Management Was the country wrong? Why India? Selection of India was a wrong idea, since India is a developing country and a large portion of its population is poor. This is evinced by the low per capita gross domestic product. The key changes in 1970s were a prerequisite for ensuring that people could afford healthcare products. The government of India was, therefore, justified in passing the Patents Act of 1970, which abolished product patents for all pharmaceutical and agricultural products, as well as the Drug Price Control Order, which instituted price controls for all drugs.
Even so, this posed a major challenge to multinational companies that had the prospects of establishing their operations in India. In addition, limiting maximum foreign direct investment in drugs and pharmaceutical industry in India to 51 percent was a major drawback to multinational companies. By then, India had not signed the General Agreement on Tariffs and Trade. In addition, India was not yet a member of World Trade Organization. These circumstances made the Indian pharmaceutical market unfavorable for foreign investment. Therefore, India could not encourage multinational foreign investment. 2.
Was deciding to partner wrong? Is partnership a good or bad thing? The decision by Lilly and Ranbaxy to partner was a good one. Each of the two partners had its own individual desires. Ranbaxy for instance was interested in supply of certain active ingredients, which they could acquire from Lilly and provide low-cost sources of intermediate pharmaceutical ingredients. On the other hand, Lily, unlike other multinational pharmaceutical companies, lacked presence on the Indian market. This mutual desire necessitated the need for the two companies to establish a lucrative partnership.
Through the joint venture, Lilly could use Ranbaxy’s knowledge of the market to penetrate India. Similarly, Ranbaxy could source intermediate product from Lilly, which could help them open up more opportunities and expand their networks. Partnership, as a business strategy, is usually a great idea. However, this depends on the circumstances under which a partnership is formed. In a partnership, the business partners share profits, liabilities, and decision-making. In terms of capital, partners fund the business jointly. There is also sharing of responsibilities of the running of the business.
Moreover, it is easier to form, manage, and run a partnership, as they are subjected to fewer regulations than companies’ mergers. However, partnership could obviously present some problems. These may include: disagreements between the partners, inflexibility in decision making, unlimited liability among many others and limited life. 3. Was the partner choice wrong? The partner choice was not wrong. Each of the two companies had their own individual desires and needed each other’s help to achieve them. Ranbaxy, for instance, was interested in supply of certain active ingredients which Lilly could offer in handy.
On the other hand, Lily, unlike other multinational pharmaceutical companies, lacked presence in the Indian market. Being the second largest pharmaceutical company in India, Ranbaxy could help Lilly get their feet on the ground in the Indian pharmaceutical market. Thus, the choice of the two partners was a perfect one! 4. Was the JV structure wrong? The JV structure was right as it fosters equality between the two companies. For instance, since the two companies had contributed equally into the JV, none of them more influence than the other. In other words, they were compeers in terms of capital contribution.
This was also the same case with the JV’s structure. At the very top, there was a Chief Executive Officer who was appointed by Lilly. The CEO was responsible for day-to-day operations of the JV. Then there was a board of directors of six directors, each company had three directors. In addition, there was a management committee of two directors, with each company producing one director. Thus, the structure is a groovy one. 5. Was the JV leadership wrong? The JV’s leadership was not wrong.
This is attributable to the fact that those appointed at the various leadership segments have a vast and competent experience. For instance, the first managing director to be appointed was Andrew Mascarenhas, who had previously held the position of the general manager for Lilly’s Caribbean basin in San Juan. They appointed Rajiv Gulati as the director of marketing and sales. Prior to his appointment, Gulati was the leader of business development and marketing at Ranbaxy. Chris Shaw, who took over from Mascarenhas, had previously been managing operations in Taiwan.
These actions assured quality leadership. 6. What was the final outcome of the JV? Initially, the Eli Lilly- Ranbaxy turned out to be a successful and lucrative joint venture. Through the JC, Ranbaxy realized its efforts of becoming a key global player. This could be attributed to the use of Lilly’s name, which had astounding credibility globally. Lilly, on the other hand, was able to penetrate the Indian market. This was because of the Ranbaxy’s knowledge of the market. Summarily, the joint venture was a success, as each of the companies achieved its initial goals and desires. Work Cited Kitching, John.
Business Strategies and Performance during Difficult Economic Condition. New York: Kindle Books, 2009. Print.