth in terms of both employees in sales, it is difficult and time consuming in the context of decision making if done from the headquarters. The staff of the Korean subsidiaries were led by Jin Ho Jun who is the country manager. The major business problem associated to reporting structure were the general norms prevailing in the industry. The change in reporting structure would affect the reporting structure and business plan of Lundbeck’s operations worldwide…………………….

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