The Evolving Finance Function: Judy C. Lewent at Merck & Co., Inc.
Corporate Finance Assignment
The Evolving Finance Function: Judy C. Lewent at Merck & Co., Inc.
Ways in which the Financial Area at Merck added value to the company beyond its typical work: * In the 80’s era there was no systematic planning model, that’s where Merck felt the need to develop theirs, i.e., the research planning model. * They also came up with a simulation planning & hedging model, which was very effective as they kept on innovating it. * Merck had a well integrated & a centralised model which reported to a single authority. * The clients existed within the company in form of other departments. The finance department provided a wide range of financial services to them. * The forecasting & analytics department was merged with the finance department. * Recruitments in the finance department were higher than the other departments, which consisted of MBA’s from good B- schools in USA. * There was no rigidity & the finance department was constantly re-structured.
Pre-conditions that enabled Merck’s finance group to develop its capabilities: * The company was constantly rated amongst the best in the U.S.A. They had a vision to grow, which was evident from their financial figures. {Exhibit 1} * To cater to the growth they formed several alliances, in the form of Joint Ventures, which led to an increase in their market capitalisation. In order to maintain and increase their market capitalisation in the future they felt the need to come up with a model which can help them to effectively analyse the returns on their investments in future. * They faced immense competition from the local players in generic drugs and to maintain an edge over them they came up with this model. * As they focussed on innovation, they had huge R&D expenditure which kept increasing year after year. They did not have a suitable
The Evolving Finance Function: Judy C. Lewent at Merck & Co., Inc.
Ways in which the Financial Area at Merck added value to the company beyond its typical work: * In the 80’s era there was no systematic planning model, that’s where Merck felt the need to develop theirs, i.e., the research planning model. * They also came up with a simulation planning & hedging model, which was very effective as they kept on innovating it. * Merck had a well integrated & a centralised model which reported to a single authority. * The clients existed within the company in form of other departments. The finance department provided a wide range of financial services to them. * The forecasting & analytics department was merged with the finance department. * Recruitments in the finance department were higher than the other departments, which consisted of MBA’s from good B- schools in USA. * There was no rigidity & the finance department was constantly re-structured.
Pre-conditions that enabled Merck’s finance group to develop its capabilities: * The company was constantly rated amongst the best in the U.S.A. They had a vision to grow, which was evident from their financial figures. {Exhibit 1} * To cater to the growth they formed several alliances, in the form of Joint Ventures, which led to an increase in their market capitalisation. In order to maintain and increase their market capitalisation in the future they felt the need to come up with a model which can help them to effectively analyse the returns on their investments in future. * They faced immense competition from the local players in generic drugs and to maintain an edge over them they came up with this model. * As they focussed on innovation, they had huge R&D expenditure which kept increasing year after year. They did not have a suitable