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Merck Sharp and Dohme Argentina,
INC.

Written analysis of case

5/9/2014

Submitted by: M. Kamran Toor Section: D



1

CASE HIGHLIGHS:
Merck Sharp & Dohme Argentina, Inc.(MSD), is the regional subsidiary of the U.S-based
pharmaceutical giant Merk & Co, Inc. The case is regarding Mercks subsidiary for Argentina.
The case describes the effort of the new managing director Mr. Mosquera to transform the
organization and its culture from the traditional one, being currently followed mostly all over
Argentina. The case mainly swirls around a critical decision to be made, whether to offer the son
of a high-ranking official in the governments national health-care program a place in the
companys high selective intern program for young professionals. The issue with the decision
was that it opposed the stress laid down on ethical concern by Mr.Mosquera. Manager of
Training and Development, Director of human resources and Director of sales are called upon to
give their point of view on the decision to be made.

CASE FACTS:
The inclusion of the 16
th
candidate in the company will provide an excellent opportunity to
increase sales in the government health care.
- MD assumes that young man would not be excluded from the internship program under
Mercks conflict of interest policy.
- MSD opened its office in Argentina in 1936 covering Uruguay and Paraguay and opened its
manufacturing facility in 1979.
- In 1988, it signed a licensing and distribution agreement with an Argentina Pharmaceutical
company, Instituto Sidus, giving it exclusive rights to produce and distribute products marketed
by MSD.
- Induction of the candidate will not be barred from the internship program under Mercks
conflict of interest policy.
- His presence in the company workforce would afford MSD an excellent opportunity to increase
sales by insuring that all its drugs were included in the government health care formulary.
- Business in Argentina had long been conducted through a web of personal connections which
gives MSD an unexpected advantage.
- Mosquera joined the company Merck in 1976 as information systems manager and then served
as a financial controller, sales representative, product manager, sales director and executive
director before taking the post of managing director in MSD.
2

- Mosquera joined as MD in March 1995, at age 47, with a 5-year planning horizon.
- When Mosquera took charge of MSD as managing director in Argentina, Latin America was
characterized by high inflation, high protective tariffs and highly authoritarian state but company
was not in financial crisis, sales remained flat and competition was intense.
- Management of MSD operated under rigid hierarchy, departments conducted business with
little sharing of information, innovation and personal initiative was discouraged and managers
lacked professional education.
- MD rebuilt the top management team in one year and placed the right people at right place
- Three inter-related goals of company comprised of flatter integrated management structure,
complete transparency and empowerment.
- Restructuring plan of MD transformed the companys power structure, reorganized the
company into business units, eliminated a layer of bureaucracy, gave managers significant
decision power, educated old and new employees, actively promoted transparency and a culture
that encouraged information sharing, personal initiative and non-authoritarian decision making.
- MD promoted ethics by developing mission and values statement and conducting seminars on
ethical standards.
- Human resource director was attracted to MSD because of MD emphasis on ethics and his
challenge of changing the general attitude of employees and creating a new culture centered on
empowerment, transparency and flatter hierarchy.
- On the basis of ethics, Human resource director gave a recommendation of not hiring the young
man.
- Sales Director gave a recommendation in the favor of young man as it would increase company
market share and sales by $5 million a year.





3

PROBLEMS:
- Threatening by Middle Manager to Manager of Training and Development to hire the 16th
candidate .
- Lack of human resource management.
There is conflict of intrest
- Ring might have been coerced by the stronger decision maker in the group
- No patent protection for pharmaceutical products and no Unionization
- Drug copying was flourishing national industry and thus saving costs on R & D.
- Uncertainty, drug copying, and ethics problem in the external environment
-Dysfunctional Conflict and wrong hiring - There is a Conflict of Interest between Manager of
Training and Development, Human Resources Director, and Director of Sales and wrong
recruiting.

Everybody is seeing the situation from his/her own perspective rather than seeing the bigger
picture. Human Resource Director is emphasizing on ethics and wants only competent internees
to be hired by the organization without any unfair process. Director of sales want to increase the
sales of the company, so he wants the 16th candidate to be hired by the organization despite of
the fact that he was not competent enough to come under the list of 15 candidates selected.
Manager of Training and Development is unsure that how the issue should be decided as she was
told by Middle Manager and Director of Sales to hire the 16th candidate. If the 16th candidate is
hired then there would be a compromise on the integrity of the company and the corporate
values. This Dysfunctional conflict within an organization is motivated by egos of employees
with competing ambitions. This can lead to higher stress and a likelihood that employees will
burn out.

CONCLUSION:
I suggest Ring to act ethically and refuse the recruiting of the candidate who will not be hired on
merit. The ethics that leaders in an organization use to manage employees may have an effect on
the morale and loyalty of workers. The code of ethics leaders use determines discipline
procedures and the acceptable behavior for all workers in an organization.
When leaders have high ethical standards, it encourages workers in the organization to meet that
same level. Ethical leadership also enhances the companys reputation in the financial market
and community. A solid reputation for ethics and integrity in the community may improve the
companys business.