One global company that found itself in trouble in the 2000s because of the way its structure and control systems were working was pharmaceutical maker ScheringPlough. In 2003, Schering was under pressures from many fronts. The Food and Drug Administration (FDA) was demanding a complete overhaul of its global manufacturing plants to increase and protect drug quality, and the patent on Claritin, its best-selling drug, was running out and it had few new products in the pipeline. Thus on both the quality and innovation dimensions, major sources of a differentiation advantage, the company’s strategy was in trouble.

Schering-Plough’s board of directors recruited Fred Hassan, a Pakistan-born Harvard MBA, to turn the company around. After meeting with hundreds of groups of managers and scientists, and visiting the company’s operations around the globe, Hassan began to realize that the company’s main problems stemmed from its global strategy and structure.

Over time, the company had developed a multidomestic approach to planning its global value-chain activities and it had divided its activities up into world regions,  where essentially each world region acted as the product group that made decisions inside its world region/group. The problem was that each of the heads of the regional groups had gained a near total control of their operations, so each world region was doing things such as manufacturing and marketing and sales in its own unique way. As a result, managers at corporate headquarters, and especially its top-management team, were not getting accurate information about the way each region, and especially the country operations within each region, were performing. And major drug quality problems had arisen because the corporate center didn’t find out about the problems at the country level until a long time after they had occurred because of all the bureaucracy that had emerged at the level of the regional groups........

Discussion Questions 

1. What kinds of problems was Schering-Plough experiencing with its global strategy and structure? 

2. How did Schering Plough change its global structure to solve these problems?