The case presented in Merck in Latin America is the story of Grey Warner’s contribution to raising the profitability of a pharmaceutical company in the complex economic and political situation of Latin America.
In 1993, when Grey Warner became Merck’s vice president of Latin America, the sales figures were unsatisfactory and the personnel’s views on business were not the ones to encourage economic growth.
Although Merck sustained high ethical standards and business values, it was a challenge to import them to some of its peripheral marketplaces, including Latin America, due to often unfair competition and corruption. It was Grey Warner’s task to enter the competition with Merck’s highest moral standards and create an open business culture.
Merck’s drugstores operated in 30 Latin America’s countries populated by 450 million people. The society was so polarized that in fact only 25% could buy various healthcare products on their own, without government support. General economic difficulties in the region included hyperinflation, unemployment, and foreign debt. Moreover, Merck had to compete being only poorly protected with patent laws. It was only in the mid-1990s that Latin America started experiencing some economic growth and increasing living standards of the expanding middle class, which was to result in higher sales.
In the early 1990s, Merck suffered from significant strategic, management, organizational and cultural problems with dissatisfied personnel and low profitability. Merck’s employees were far from feeling steadfast in the company’s values and mission. It might have been explained by the mentality of people who generally lived under dictatorship regimes which paid minimum attention to individual needs and opportunities. Needless to say, the people were not ready to offer management and cultural support to Merck.
Organizationally, Merck in Latin America was chiefly represented by sales and marketing personnel with little cooperation between them. As to medical research groups, they reported immediately to their functional heads in New Jersey, thus being disintegrated from Latin American system.