Case 4 Ludbeck V1
Doing Business Globally
Case team write-up
Team: Alex Earl, Felipe Fonseca, Ishan Desai
Date: 27/01/2015
Lundbeck Korea (case question 4)
Should Andersen separate Lundbeck Korea from Lundbeck Asia? Why or why not?
Analyzing the Lundbeck case and considering the theoretical readings provided, one can conclude that Andersen should not separate Lundbeck Korea from Lundbeck Asia. Although the Korean pharmaceutical market has its own culture and aggressively grows, Lundbeck Korea is still a very small percentage of Lundbeck’s corporation revenues. The Asian division can also provide better support to the South Korean unit than the company headquarters if the organizational process and communication between them become better structured.
While Lundbeck is a huge multinational company, the South Korean unit is yet very small in revenues and size. Lundbeck has $1.5B in revenues and $240M in operating profits, employs 5,500 people and has its own sales force in 55 countries. To manage the business, the company organized itself by regional structures, leveraging regional efficiency and market knowledge. The South Korean unit, however, is comparatively very small. It had $22M in sales in 2005, which represents less than 1.5% of company revenues, and employed 50 people. Even though the South Korean subsidiary bet its business plan and also expects significant expansion, the unit will maintain a reduced size. Constantly growing at 40% per year, in three years the unit would still represent less than 3% of total sales, assuming no further growth of the company. Accordingly, other relevant and high growth units that follow the current structure and have been successful so far, like China, would probably deserve more attention.
The company reporting structure would also be affected. Other high potential units would likely feel that the South Korean units unjustifiably upgraded its status, which could affect relationships and meritocracy within the company. According to W. Chan
Case team write-up
Team: Alex Earl, Felipe Fonseca, Ishan Desai
Date: 27/01/2015
Lundbeck Korea (case question 4)
Should Andersen separate Lundbeck Korea from Lundbeck Asia? Why or why not?
Analyzing the Lundbeck case and considering the theoretical readings provided, one can conclude that Andersen should not separate Lundbeck Korea from Lundbeck Asia. Although the Korean pharmaceutical market has its own culture and aggressively grows, Lundbeck Korea is still a very small percentage of Lundbeck’s corporation revenues. The Asian division can also provide better support to the South Korean unit than the company headquarters if the organizational process and communication between them become better structured.
While Lundbeck is a huge multinational company, the South Korean unit is yet very small in revenues and size. Lundbeck has $1.5B in revenues and $240M in operating profits, employs 5,500 people and has its own sales force in 55 countries. To manage the business, the company organized itself by regional structures, leveraging regional efficiency and market knowledge. The South Korean unit, however, is comparatively very small. It had $22M in sales in 2005, which represents less than 1.5% of company revenues, and employed 50 people. Even though the South Korean subsidiary bet its business plan and also expects significant expansion, the unit will maintain a reduced size. Constantly growing at 40% per year, in three years the unit would still represent less than 3% of total sales, assuming no further growth of the company. Accordingly, other relevant and high growth units that follow the current structure and have been successful so far, like China, would probably deserve more attention.
The company reporting structure would also be affected. Other high potential units would likely feel that the South Korean units unjustifiably upgraded its status, which could affect relationships and meritocracy within the company. According to W. Chan