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Management Case Study Assignment Help
Case Scenario:
Organisation Case Study – Millennium Health Sciences (MHS)
Company
MHS was established in 1968 by two scientists who wanted to develop dermatologically tested skin care products. They came out with several skin care products that were ahead of its time. The innovative spirit of the founders can still be seen throughout the company, but significant changes have taken place over the years. Since then MHS has moved into several related (arguably “unrelated” according to some) businesses. Today it is a $4.3 Billion revenue company with 4500 staff spread across the country.
Structure
Currently, there are four business units within the MHS group. Neutrino manufacture Vitamins and Nutritional Supplements while Dermatech produces advance skin care products. LOOKS is into Cosmetics and Energino is known for energy drinks.
Except for Energino which was acquired in 2001, other three businesses evolved organically over the years. A General Manager (GM) heads each business unit, and they report to the MHS CEO and the Board of Directors. The GMs have significant autonomy and tightly control each business unit. The managerial structure is ‘top-down’ meaning that all decisions such as project appraisals and selections are made by the GM and the Executive Management team (EMT) of each business unit and then filter down to the lower levels in the organisational hierarchy. Each company competes for resources from the holding company MHS which is listed in the stock exchange. According to one insider “, each unit is trying to outdo the other, and I feel the Board likes it that way, competitive, secretive, divide and rule.” The company culture is such they believe senior executives should come up through the ranks. Therefore, most of the top executives have worked at MHS for an extended period and in most cases worked at only one business unit.
Four Businesses
Neutrino
Neutrino research, develop, and manufacture vitamins and supplements. The Neutrino R&D is known for their research and commercialisation of different herbal extracts. The R&D centre is located in Adelaide; the staff at the centre are older than most other R&D staff at MHS but experienced in vitamins, supplements, and regulatory requirements. Recently they developed a new product that can be orally administered to enhance the vitality of the skin. Although years of research into a known seaweed costed Neutrino $12.0
million, this new product range, Poseidon is expected to generate $350 million a year in revenue from 2023 onwards in Australia. The market for Vitamins in Australia has matured, but several Asian distributors (from China, Indonesia, Thailand, Vietnam, etc.) are showing keen interest to represent Neutrino. However, the management is overwhelmed with maintaining the market position in Australia. Since the margins are coming down, Neutrino EMT does not want to sacrifice market share. The marketing and R&D teams can see the export potential but, are powerless to make decisions. “I don’t know why we are fighting in this crowded market when we know there is a better place for us. I wish the EMT listens to frontline staff,” a junior business development executive was frustrated but dared not to question the wisdom of Neutrino EMT.
Dermatech
This is the oldest product group of the company and demonstrates tremendous potential. Dermatech’s state-of-the-art R&D centre is in Sydney. According to the company website, Dermatech defines their operating domain as “Cosmetic Dermatology” and “Cosmeceuticals.” Dermatech owns several valuable patents, and Neutrino R&D team feels that some of these patents can add significant value to their product range. However, negotiations on using these patents jointly stalled sometime back. Export markets are handled through distributors, and few staff are familiar with the export operations. The marketing manager only visited two of the main export markets (China and Indonesia) last year although 30% of the profits and 20% of the revenues are coming from export sales. According to an EMT insider, exporting is “too messy, so many regulations, and frankly, no one has the energy to run around the world.” Australian made products are received well in the region, and some feel this sector is neglected.
LOOKS
The company produces a range of cosmetic products – cleansers, body lotions, ordinary moisturisers, lipstick, eyeshadows, and hair care products; shampoos, conditioners, hair spray, etc. LOOKS is a well-established brand in a very competitive industry. More than half the staff of MHS works at LOOKS. The company only operates in Australia, and according to the GM, there is no appetite or the energy within the team to expand internationally. The revenue has remained the same over the last two years, and the board of directors have asked the unit to streamline the product range which the LOOKS management is resisting. LOOKS depend on R&D support from Dermatech and Neutrino to some extent. The company operates in a maturing market, but the demand for specialised products (i.e. organic, natural, cruelty-free, eco- friendly, etc.) is picking up.
Energino
The acquisition of Energino was based on the premise that Energy drinks demand will increase, and the company can leverage on its other businesses to provide R&D support. The company was purchased from a multinational beverage company and therefore inherited a well-trained staff with international experience. Over the years the company has experimented with different products with limited success (example; fruit juices). Not much support has come from Neutrino and Dermatech R&D. A senior R&D executive was heard
asking the question: what do we know about energy drinks?
The findings of a recent report into these four businesses and their respective markets are presented in the following tables:
Poseidon product range
Years of research and 12 million Dollars after, Neutrino developed the Poseidon product range successfully and are about to commercialise. The active ingredient was developed based on a seaweed extract. Neutrino R&D managed to create a synthetic version of the active ingredient for which they are seeking a patent (some believe they should keep the process as a trade secret). The product comes in liquid and tablet form. The project was code-named Poseidon and kept top secret; along the way, sketchy details were also given to the Board of Directors.
Simultaneously Dermatech was also developing a skin cream based on the same know seaweed. The company spent close to $8 million on the project and research is still on-going. Presentation of field trial results from Project Poseidon to the Board was a joyous occasion for Neutrino especially given the potential of the new product range. However, all were taken by surprise when Dermatech GM presented the partial results of their seaweed project.
It was evident that there were significant overlaps in the research with unnecessary duplication. Neutrino’s Head of R&D charged a trainee lab technician who moved to Dermatech might have revealed the existence of the project. For their part, Dermatech vehemently denied the allegations and contested some of the field results presented by Neutrino.
The situation has raised serious concerns for the senior executives of MHS. According to the CEO “it is time we reflect critically on how we operate and plan to progress as a company.” The questions were raised as to why R&D effort was not consolidated. Also, why these companies can’t work together to develop products in the future. Informally, some team members blamed the defensive and divisive leadership at all levels for this fiasco.
Task:
You are required to review an organisation case study including statistical information on business unit performance and current market conditions. The case study to be shared among students in week 5.
The case study will also include information regarding the organisation’s current capacity to respond effectively to change.
You must then prepare a Business Portfolio and Dynamic Capability Slide Presentation using the following headings:
Business Portfolio Analysis
Plot each business unit on a BCG matrix, GE-McKinsey matrix, and Synergy matrix.
Business Portfolio Recommendations
Provide recommendations to the organisation for the strategic management of each business unit with explanations for each recommendation.
Dynamic Capability Analysis
Prepare an assessment of the organisation’s dynamic capability including its capacity to:
Dynamic Capability Recommendations
Provide recommendations to the organisation for enhancing overall dynamic capability with explanations for each recommendation.
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