Pfizer-Pharmacia Merger
Problem statement: Pfizer, Inc. announced the acquisition of the company Pharmacia, Corp. In the months leading up to the merging of the two companies, there were issues with the employees of Pharmacia. The announcement of 2. 5 billion in cost savings as a result of the merging of the two companies, had staff worried because it would be in form of labor costs, which would potentially cause disclosure of local operations. Staff was concerned about their financial futures, loosing their income would not just affect their personal lives, and families but the community in general.
A “trickle down effect”, would effect businesses that provide products, and services to the consumers, as well as the tax bases of local communities (Stamper, 2). The issue of having to potentially seek a financial bailout, and also possible bankruptcy of the city if Pfizer were to close down the operations of Pharmacia was a larger issue as well. The core mission of typical pharmaceutical company is drug discovery, clinical development, manufacturing, and sales and marketing. Before the merging of the company, the core mission of the company was met.
Now the issue is, due to the merging of the companies, there was a loss of discovery, clinical development, and sales marketing. Why did the problems occur? The problem of staff being worried about their financial future, and the future of the company mainly aroused because of the 2. 5 billion dollar in total cost savings that would be implemented as a result of merging the two companies. Emotions were a major concept that was overtaking the staff at Pharmacia, everyone was in a certain state of readiness at times, due to the uncertainty of jobs, and the uneasiness with staff members caused mainly from the distributed memo.
Misunderstanding of the memo, giving the impression that Pfizier was going to pull out of downtown Kalamazoo, was a “misunderstanding”. This caused uncertainty avoidance within the company, people felt threatened by ambiguity and uncertainty. It also caused stress; the well being of staff members was at stake. The problem of staff being overwhelmed by the memo was due to the fact that Pfizer did not take the time to properly explain the meaning of the cost savings, from the very beginning.
Loosing core essential missions for the company due to the merger occurred because the team at Kalamazoo was extremely effective; the decline of efficiency within the newly merged company could have been caused by the new collectivism of the company. With the merging, people got swapped around the concept of “job rotation”, and moving employees could be seen as a bad thing in this situation, because the Pharmacia had a very successful company to begin with, now with the merging it caused the company to have to work with less resources than prior to the merge. Alternatives:
In assessing the case, the main problems with the merging of the company were communication. The lack of communication with the two companies, and the staff created a lot of problems, not only with staff but with government. If there was more communication within the companies from the beginning, it would have saved a lot of emotion, and stress due to the potential job loss and financial problems trickling to the whole community. To fix this initial problem, CEO of Pfizer Hank Mckinnell could have re-assessed the memo going out, and maybe spent more time thinking about the staff of the company, and how it would affect them when writing it.
Within the newly devolved company, they could adapt high-performance-work-practices that could help the company get to where it was before the merge. Gathering the knowledge and skills and abilities that all the employees have, and trying to built them so the company can be successful. Conclusion: The Internal Subsystems could have been looked at more in depth, looking at how the company worked as a whole, instead of automatically making changes to the system. In order to have a successful company, you need to be able to have not only efficient, but adaptive and innovative.
There could have been organizational efficiency, so when merging the two companies, it was helping the company grow and develop instead of putting it behind on its mission statements. Before the merging of the company, they should have taken a better look at the Internal Systems, and how well the company was operating internally. If this was done, they could have maybe found alternative ways for savings, and realized that the organizational efficiency of the company to begin with, was extremely strong.
