Using the University Library and the suggested websites, identify at least two articles that examine the role IHRM plays in leading change.
Create a three- to five-page paper, use your research to address the following points. In your paper:
• Describe how MedPharm's change was implemented
• Present suggestions on how to overcome the slow progress and the resistance faced by MedPharm.
• Identify and discuss the issues that HR should be prepared to address when planning and implementing change in a global context.
• Present recommendations for how to increase acceptance of change.
Your paper should be formatted according to APA style as outlined in the approved APA style guide, and you should cite at least two scholarly sources in addition to the textbook.
Managing The Tensions of Change at MedPharm
MedPharm is a German subsidiary of a leading US pharmaceutical company that develops and manufactures active pharmaceutical ingredients for the parent company and other customers.1 Under the leadership of a charismatic founder, Med- Pharm pioneered the development of new complex drug compounds, but to finance expansion, the German founder sold the firm to the American corporation in the 1980s. Today MedPharm has five production sites around the world, two in the United States, and one each in Germany, Switzerland, and the United Kingdom. Plants were initially largely autonomous, making products not only for the US parent but also for other firms. However, since the mid-1990s, under some pressure from the US, coordination among plants has increased, mainly to exchange know-how about manufacturing methods and quality. The result was effective low-cost operations worldwide, as well as greatly enhanced customer focus.
As its pipeline of blockbuster drugs began to dry up, the parent firm embarked on an aggressive growth strategy involving R&D investment and partnerships, with targets to increase overall capital efficiency by 20 percent. This led the newly promoted general manager of MedPharm, along with his global pharma division boss and the corporate director of corporate planning at the parent headquarters, to initiate a project to explore its future opportunities.
The outcome was a new MedPharm vision-to become the main supplier of chemicals to the parent company. It would involve outsourcing the manufacturing of simple compounds to other partners, including low-cost but technically competent Chinese firms, so that MedPharm could focus on complex, high-valuecompounds. It would also mean taking the responsibility for managing the relationships with other external suppliers of chemicals, and strengthening R&D collaboration with the US parent firm. Managing all this would require the development of a strong global supply chain management capability.
A team of 50 managers, almost all from the German headquarters and US parent, was set up to detail this strategy, and divided into four working groups, including one focused on the supply chain. These groups presented their recommendations to top management and all managers, including those from the plants and countries, at a three-day working conference in Milan. There was polite resistance from many in the room, including some "heavyweight" plant managers, who saw the new vision as an attack on their autonomy and a progressive takeover by the American parent. However, opponents were firmly told to play ball, and a new global supply chain function was created. Each plant appointed a key manager to this function with the mandate of aligning the existing supply chain process with the yet-to-be-developed global supply chain platform and underlying IT system.
Eighteen months later, planning began for a follow-up conference to take stock of progress. MedPharm results continued to be good, and costs continued to decline. But, in the eyes of the general manager, progress on building the global supply chain had been frustratingly slow. "People simply aren't working as a global leadership team," he said. "The results these last few years have been good, but that is irrelevant. Our managers are not yet used to taking a global perspective in addition to their local responsibilities."
Some of the plant managers and supply chain managers commented that, with conflicting priorities, one had to be realistic about time horizons for the supply chain project-attention had to be paid to shortening cycle times in the factories, to staying ahead of the changing regulatory environment, and above all to guaranteeing security of supplies to customers. Afterall, MedPharm was able to manage the current supply process in the traditional way. While a justification for the global supply chain platform was the planned growth in new products and compounds, many felt skeptical about this growth, pointing out that only one major new product had been introduced over the last five years. There was an underlying feeling out in the plants that the global supply chain project was part of growing movement toward centralization and bureaucracy that would undermine the entrepreneurial spirit that had always been a key to MedPharm's success. The project was seen as part of a dangerous Americanization of the company that should be resisted.
Some who had witnessed periods of centralization in the past felt that this one too would eventually blow away. They were already used to fighting battles with the parent over capital expenditure-this was just another battle to fight. And with the incessant pressure to cut costs, there were no spare resources and people to invest in the supply chain project-the returns on which, in any case, seemed uncertain and unclear. There had been many meetings about this, but as one director commented, "Consultation is part of our culture, which means that we have too many meetings. But decisions aren't taken in our culture until they are implemented."
Meanwhile, the frustration was growing at the parent headquarters, particularly in the IT and finance functions. From their perspective, MedPharm continued tooptimize each site and neglect the whole. The corporate vice presidents were putting pressure on the MedPharm general manager. "I thought we had agreement on the vision, but there's no sense of urgency," commented the corporate vice president for IT. "MedPharm keeps pushing back and putting off the development of the global plat- form." Others at headquarters hinted jokingly that it might be tempting simply to sell MedPharm to the Chinese-things might be more straightforward if they were dealing with an external supplier.
Given these conflicting pressures, and with the follow-up conference scheduled to convene in 10 weeks, the MedPharm general manager gave his head of strategy and business development and the HR director the task of developing a plan to re- solve the stalemate.