1985
Acquisition of the American Master Builders, Inc. and the Japanese Nisso Master Builders K.K.; creation of the construction chemicals division by Sandoz.
1990
Sandoz is transformed into a holding company.
1994
Ciba and Chiron form a strategic partnership.
1995
With the foundation of Clariant Ltd., Sandoz separates out its Special Chemicals business, thus focusing on Pharma and Nutrition.
7 March 1996
The news struck the business world like a thunderbolt. Sandoz and Ciba, two proud Swiss-based companies with almost three hundred years of tradition, have agreed to become one. The creation of Novartis, as the new company was called, was at that time the largest corporate merger in history.
Preceding the merger were months of top-secret negotiations and a meeting of the minds on a bold strategic move. "The globalization of markets, and therefore of competition, is taking on gigantic proportions," explained Marc Moret, Chairman of the Board of Sandoz. "And the long-term success of the company depends to an ever greater degree on being among the best in our fields of activity."
The objectives of the company:
An objective is a goal the business wishes to achieve. A business will succeed in its aim through the achievement of a variety of objectives, including profitability, growth, quality and social responsibility. Some of the objectives can conflict each other.
Business and individuals have attitude, beliefs and values that make up their culture and their objectives.
All businesses whether they are large or small need to make a profit or a surplus. Profit is what is left from sales income after expenses have been paid. However, businesses are wary of adopting profit as their main objective.
For some businesses, beating the competition is one of the main objectives because the survival of the business often depends upon it. A weak business can be a prime target for a take over by another business.
A business that provides a quality product and a quality customer service keeps its customers. If a business is charging a high price for its products, it will ensure that the whole workforce is involved in the quality process. Therefore, most companies do have quality maintenance as a main objective.
Another objective of a business is to build up a skilled workforce; this often goes hand in hand with the issue of quality. Business that offer a service, financial services companies, for example, need to ensure that their employees are fully trained and qualified to give informed advice.
Now-a-days many businesses have an objective to support the local community. This is because the business is then seen as to be socially responsible and will retain the respect of the customers. They provide support by giving to national and local charities, sponsoring events and providing resources for education.
Businesses are under intense pressure from governments and pressure groups such as green peace to carry out a policy of sustainability. This means that they have to adopt objectives like cutting down on pollution, not wasting natural resources, using energy efficiently etc.
Business objectives involve different individuals and groups of people like employees, customers, etc. These people are often referred to as stakeholders. It is the task of the management of a business to prioritise business objectives-some of which can be conflicting to keep the majority of the stakeholders happy for the majority of the time.
Novartis has tried to explain its mission in brief as follows:
“As the leader in the field of transplantation since the early 1980’s, Novartis Pharmaceuticals Corporation continues to build on the proven success of its leading therapies. We remain dedicated to enhancing therapeutic options, quality of life and the long-term success of therapy. To meet these goals, we have created the broadest pipeline in the field with three compounds in clinical trials and ten other projects in development.”
Novartis has its objectives based on the following core values:
“They try to keep a step ahead of what their customers want and a close eye on what their competitors are doing.”
“They have the patience and the skills to gain professional competence and adopt a wider perspective. It is from this platform that they take the initiative, take calculated risks, and set out to do new things in new ways.”
“The future of the company is in the hands of the company itself. They have excellent people committed to values such as candor, trust and integrity. Through teamwork and cooperation, they enhance learning throughout the organization.”
“The management sets ambitious targets, benchmarking themselves against peers, and striving always for 'best practice' levels of performance. The company look to reduce bureaucracy and risk-averse behaviour.”
The major objectives of Novartis are as follows:
- Increase sales by the end of the financial year.
- Providing better goods and services to the local and wider community.
- Keep the customers happy so they will continue using the business.
- Providing a charitable service to the community.
- Being environmentally friendly for the surrounding area.
- Being a responsible corporate citizen.
Apart from the above objectives Novartis also have a few specific and well-defined objectives.
- Increase profits by 15.1%.
- Expand their promoted brands to maximum potential.
- Creatively and aggressively manage their mature products.
- Continue to develop a winning culture through best practice marketing and productivity.
In assessing the impact of their products they participate in an interactive dialogue involving the company, regulatory agencies that act on behalf of society, and the customer, who personally chooses whether or not to buy the product. Novartis takes the interest of their stakeholders into account.
They believe that for Novartis to meet these specific aims they must work efficiently and effectively but of course things are never that simple because everything the business does will effect how well they meet their objectives.
There are factors that assist and at times do not assist in the achievement of the company’s objectives.
The factors that assist the company to achieve its objectives are:
- Good customer service.
- Efficient and committed staff.
- High salary and quality benefits to the staff.
- Quality research and development.
The factors that Novartis consider as obstacles to the company in the achievement of its objectives are:
- Fierce and intense competition from the competitors.
- Lack of experienced and committed professionals.
- Sometimes the company does plan some unattainable objectives that lead to intense pressure on the staff that further leads to failure and low morale among the staff and the workers.
Novartis always tries to please its shareholders. For this purpose there are at times disagreements among the stakeholders in order to make decisions. But mutual understanding generally solves these problems.
As mentioned before Novartis has signed a U.N. global compact for a clean and green environment. But since Novartis is a high and expensive user of technology and chemicals that the release of toxic materials just cannot be controlled and the disposing of these materials is a matter of great concern for the company. But the company has
accepted and disclosed this fact in front of the world, as it does not want to take any illegal or wrong steps because they feel that they want to express their responsible towards the environment.
Stated below is the sales statement of Novartis sector by sector that proves that so far they have been fulfilling their objectives to increase the sales of the company.
The corporate structure and legal identity of the company:
Businesses are traditionally divided into the private sector and the public sector. In addition to these, there are the charities, which form the voluntary sectors.
The public sector comprises government-owned or government-controlled bodies whereas the private sector comprises the businesses which are directly or indirectly in private ownership and this sector accounts for most businesses operating within the U.K.
Charities are the independent bodies in what is known as the voluntary sector.
A sole trader is an individual trading in his or her name, or under a suitable trading name. A sole trader is the most common form of business. However, there are more risks involved in sole trading than in any other type of business.
A partnership is a group of individuals working together in business with a view to making a profit. A partnership is established by involving two or more people running a business together. In legal terms, the partners are the business.
All these are followed by the limited companies. There are two types of limited companies: a private limited company (Ltd.) and the other one is the public limited company (Plc.).
The private companies cannot offer their shares for sale to the public at large.
Another type of business is the co-operative business. Its members own a co-operative society. It incorporates the insurance company and the co-operative banks.
The franchise system was first established in the U.S.A. and is now a rapidly growing business sector in the U.K. A franchise is an established business name that is sold to someone setting up in business. The two people involved in this deal are the franchiser and the franchisee.
The public companies can offer its share for sale on the stock market.
A private company can go public by selling its shares in the market. Huge plc’s are referred to as multinational companies.
Novartis pharmaceuticals are a public limited company. It has its shares traded in the stock market.
Stated below is the statistics of the companies’ ups and downs in the stock markets in the past 1 year:
The culture of the company:
A business culture can be defined as “the approach of the organisation” or “the written or unwritten policies and procedures of the organisation” or “the personality of the organisation”. The reason why there are so many definitions for the culture of the company is that the culture in general can give an idea about the company’s way of working and its management style.
There are four types of organisational cultures:
This type of culture mainly has a centralised power for e.g. a spider’s web. This type of culture is generally found in small organisations. Only one person makes the decision in the organisation.
This type of culture is mainly found in the government departments. The power is derived from employee’s position in the organisation.
This type of culture mainly requires teamwork. There is an extreme focus on the tasks. There is a democratic approach in the decision-making.
This type of culture is generally found in the charities, clubs and voluntary organisations. The organisations having this type of culture exist for the benefit if those within the organisation.
At Novartis they understand and believe that people do make a lot of difference.
This means that they treat each other with respect, support each other’s efforts, and work at delivering superior results. They want their associates to take pride in working at Novartis and to have fun in doing so. This requires inspiring leaders at all levels who fully utilize the talent and diversity of their fellow associates. The company invest to attract and retain leaders, professionals, and to develop their associates. They value competence, professionalism, and a positive attitude. They recognize and reward high performance. At every level of the organization, they want their people to become "best-of-class".
By fostering teamwork and collaboration, they can enhance learning throughout the organization. Thus, they promote interaction across functions, geographies and hierarchies.
Hence, it can be said that Novartis operate and functions based on role culture and task culture.
The company values candor, trust and integrity, and they recognize the importance of open, continuous communication.
Every day their researchers and managers make decisions about whether or not to take an action that will meet a business interest and a societal need. They must consider the consequences of both action and inaction from many different perspectives.
Over a period of time, Novartis has changed its culture in the organisation. In the beginning when Novartis was established the company had adopted power culture. However, later as the company started progressing and soon established itself they decided to change the culture and adopt a much democratic culture that would help to integrate the company and motivate it time and time again.
They evaluate the effect of their products on the end user i.e. their customers, on the environment and on society by taking a feed back from them. They take into account production issues and how the company can responsibly care for the health and well being of their neighbours and workers. They look ahead to see how they can monitor their products' use and effects in the marketplace.
They also consider the long-term effect of their innovations, not only on the short-term result. In assessing the impact of their products, they participate in an interactive dialogue involving the company, regulatory agencies that act on behalf of society, and the customer, who personally chooses whether or not to buy the product. They take the interests of their stakeholders into account.
The internal and external communications of Novartis:
All the people involved in a business need to have access to suitable information in order to do their jobs effectively. A business needs to be co-ordinated so that the right things happen at the right time.
In communication, two things have to be taken into consideration. Firstly that the message is sent and secondly that the message is understood. Any failure in communication routes could result in serious problems and inefficiency.
The main objectives of communication are as follows:
A successful organisation is one that enables its employees and customers to have access to up-to-date, relevant and correct information. In business communication means getting the right message across.
Communication in an organisation sometimes requires instruction to be transmitted from one person or department to another. Each member of an organisation will have to follow the instruction at the appropriate time.
- Making checks and receiving feedbacks.
The organisation needs to keep an eye and check on areas of work for which they are responsible. Feedback will need to be sent to the managers to make decisions on the further course of action.
The human resource managers negotiate job descriptions with staff.
A business that does not develop new products or revamp existing products will soon lose out to its competitors. Research and development is an essential function, particularly where the business is technology based. In the pharmaceuticals industry, the success of a company is based on the drugs it researches and develops; ICT has reaped the rewards for developing the best selling anaesthetic.
As said before no company can ever survive without technology. Novartis is a huge multinational company and has technology and ICT in every part of their success.
Novartis' use of new technology is governed by two principles. It must bring benefits and it must be safe.
The company needs the science to come up with new products, further research or existing products and also the field force to get all this information to physicians and help patients.
Novartis is one of the world's main investors in research and development and is a leader in the development of new emerging technologies such as genomic, biotechnology and cell therapy. Ethical and responsible uses of new emerging technologies offer them huge potential in combating disease and improving health.
The internal structure of the company:
The structure of a business can tell as to how well the management can control and communicate with employees. In the study of organisational structure theory, it is a common practise to illustrate the organisation by means of an organisational chart.
There are two types of organisational structures:
A hierarchy is a series of levels of people, each level controlled by the level above it. Large organisation, public limited companies or civil services departments may have thousands of employees. They are likely to have a more elaborate and ’tall’ organisational structures which has:
- A number of levels of hierarchy
- Division into functional areas such as sales, finance, human resources etc
Each level of the hierarchy has responsibility for the actions of the people in the levels below it. The person at the top has overall responsibility for the whole organization. Instructions are passed down, problems and complaints are passed up and discipline is exercised by a higher level or lower level.
Good level of communication is very important in this type of structure.
A simple horizontal or flat structure is in complete contrast to the tall hierarchical structure.
In this type of structure:
- There is only one level of command.
- The head of the firm handles the main functions of the business like finance; administration, human resources, marketing and his assistants do all the selling.
The flat structure is not confined to sole traders. School and colleges are likely to have a flat structure. The managements of large hierarchical organizations are finding that it is advantageous to make functions, product divisions and geographical areas more independent of the senior management.
At Novartis they understand and believe that people do make a lot of difference.
This means that they treat each other with respect, support each other’s efforts, and work at delivering superior results. They want their associates to take pride in working at Novartis and to have fun in doing so. This requires inspiring leaders at all levels who fully utilize the talent and diversity of their fellow associates. The company invest to
attract and retain leaders, professionals, and to develop their associates. They value competence, professionalism, and a positive attitude. They recognize and reward high performance. At every level of the organization, they want their people to become "best-of-class".
By fostering teamwork and collaboration, they can enhance learning throughout the organization. Thus, they promote interaction across functions, geographies and hierarchies.
The company values candor, trust and integrity, and they recognize the importance of open, continuous communication. If we take a closer look at the organizational structure of Novartis it can be seen that Novartis has a hierarchical structure. Stated below is the hierarchical structure of the company.
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The Novartis Board of Directors consists of 12 members and is chaired by the Novartis Group Chief Executive Officer.
- The Board of Directors is responsible for the ultimate direction, strategy, organization and administration of Novartis.
- Dr. Daniel Vasella, Chairman and CEO
- Prof. Dr. Helmut Sihler, Vice Chairman and Lead Director
- Hans-Jörg Rudloff, Vice Chairman
- Dr. h.c. Birgit Breuel
- Prof. Dr. Peter Burckhardt
- Dr. Ulrich Lehner
- Walter G. Frehner
- William W. George
- Alexandre F. Jetzer
- Pierre Landolt
- Heini Lippuner
- Prof. Dr. Rolf M. Zinkernagel
- Dr. Ingrid Duplain, Secretary to the Board
Honorary Chairmen
- Dr. Alex Krauer
- Dr. Marc Moret
- Dr. Louis von Planta
Board Committees
To assist the Board in carrying out its duties, four committees have been created:
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The Chairman's Committee,
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The Compensation Committee,
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The Audit and Compliance Committee,
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The Corporate Governance Committee.
Executive Committee Novartis (ECN)
The Executive Committee Novartis (ECN) is charged with providing leadership and strategic guidance to the Novartis Group.
Dr. Daniel Vasella
Chief Executive Officer
Dr. Raymond Breu
Chief Financial Officer
Dr. Urs Bärlocher
Legal and General Affairs
Norman Walker
Human Resources
Thomas Ebeling
CEO Pharmaceuticals
Paul Choffat
CEO Consumer Health
Marc Fishman
President of the Novartis Institutes for Biomedical Research (NIBR)
Their respective assistants and second assistants then follow all these. After this comes the supporting staff that form the clerical level.
Novartis has formed the matrix structure many times in order to form new products and improve their standards. They have tried to change the structure of the organisation and make it more and more flat because many a time Novartis has had problems with its structure. They have found it difficult to manage the company because of the large structure. This is the reason they are trying their best to form a flat structure.
The management structure and its style:
The success of management in motivating employees to meet the business objectives they have set is largely based on the management style they adopt. There are three main management styles ranging in a wide spectrum from the dictatorial to the ‘oh, let them get on with it’ attitude. The style adopted by a manager will fall somewhere within this spectrum. The three styles of management are as follows:
The autocratic manager is the main decision maker. He or she sets objectives, allocates tasks and expects the work force to do exactly as required. This does not normally make for a happy or motivated workforce. It does however; work well in a hierarchical organisation in which discipline is important.
The democratic manager allows the employees to take part in decision-making. They are consulted and made feel part of the final decision making process. This helps to motivate the workforce and ensures that they are well aware of the objectives of the business and will work hard to achieve them. This style of management means that managers have to be good communicators. This style obviously suits a flatter business structure that is geared up to team working rather than a hierarchical structure that has many layers through which communications have to pass. When looking at a democratic style in action it is important to distinguish between:
- The manager who has probable made up his/her mind about a course of action to be taken anyway but involves the workforce in discussion to motivate them and make them feel part of the decision making process.
- The manager who genuinely consults the workforce in the decision making process and is influenced by their views - this style of management is known as a ‘consultative’ style.
The manager here allows the workforce to get on with whatever has to be done and has little input in the way of direction or control. This can work well in a small team ‘flat’ business such as a group of software developers where all are equal and are well motivated. In a larger, hierarchical business, this style can be a recipe for disaster, encouraging laziness and apathy.
Conclusion:
- Novartis consider the long-term plans as important and innovative as the short term plans.
- Novartis has their core values based on fundamental rights of every individual, such as the protection of privacy, freedom of opinion and expression, freedom of association, nondiscrimination and the right to be heard.
- They believe that their associates are the key to their success. They base their human resources policies and practices on fairness, openness and mutual respect.
- They want to be a leader in Health, Safety and Environmental protection (HSE).
- The company cares about the expectations and concerns of their stakeholders.
- They integrate the principles of corporate citizenship into their business strategies.
- It can hence be stated that the company has a very bright future and can therefore afford to take considerable risks.
Evaluations:
- Novartis is striving hard to achieve its objectives. They are taking any possible steps to achieve it. If we take a look at their sales and income.
- If we take a closer look at both these statements we can observe that their sales have indeed increased but they are not as they had expected (15.1% increase).
- There are no exact figures of the staff turnovers but as per the details provided, it seems that there is a very low staff turnover.
- This proves that the company has a very good culture maintained and that it does imply its corporate citizenship in its running.
- The main strengths of the company are its committed staff, its research and development, its culture, its technology, its goodwill/good name in the market, their democratic style of management, their methods of communication.
- The main areas of concern of the company are the lack of professionals, its goal setting techniques, the same culture throughout the company, their hierarchical structure, their aim to always keep their shareholders happy.
- The main areas where they should take action are their goal setting techniques for which they do not require any resources; they could use the traditional SWOT analysis or the 5 bums on the goal method to set up their goals.
- I personally believe that Novartis should not have the same type of culture throughout the different functional areas. They should change it in a few areas to maintain their standards and to motivate the staff to work in one direction and that is the company’s objectives.
Recommendations:
- Although the company seems to be a very profitable one the have not mentioned as to do they believe in charity to the needy.
- They can promote themselves as a company that also performs charity deeds such as providing free medicines, free medical camps etc. in poor countries such as South Asia, African countries etc.
- As mentioned above Novartis was formed with the corporate merger of Sandoz and Ciba that have a tradition of more than 100 years.
- The shocking the news of the merger was, the shocking could be the news of a split.
- On observing the sales and the income of the company it can be seen that apart from making profit the have also made some losses in some part of their business.
- As the company has a policy of keeping the shareholders happy they must keep in mind that they cannot always keep them happy.
- In order to avoid loss the company can close down the area where they are having some serious losses or can have some alternate methods as to give more attention to that particular area of the business.
- The idea of role culture in a company is very good but it cannot be used in every part of the department.
- For e.g. in the finance/accounting department everything needs to go just as planed and decided. Therefore based on the circumstances the culture in such departments should change.
- The company has very good plans for expanding in the medicines department.
- They could expand in health related foodstuffs like energy drinks, protein biscuits etc.
- Though a lot of information was available there were still a few details that could not be collected because of the company’s private policy.
- In order to obtain more information about the company they should explain things about their company in much more details.
The UN global compact:
To unite the power of the markets with the authority of universal values." That is the goal of the Global Compact, a UN initiative that seeks to safeguard sustainable growth in today's global economy.
The UN Global Compact promotes core values for meeting the socio-economic needs of people around the world. It asks for the partnership and commitment of multinational corporations to work with the UN in sustaining open markets and in finding solutions to social issues.
Novartis has joined with the UN and other corporate partners and organizations (i.e. NGOs) to support the Global Compact. We consider the principles set forth in this compact to be important building blocks for a free and prosperous world economy and essential for sustainable economic and social progress.
The compact sets forth nine principles in as follows:
Human Rights
· Support and respect the protection of human rights within the sphere of our influence
· Ensure that our own operations are not complicit in human rights abuses
Labour
· Freedom of associations and the effective recognition to collective bargaining
· Elimination of all forms of forced and compulsory labour
· Effective abolition of child labour
· Elimination of discrimination in respect of employment and occupation
Environment
· Support a precautionary approach to environmental challenges
· Undertake initiatives to promote greater environmental responsibility
· Encourage the development and diffusion of environmentally friendly technologies
As a corporate partner, Novartis is asked to make a clear statement of support for the Compact and to post an example of progress made or lessons learned in implementing the principles on the UN Global Compact website at least once a year. We are also asked to engage in or support partnerships with UN organizations by undertaking activities that implement the principles of the Compact, such as eradication of poverty.
