Globalization of Wyeth Pharmaceuticals

The Globalization of Wyeth Case Study

For close to seventy five years Wyeth was a major pharmaceutical company that operated in over 100 countries. The culture of the company was to treat the operations within each country as an individual company with its own departments like finance or information technology. The thought for senior management was as long as each part of the company made money then nobody would question how. This approach did work for Wyeth, and the company was profitable and delivered solid returns for investors. However, the company was leaving money on the table. Senior management realized the changes occurring in the global economy and heard the grumblings that Wyeth could be more profitable, so they decided to act. However, changing the culture and operations of a company is never quick or easy.

Wyeth in the late 1980's and 1990's was under the threat of diminished shareholder value. The business model of a diversified holding company is a threat towards competing in a global marketplace which impacts negatively the ability to add shareholder's value and make contribution towards future value. To add value to the organization Wyeth utilized Information Technology (IT) to produce a globally integrated corporation. Through IT Wyeth gained the tools to manage a global corporation.

Globalization for Wyeth is not a simple task since the funding to execute the strategy is limited and the outlook of management not understanding the dynamics of IT taking on a different role from its traditional model as a service provider. The importance of globalization for Wyeth is mainly seen as a mechanism that allows Wyeth to continue to add shareholder's value. This is important to Wyeth because the management style of focus on the bottom line to increase profitability is the main strategy for delivering shareholder value. Wyeth now finds itself needing to use globalization to offer standardization and deliver increased profits.

Globalization presents Wyeth with a lot of challenges. Neither the culture nor the business processes of Wyeth are compatible with a global organization. The culture at Wyeth is very local in nature. From hiring processes to purchases each local firm was given autonomy. The flow of information within Wyeth does not support cross communications between managers and the corporation. Further compounding the isolation of local firms is having no formal control mechanisms between affiliates. Compensation and performance assessments are arbitrary along with a situational process selection that gives rise to opportunistic dynamics. The local mindset at Wyeth presents challenges to integrate globalization efforts. Business processes will be significantly impacted in order to bring about globalization. The need to align business process and culture at Wyeth is the nature of the business having more than forty percent of sales outside of the United States. Lack of an integrated system presents operational challenges in global inventory management for Wyeth.

Wyeth understands that IT is the answer to help the corporation ascertain globalization. This goal is further complicated by Wyeth not having a global IT business unit to carry out the task of integration. Wyeth's IT is fragmented and focused on individual country priorities rather than a global priority. The IT infrastructure is spans a wide area ranging from 62 AS400 minicomputers worldwide. This infrastructure depicts an inefficient use of an expensive resource. Many areas are underserved and lack of standardization within IT presenting enormous barriers to overcome. The accounting practice of closing the books took longer than preferred and left questions of inventory inconsistencies. To facilitate better accounting practices JD Edwards implemented financial processing for each country. Software customization assisted each country handle the various business processes and resulted in different data definitions and classifications. By tackling lower level problems it is clear that inventory management at Wyeth could produce significant financial gains. The new software solves individual needs but lacks the ability to convey regional or worldwide analysis. IT realized direction in needing to produce integration results that are regional in nature supporting worldwide analysis. Primarily the culture of Wyeth viewed globalization as a potential loss in power and very little to gain from it.

Obtaining inventory management at the global level encourages Wyeth to pursue globalization despite the challenges of immature business processes and the conflicting levels of IT management throughout the organization. The overall nature of how Wyeth performs business depicts the corporation as an international firm. The nature of the pharmaceutical business brings varied regulations requiring different marketing strategies to correlate with regulation. This presents a barrier to globalization and would require new strategies to bring about globalization.

To change the dynamics of the corporation from an international firm towards a global corporation, global product sourcing is an option. Global product sourcing while eliminating stock outs and surpluses can bring more problems. The problem stem from a lack of coordination on local authority for regional direction of production plants, plants that typically serve more than one locality. Exceptions would cause havoc on the production plants. The expense of longer lead times to produce a global product also raises costs. Underlying business process would require a change to support global product sourcing because each country performed things differently. Now standardization is needed to reap the benefits of global product sourcing. Wyeth must ensure that the meaning of globalization for the organization is communicated to achieve consistent understanding and perception of the tasks. To ensure focus of products Wyeth must sell its non-pharmaceutical businesses and strengthen the organizational structure.

Because Wyeth understands that the standardization of business processes is paramount to achieve globalization, the corporation hires a Corporate Information Officer that will lead IT as an enabler of globalization. Bruce Fadem would serve as CIO and primarily is selected for the position because he has successful experience running a major IT operation at Bank of America. A workshop for senior supply chain-related managers ultimately demonstrated how 80 percent of data sets were shared globally. This fact cast a vision for globalization. While initiating the workshop, IT served as bystanders and allowed the various directors, associate directors, and key manufacturing people take the lead. The workshop was intended to halt quick fixes that only create more interface problems for IT and drive