What Are the Strategic Objectives of the Acquisition - GSK - Assignment Example

?a) What are the strategic objectives of the acquisition? What is GSK hoping to get from it? The strategic objectives of the acquisition are To attain synergy for GSK’s and Sirtris’ distinct competencies, wherein GSK can use Sirtris’s specialty in sirtuin activators to develop new major new drugs and to adopt Sirtris’s entrepreneurial culture and development perspective, while Sirtris can use GSK’s drug development and commercialization competencies to leverage its drug development abilities, 2) To facilitate a smooth integration between two different organizational designs and cultures that can lead to the least drop in employee morale and retention/hiring of key scientists and managers, and 3) To attain cost efficiency from economies of scale and economies of scope. GSK wants to become more of a biotech company that Sirtris is because it has become too bureaucratic to achieve the design and cultural changes it needs to be competitive. GSK wants a diverse portfolio, where it does not only focus on one specialty and product, but is open to different sources of research, services, and ideas. It also wants access to Sirtris’ unique entrepreneurial culture and distinctive scientific advantages. In other words, GSK wants to stay big but become nimbler by dividing its large bureaucracy into smaller scientific units. It has introduced several changes already to hasten its new product development process, but so far, its overall culture and design remain bureaucratic, at least for Sirtris which is a biotech firm and is used to less bureaucratic controls and processes. b) What challenges are facing the managers responsible for the integration process? That is, what must Slaoui be concerned about? Westphal is concerned that GSK’s bureaucratic design and culture is affecting Sirtris’ entrepreneurial culture and management system. In particular, his concerns are time management, people management, and other small, but important, issues (Weber 9). Time is essential to research work, but Westphal observed that GSK is eating most of his time through constant meetings with many people, who are not always critical to decision-making and other managerial processes. Westphal thinks that he should be doing more work, as well as his scientists, but the incessant meetings directly interfere with their research activities. Furthermore, people management is a key issue for Westphal. GSK has not provided him autonomy in making significant hiring, firing, and compensation decisions like he used to. Westphal wants to make these decisions that are crucial in keeping the entrepreneurial spirit of Sirtris. Finally, Westphal is concerned of small, but also important issues, such as media access, petty cash, and science publications. He wants some degree of autonomy on these issues because relying on GSK for these decisions only delays decision-making and can dampen the sense of control over these pertinent small tasks (Weber 9). Essentially, Westphal is wary that Sirtris is becoming more like GSK instead of the other way around. Slaoui generally has the same concern as Westphal, but more of macroeconomic in scope, because he wants an efficient and effective integration between Sirtris and GSK. Slaoui’s main concerns are employee retention, management integration, and DPU integration. He is concerned of employee retention, when scientists have different motivations, especially when biotech companies and big pharma companies attract different kinds of scientists. Biotech company employees are more focused on the science and tend to easily shift from one company to another as their interests change or if companies change, while big pharma scientists value stability and career progress (Weber 9). The right reward and management approach must appeal to these different motivations, but the right balance is tricky. Furthermore, Slaoui is unsure where to put Westphal and Dipp (Weber 9). He wants to retain them because of their valuable scientific and management capabilities, but he does not know if they are happy with existing roles and responsibilities (Weber 10). He wants GSK to maximize their competencies, but he wants them to be happy with GSK too. In addition, Slaoui does not know how to continue Westphal’s desire of continuing his control over rewards and compensation. Westphal rewards significant contributions with stock rewards, which are not applied in GSK. Westphal wants continued control over these decisions, which must be set by GSK management. Finally, Slaoui wants to know how to properly manage Sirtris’ collaboration with other DPUs. For instance, Sirtris has produced several sirtuin compounds but was focusing on a specific compound, SRT2104. Sirtris sees SRT2104 as its most high-potential compound for the production of an orally administered drug for diabetes. Sirtris already let other GSK DPUs to employ its compounds for other projects, but it did not want for its SRT2104 to be used in treating Alzheimer’s disease because it can result to pricing issues (i.e. doctors who treat diabetes will give Alzheimer’s disease medicine for diabetes patient because the latter is cheaper than diabetes treatment) (Weber 10). This concern shows that Sirtris wants autonomy for its compounds, but Slaoui wants strong collaboration among DPUs for the larger interest of the company. There is conflict then because Slaoui sees the larger picture of GSK needs, while Westphal understands more the local concerns of Sirtris. c) Provide a plan for integrating Sirtris into GSK. In other words, given the objectives of the deal and the challenges involved, how should this be managed? (Without getting too detailed, show how your plan would address both the objectives and challenges.) To integrate Sirtris into GSK, it is important to not interfere with the former’s independence and entrepreneurial spirit, although it should also follow general GSK policies. The objectives are the following: 1) To retain Sirtris’ scientist and managers by providing them with the same level of autonomy, except in areas that GSK has better competencies; 2) To allow Sirtris to act as a stand-alone DPU with minimal interference from GSK in human resource management policies and processes; and 3) To allow GSK to learn from and to adopt the entrepreneurial design and culture of Sirtris for its DPUs and Centers for Excellence in Drug Discovery (CEDDs). The main challenges are: Balancing parent company and DPU priorities and needs. Ensuring synergy where both DPUs and GSK learn from each other and become both better from their collaborations. Changing GSK’s bureaucratic culture through becoming more like Sirtris in management and HR approach. The recommendations are as follows: Empower Sirtris to be a standalone DPU with complete control over HR policies, such as hiring, recruiting, firing, and developing, including rewards. Sirtris knows the best reward system for its employees who want to work for a biotech company. GSK must allow the same independence for all DPUs. CEDD heads can be the middle managers in charge of reporting, so that scientists can focus on their research and development work. Retain Westphal and Dipp, although they should be asked regarding the positions they want in the company, which will be open for company negotiation. Allow Sirtris to decide on how to use its compounds, but encourage collaboration, which will include setting the right prices to avoid pricing issues for future new products. As standalone DPU, Sirtris managers must not be subjected to the same meetings. Middle managers should be hired for these meetings, so that scientists can do their R&D jobs. In essence, DPUs must be biotech firms in design and culture, while GSK must be more entrepreneurial by treating these DPUs as autonomous units. It must only be concerned in funding and introducing additional source of ideas and collaborations, while managing potential collaborations among DPUs too for maximized returns. Reference Weber, Toby Stuart James. “GSK's Acquisition of Sirtris: Independence or Integration?” Harvard Case Study. Read More