Amgen Inc Case Analysis
The biotech firm Amgen Inc. gives much attention and time to the planning process. Because the outcomes for a company like Amgen are often very unsure and many employees are quite sceptical about the use of such a planning, the main issue can be described as follows:
What is the added value of planning for a fast-growing company in an uncertain and dynamic environment?
To address this issue, an analysis will follow based on the following elements:
Responsibility structure
Amgen Inc. is a biotech company. The responsibilities of the Product Development Teams (PDT’s) can be described as “discretionary cost centres”. The output of a PDT is therefore difficult to relate to its input. Based on the long-term planning a reasonably clear definition is given what budget is available for each of the teams. Research in the early stages has less stringent policies.
Planning & budgeting
Within Amgen much time and effort is dedicated to the creation of a long-term planning (LTP). In the early stages of Amgen the strategic planning was executed by top management and implemented top-down. The PDT’s then created their own budgets and 5-year planning. Later on, the planning process of Amgen has developed into an interactive process whereby planning and information of the PDT’s is also used bottom-up. The LTP of Amgen is now mainly prepared as capital budget whereby the PDT’s have their own operational budget. The current interactive planning process ensures that employees are better informed and a bigger commitment to the planning is established.
At first the LTP was mainly financially driven. After the initial success of some of its products, Amgen’s LTP devote more attention to qualitative targets.
...
... middle of paper ...
... susceptible to financial rewards, the reward system should be focused more on soft rewards (extra facilities, extra flexible time, extra privileges).
The problem that middle management is not actively using the plans could be solved by more frequent evaluation of these plans. This because middle management does acknowledge that reviewing the plans creates added value in checking if they are still doing the right things. By evaluating the plans every quarter commitment will grow, without losing the necessary flexibility.
Bibliography:
- Merchant, K., Planning and Budgeting Systems, in: Merchant K.A., W.A. van der Stede, Management Control Systems, Performance Measurement, Evaluation and Incentives, Prentice Hall, 2007
- Simons, R., Building a profit plan, in: Simons, R., Performance Measurement & Control Systems for Implementing Strategy, Prentice Hall, 2000
Evaluation and review should be an ongoing process of learning, embedding a process of continual improvement and development. The key to evaluating is knowing what we are measuring. We cannot monitor and evaluate the team’s progress towards agreed objectives without clear advance planning of what we want to do and how it will be achieve. Effective strategic and operational planning, incorporating clear measurable objectives, is therefore an important
The benefits to those organizations that choose to embark on the process of developing a long-range plan are numerous as well as invaluable. Organizations that commit to such planning are able to establish objectives and priorities, make clear their future direction, adapting to both internal and external environmental changes, resolve major issues that impact the organization and obstacles and provide a clear and justifiable rationale for decision making (Bryson & Einsweiler, 1988, p. 3). Ultimately, the public is better
The Guiding Principles that drives strategic planning strengthens the organization’s ability to implement a system that is solution and priorities oriented. The strategic initiative taken by the organization towards its strategic planning has brought people of diverse disciplines together to address short-term and long-term issues that hinder its future success. The organization has a vision of identifying breakthroughs and implications of biotechnology. It is also in the plan of expanding The Rose Project, a program that caters for breast cancer screening and Cancer
[4] Colin Drury, Management and Costing Accounting, (7th edition), Chapter 3, Cost Assignment, p. 54-59
...peak level while offering quality services, strategic planning must be implemented to understand where necessary changes are needed.
Nucleon is a small biotechnology start-up with a very promising potential product (CRP-1), which is also the first product that Nucleon is planning to go into the clinic market. Nucleon has reached to human clinical trials phase with its product and it has no manufacturing facilities that satisfy the guidelines for these clinical trials and testing. Nucleon is on the verge of making a critical choice of manufacturing strategy, which will affect Nucleon’s survival in the intense competition in the long haul. Nucleon management is aware of the facts that they have a limited budget to start with, the financial environment in biotechnology is rapidly changing and establishing the safety and efficacy of products like CRP-1 is complex, time-consuming and expensive; that’s why they want to evaluate risks and rewards of each manufacturing strategy before making their final decision.
Tapinos, E., Dyson, R.G. & Meadows, M. (2005). The impact of performance measurement in strategic planning. International Journal of Productivity and Performance Management, 54(5/6), 370-384.
Over the past decade, scientists have made significant advancements in the treatment of certain diseases. Unfortunately, just like any new product, the cost of developing these new technologies and treatments is extremely high. Plus, unlike other technology, heath technolo...
A partner to the business brings an advantage of providing additional capital, resources, and other material to develop the ABX-EGF drug program, all the while limiting the amount of risk that Abgenix takes on. For example, the drug may not develop correctly and fail in trail(s), or possibly the turns out to be unsuccessful, this after Abgenix provides a large amount of their limited resources. It’s also a benefit that the partner will have complementary knowledge, assets, and resources to market, sale, test, and develop the drug for market and/or testing. A significant hurdle is the testing phases and other regulation under the FDA Center for Drug Evaluation and Research (CDER). When the drug demonstrates its effects and the company moves forward, or makes required changes, it develops experience and knowledge that will be needed for future drug compounds. A mosaic of studies have further shown that collaboration can be a powerful tool towards higher achievement and increased productivity since collective efficacy can significantly boost groups’ aspirations, motivational investment, morale, and resilience to challenges. It’s noted that there is presence of competition in the market (AstraZeneca and Genetech), producing similar products or are in the development phase of copying the cancer fighting techniques. With that being said, adding a partner further assists Abgenix in pushing the ABX-EGF to market quicker, which decreases various costs to adapt to sudden changes. Overall, it’s in the best interest for Abgenix to join with a partner to increase the chan...
A pharmaceutical company is the number of patients tested, to test their new drugs to fight cancer. Some marketing decisions, or fine-tune the new product ...
- Williams, L.T, 1997, “Planning and managing the information system - a manager's guide”, Industrial Management & Data Systems Volume 97 Number 5 1997 pp. 187-191
Stephen P. Robbins and David A.Decenzo, Fundamentals of management: essential concepts and applications (USA: pearson prentice hall, 2003), PP.13-14.
As Schermerhorn states in Management planning, organizing, leading, and controlling are the tools needed by managers to accomplish performance goals. It is crucial that managers be able to recognize and act upon problems or opportunities as they arise. Planning is perhaps the cornerstone of the four processes. All good processes were at some point given great detail so as to anticipate possible problems and solutions to those problems. When the Honda Motor Company decided it needed to refine its inventory they didn't just jump at the first idea that was proposed; they first set their objectives and discussed ways to meet those objectives. After giving careful consideration to processes and the streamlining of those processes human error rose as the top need for change. Sounds simple you might respond; in reality it is much more complicated.
The future of biotechnology can be seen as one that is relatively safe and guaranteed. Because the industry is constantly focused on the future, as long as there are always new innovations and goals to work towards (like cures for diseases and renewable energy sources), the industry will remain to be a key part of the United States and global economies. When looking at future forecasts for this industry, it is no wonder that venture capitalists, private investors and universities are looking to grant or invest large sums of capital to these firms; biotechnology products accounted for 21% of the total 714 billion dollars in the global market for prescription drugs in 2012, and is expected to grow to 25% by 2018. This substantial growth forecasted in a risky stock is what helps keep our economy healthy.
Operational planning is what drives strategic planning goals to a success. On a day to day basis, operational plans are being communicated and decisions are being made. Operational planning is important because it leads to the goals and visions of the organization and by doing that, operational plans must be made daily to keep the organization competitive in the market. Friend & Zehle (2004) discuss operational plans central to the allocation of resources, it uses inputs to scale operations in order to deliver information about all stages of the primary value chain activies and the support of those activities. Without operational plans, an organization would have no way to reach its goals that were set. The market is changing constantly and operational plans help keep organizations making effective