Case ID: A07970006
Solution ID: 27126

Warner Lambert Company

Case Solution

In 1991, Warner-Lambert Company, a firm involved in three core businesses - ethical pharmaceuticals, non-prescription health care products, and confectionery -- has just completed its most successful year ever. However, Mel Good-es, the new CEO, is worried that the current organizational structure is inconsistent with an increasingly global business environment. The key issue in the case is how to shift a classic multi-domestic, country-oriented firm to a more responsive, tighter linked global structure. This should lead to a discussion of the pros and cons of running a business on a global versus local basis. The issue becomes quite complex with Warner-Lambert because of the differences between its three core businesses. Teaching direction: The case illustrates the problems facing a division of a large multinational company as it does business in a developing nation. It also illustrates the difficulty of predicting and understanding local political conditions, and coping with the threat of project cancellation or forced renegotiation. In addition it also raises issues dealing with the appropriate rate of return for a large capital-intensive project in an uncertain political environment, including corruption and transfer payment equity.

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