MGMT 2384

Blue Diamond Drugs, Ltd - Value - 32 out of the 40 of exam points that contribute to the final total grade in the course.

Name:

Date:

INSTRUCTIONS: Please read the case "Blue Diamond Drugs, Ltd." that has been posted on Brightspace under the Content tab that contains the course outline and then refer to the directions below.

Assume that Don is going to keep running the firm and that he has hired you as a consultant - he wants to know what has happened in the product research group of Blue Diamond Drugs - so, please read the case, provide an analysis of the case Your focus should be on the structure, culture, and effectiveness of the product research group, along with other relevant issues.

Please use this Word document provided for the analysis, problem statement, and recommendation. The case requirements can likely be easily completed within three pages. Please do not use point form - please use full sentences and paragraphs in the formulation of your answer.

Analysis of the case is 80%!!!!!!

Please make sure you don't give an average answer, otherwise I will rate you down!!!!!!

Incident 9-1 Blue Diamond Drugs Lid. Blue Diamond Drugs Lid. is a family-owned firm that began operations forty years ago. It employed only forty-two people until last year and attempted to maintain a family atmosphere at the workplace. The founder, Frank Oakley, and his son Stewart knew every employee per- sonally and had a small gift ready for them on their birthdays. Many of the employees in the com- pany date from Frank's time. Stewart, like his father, kept an open-door policy and was always available to listen to his employees' problems. The firm is not unionized. Last year, Stewart had a stroke and was semi-paralyzed. His only son, Don, was trained in computer animation and was bent upon pursuing a career in the film industry. After much per- suasion from his mother and other relatives, he reluctantly gave up that career and joined the business as CEO. Within a very short time of his joining the firm, one thing became very clear to Don: the firm desperately needed a shot in the arm in terms of product innovation if it was to survive in the fiercely competitive drug industry. In the past, the firm had relied on its patented cough reme- dies for adults ("The Oakley Magic") and children ("Jack and Jane Magic Potion") for most of its revenues. Currently, these account for over 65 per cent of the firm's annual sales of $8 mil- lion). The firm also produces some decongestants, pain relief balms and veterinary products (in- cluding a cough remedy for livestock). Currently, sales outside Canada account for about 20 per cent of total revenues, coming mainly from the Caribbean, the United States, Australia and New Zealand. Since Don took over, the company has hired fifteen new research scientists and techni- cians to bolster new product research. Currently, the firm has a research staff strength of nine- teen and a total workforce of sixty-five. itional design for Canadian firms in a global economy. Three of the five major products in the past were invented by the firm's research staff, The staff were given a free hand and a "reasonable" budget to pursue their own ideas. Stewart Oakley, who had a background in biochemistry, always took a personal interest in product re- search. Whenever he had free time, he took a lab coat and a pair of gloves and "fooled around in the lab with the boys." Don felt that such an informal system was no longer adequate given the competitive chal- lenges facing the firm. He hired a management consultant to recommend a system for as- signing product responsibility to research scientists. The consultant, after a month-long study of the industry and Blue Diamond, submitted a report to Don, who implemented it in full. The major points in the report were:1. The new procedure will release considerable funds to new projects since the viability of an idea will be decided within a very short period (at most three months). Money will not be tied up in projects that have no scope and have survived solely because they are "pet projects" of the researcher who proposed them. FIGURE 9- Organization Chort of Blue Diamond I Don Oakley, CEO John Maggus, Vice President General General General General Manager Manager Manager Manager [Marketing) (Finance) (Production) (Administration] Junior Junior Divisional Research Junior' Managers Managers Managers In-Charge Managers Division 1 Division 2 Division 3 Research : Scientists* -Support staff Support staff "Depending on the project, one of the scientists would assume the role of the Project Coordinator. Typically, the originalor of the idea was the Project Coordinator, although there were instances where someone else with belter leam leadership skills coordinated the project while the Idea originalor fo- cured on the technical and creative aspects of the project.2. The new procedure will separate the reviewer from the person involved in the project, thus bringing more objectivity into the process. 3. The Research Project Coordinator and project team members whose project is "killed" during a review will be available for other projects. Thus, there is very little wastage of valuable human resources. In a job satisfaction survey conducted four months after the new procedures were imple- mented, the Human Resource Manager found that the overall morale among research staff had come down significantly. This was surprising since the employee morale in most departments was either stable or improving. Considering the fact that the research staff were well-paid by in- dustry standards, the drop in morale was unexplainable. In the past five years, the firm has managed to come up with at least one workable idea (either a new product or a product improvement) each year. Compared to the past record, the performance of the firm in the first year of the new system was disappointing. A year after the system was implemented, only one new research project had shown any po- tential, and even that was far from completion. Six projects had been dropped during the two preceding reviews. Even worse, six of the research scientists and technicians hired by the company had left the firm and joined its competitors within a year. Two of those who left had been with the firm for . over ten years.. The competence of the research staff hired by the firm is very good to excellent. There is both breadth and depth of skills in the team to carry out high-quality research. . The planned allocation of a $930 000 budget (excluding salaries) for research for next year appears adequate considering the industry conditions and the budgets of major competitors. . To get the maximum results from the research staff, the consultant recommended the Toronto: Prentice Hall. Pp. 353-3 Das, H. (1998). Strategic organis following procedure: Instead of funding a research idea for a year (as in the past), each research proposal is to be funded initially only for four months. At the end of four months, the progress of the pro- ject shall be reviewed and only "workable" and "promising" ideas shall be continued. Economic, technological and market-related factors will be considered at this review. After a successful review, a project may be given a life of another four months before it undergoes the next review. A project can be killed at the next review as well. At the end of the financial year, all projects shall be again reviewed for their poten- tial and progress: Continuation and allocation of resources shall be dependent on satis- factory progress and market viability for products. The review shall be conducted by the divisional managers. In the past, the Research Project Coordinator and his or her staff conducted an evaluation and recommended to Stewart Oakley whether the project should be continued. (See Figure 9-A for an approximate organizational chart of the firm at the time the consultant was hired.) The con- sultant felt that the new procedure was superior to the past practice on a number of dimensions