INTRODUCTION:

Merck Sharp & Dohme Argentina, Inc. (MSD) is the regional subsidiary of the U.S-based
pharmaceutical giant Merck &Co, Inc. Merck itself entered the Argentinean pharmaceutical industry
in 1954, before that it had authorized a local company to distribute its pharmaceutical products.
Antonio Mosquera, the managing director, took charge of MSD at a critical juncture in Argentinas
history when the country was moving away from it nationalist economy. He arrived in May 1995 with
a 5 year planning horizon and intended to change the companys culture and professionalize and
modernize the organization.
THE SITUATION:
Silvia Ring, MSDs director of development and training, was asked to choose and announce the
names of 15 college students chosen to participate in MSDs internship program. Before the final
decision and initial announcement, she was informed that one of the candidates was the son of a high-
ranking official in the governments national health care program, the single largest health care
organization in the country. Hiring this candidate would bring to the company an excellent
opportunity to increase sales as MSDs drugs would be included in the government health care
formulary. However, this candidate was ranked 16 in the list and below the cut. Silvia was unsure and
fearful about what she should do and turned to Mosquera for suggestion. Mosquera then convened a
meeting and had assembled Quinteiro, the director of HR, Martin Rodriguez Hunter, the director of
sales and Ring to discuss about the recommendation. Quinteiro thought it was unfair to include the
person while Martin said it was a good opportunity to make revenue and expansion.
THE CONFLICT:
The conflict between the four people discussing the situation can be considered to be a task conflict
since it can be thought to be a conflict about the goals of the organization. This conflict can also be
considered as a functional conflict, not a dysfunctional one since discussion about the situation will
lead to a strengthening of the organization culture and reinforce what the goals of the organization are
and the acceptable means of achieving them.

ORGANIZATION CULTURE:
BEFORE MOSQUERA:
When Mosquera took charge of Merck Sharp & Dohme Argentina (MSD), Inc as managing director,
he felt the need of changing the culture. Exhibit 1 shows the dimensions of culture
1
before Mosquera.
Exhibit shows that MSD too was infected with characteristics of other Argentine companies.
Following were the dimensions according to Exhibit 1:
High attention to detail: MSD management operated according to rigid hierarchy with decision
making done by few top level people. Employees did only what was told to them, they did not have
any say in making decisions relating their job.
High outcome orientation: MSD employees were only asked to increase the performance, no matter
how the outcomes were achieved, as can be seen by the example of sales that physicians were given
incentives to prescribe certain products.
Low people orientation: MSD management only use to take decision that were beneficial for them
and increase the outcome. Due to this there was high level of corruption and rewards were given due
to contacts. This shows that there was low people orientation. Everyone thought of themselves.
Low teamwork orientation: Teamwork was not at all promoted at MSD.
High aggressiveness: There was little co ordination among the departments and they did not even
share any information even about product promotion.
Low stability: Decisions were not made according to standards, such as advancements were done
based on personal relationships, not on merit.
Low innovation and risk: As decisions were only taken by top levels, and employees were told what
to do, innovation and personal initiatives were discouraged.
AFTER MOSQUERA:
Exhibit 2 shows the organization culture dimensions that Mosquera encouraged and injected in MSD.
He transformed the culture completely. Following were the dimensions as shown by Exhibit 2:
Low attention to detail: Mosquera empowered his employees by allowing them to take decisions. He
demanded managers who made decisions and were willing to be held accountable. They were allowed
to handle the situations as they think is suitable, and he was open for help all the time. They were no
longer bounded by particular procedures. In Exhibit 4 of the case, this aspect is also evaluated to
determine the performance of employees under questions for empowerment.
Moderate outcome orientation: Mosquera did want his employees to perform best and produce
quality products and services, but he gave importance to ethics as well. For him right means of
achieving outcome was also important.
High people orientation: Mosquera gave great importance to feelings of people. Therefore in Exhibit
3 of values among personal values he included empathy which said we show respect and
understanding for everyones feelings. Even in Exhibit 4 of the case empathy questions were included
to assess how much employees demonstrate empathetic behavior for others.
High teamwork orientation: Mosquera promoted teamwork. Infact it was part of his personal values
that is given in Exhibit 3 of the case. It says that we (MSD employees) believe in the power of
teamwork. Through teamwork ideas contributions are enhanced, the commitment of the internal client
grows, and productivity and results increase. This aspect is also evaluated in 360 Inventory questions
under heading of team player.
Low aggressiveness: As mentioned above that teamwork was promoted. Moreover, information
sharing was encouraged among the departments.
High stability: Mosquera gave high priority to ethics. Therefore, he made decisions accoding to
standards in order to be fair. In his corporate values given in Exhibit 3 of the case he says that honest,
transparent and fair evaluation systems will be developed for performance measurements and
incentives.
High innovation and risk taking: Mosquera encouraged innovation and risk taking. In Exhibit 3 of
the case, in corporate values it was mentioned that we are always open to new ideas and opportunities
and are willing to assume the risks involved. In our wish to learn, we make mistakes and those
mistakes will be treated as opportunities to learn. In Exhibit 4 of the case this aspect is also included
in questions of 360 inventory under the heading of open mindedness.
LEADERSHIP:
Leading is one of the functions of the management. Everyone has a particular leadership style, which
influences their decision making. Mosquera as Managing Director, had democratic style that
involves subordinates, delegating authority and encouraging participation. He was against the
autocratic style of leadership which dictated work methods, centralized decision making and limited
employee participation. He flattened the organization structure and empowered his employees. He
demanded managers to make decisions and be accountable for it, and share their views. Infact he was
so much in favour of that he fired a manager who stopped his employees to say anything bad about a
task force sent from headquarters. Moreover, Mosquera exhibited a participative leadership
behavior when he included director of Human Resource, Sales and manager of training and
development to consult about the decision regarding selecting the official son. Moreover, Mosquera is
transformational leader who stimulate and motivated his employees to achieve extraordinary
outcomes by letting them make decisions.
Mosquera leadership style was not limited to him only; he wanted to establish organization culture of
empowered employees who come up with ideas and take decisions themselves. For this he hired
director of Sales and Human Resource that would channel this approach of empowerment to
employees. Therefore, Christina Quinteiro, the Human Resource Director, also had delegating and
participative style, and hired employees who had ability to adapt changing circumstances, problem
solving skills and oriented toward a continuous learning process. As for Martin Rodriguez Hunter,
the director of sales, also shared similar view as Mosquera, to empower lower level employees with
responsibility of decision making. He too demonstrate participative style of by making sales
employees mangers of their own territories, responsible for efficiently implementing the marketing
plan and developing their own business plan to grow the area. Ring, Manager of Training and
Development, too was trained by Mosquera to inculcate in employees decision making skills. Before
Mosquera, Ring too was used to of working according to the directions of employees but after being
coached by Mosquera she too has started implementing her ideas. She has now started training
sessions aimed at coaching employees in area such as leadership, communication, teamwork,
planning, forecasting and resource allocation.
DECISION MAKING PROCESS:
a) Dont Select. Mosquera is a person who believes in taking decisions that are ethical and he has
taken steps to change the corrupt culture of MSD. He made the legal affairs department and conducted
seminars on ethics that was mandatory for everyone to attend. Moreover, he hired an HR manager to
propagate ethics. In Exhibit 3 of the case, Ethics and Integrity rank high among corporate values.
Moreover in personal values it is written that the company maintains the highest ethical and moral
values and do not compromise as a result of job pressure or external demands. They make an effort to
ensure that their decisions are fair and valid and that their positioning is expressed with sincerity and
honesty. If Mosquera decides to go with selecting the officials son, it would be unethical and not
based on merit.
As a result all his efforts and initiatives, to introduce ethical culture of MSD, would become
meaningless. He is a role model for his employees, and if he himself acts unethically, it would be a
signal to his subordinates that under exceptional conditions we can deviate from standards.
b) Select him for 15
th
position. It would be unethical on the companys part to select the 16
th

shortlisted internee over the 15
th
one. This goes against the set ethics and merits of the company. This
would also set a bad repute of the company internally and as well as externally. The culture of the
company can be deeply affected by this move as the workers would think drifting away from merit
and set rules is not a big issue for the company. And externally as well, it can put the company in bad
light for not following merit and ethics.
c) Select 20 Interns.Selecting the son of high ranking officer of government national health care
program for government retirees would increase customers of MSD by 4.2million and add on
$5million a year in revenue, which when added to quarter 2 share of 1996 would result in
$26,689,820. This would push it above Bristol and Myer and increase its chances of beating Novartis.
Moreover, through this MSD can penetrate into other health programs of government as well, which
would result in increasing its market share further.
Apart from this the officials son is competent. It is only by few points that he is at sixteenth position.
Out of 1200 students who applied, he has outstanding qualities due to which he has been given 16
th

position. Selecting him wont mean that incompetent student has been chosen.
Based on the above analysis, 6) We selected to go with the option of selecting 20 interns instead of
16. This would be a balanced approach as with this decision, the company doesnt have to
compromise on its ethics and at the same time they can benefit from the 16
th
shortlisted interns
government links. After we make our decision, 7) the implementation of the alternative is of great
importance. Hiring the officials son and justifying it within and as well as outside the company needs
to be done. This is of extreme relevance in order to avoid the company from getting a bad reputation
for not following ethics and merits. The companys employees need to be well informed about the
reasons of the decision and how it is justified. The employees must be already well aware of the
current financial situation and ranking of the company hence through that they have to be explained
the need of this decision. For the outsiders, the company can justify the decision based on the fact that
the competition was has been quite stiff among candidates which made it hard for them to select only
15. Furthermore, this being the companys first year of this program they have decided to raise the
number of interns to be selected. This leaves no space for any demerits.
Last but not the least, 8) Evaluation of the decision needs to be conducted in order to ensure that the
right decision was made. This will be done by seeing the growth in customer base of the company as
well as in the revenues. The estimated increase in customer based was 4.2 million along with
additional revenue of 5 million. If these targets are met it would mean that the company had made the
right decision of selecting the officials son.
CORE PROBLEM:
Every MNC that takes the course of expansion in countries other than its home base face a number of
problems that are a result of the cultural differences, political arrangements and with respect to overall
adjustment issues. All of these problems become more serious in magnitude when it comes to
countries with political and economic instabilities like Argentina.
Cultural Difference: A major problem that the management of MSD in general and the MD on the
ground in particular is going to face is that of the cultural difference between the work environment of
the home country and that of Argentina, which are poles apart.
This culture is an extension of the overall culture of the country itself. After all, the local people who
are employed in the local branch of the MSD have an upbringing that has been invested in them by
the countrys and their families values and norms.
As the case points out, the general environment of the pharmaceutical industry was a mirror image of
the one followed by the country; and as a result was rich in bureaucratic systems, corruption and
cronyism. The results were evident in the economic indicators of the country and the industrys output
was not that impressive as well.
Change is not easy, especially when it comes to cultural change. It is evident that this change is the
need of the hour for the success of the company and for that the MD has taken a number of positive
steps that have shown results. However, to turn this isolated environment into a norm is going to take
time, before people see that this new, more ethical oriented culture is a better option at both personal
and overall levels as well.
Political Pressures: Expansion is the key to the success of any organization. In the current global
economic environment, expansion to other countries is becoming a natural growth process. However,
this expansion is a double faced sword for the companies and same stands true for MSD.
There are two problems in this regard that the company is facing. One is the fact that Argentina is still
not that stable a country, both politically and economically, even with all the measures that the current
regime has taken. Therefore, to operate in the country both at the macro and micro levels is a constant
challenge. However, in worse scenarios when other companies went packing MSD stood its ground so
this is an encouraging factor that works for the companys reputation in the long run.
The other major issue and a very complex one at that, is the fact that there are no laws in Argentina
that protect the companys patent rights, and most of the copying is being done by the government
backed pharmaceutical companies themselves. This problem cant be confronted directly, as given the
strength of the state, pushing too hard might get MSD kicked out of the country. The suggestion here
is that to tackle the situation in a slow and steady manner. With the gradual change in the culture and
political system, the laws will be a step that will be set, but until then the efforts should be
concentrated on helping setting examples of a better working and ethical culture to improve the
overall environment. That is the sustainable way of doing this.
Given all this situation, the thing to note is that we need to maintain a balance between the ethical
situation and the monetary situation as well and in no way can we cant overlook the monetary
situation compared to the ethical one.