Reference no: EM132602560

Question - When Upjohn Pharmaceuticals of Kalamazoo, Michigan, and Pharmacia AB of Stockholm, Sweden, merged in 1995, employees of both sides were optimistic for the newly formed Pharmacia & Upjohn, Inc. Both companies were second-tier competitors fighting for survival in a global industry. Together, the firms would create global company that could compete scientifically with its bigger rivals.

Because Pharmacia had acquired an Italian firm in 1993, it also had a large operation in Milan. U.S. executives scheduled meetings throughout the summer of 1996-only to cancel them when their European counterparts could not attend. Although it was common knowledge in Europe that most Swedes take the entire month of July for vacation and that Italians take off all of August, this was not common knowledge in Michigan. Differences in management styles became a special irritant. Swedes were used to an open system, with autonomous work teams. Executives sought the whole group's approval before making an important decision. Upjohn executives followed the more traditional American top-down approach. Upon taking command of the newly merged firm, Dr. Zabriskie (who had been Upjohn's CEO), divided the company into departments reporting to the new London headquarters. He required frequent reports, budgets, and staffing updates. The Swedes reacted negatively to this top-down management hierarchical style. "It was degrading," said Stener Kvinnsland, head of Pharmacia's cancer research in Italy before he quit the new company.

The Italian operations baffled the Americans, even though the Italians felt comfortable with a hierarchical management style. Italy's laws and unions made layoffs difficult. Italian data and accounting were often inaccurate. Because the Americans didn't trust the data, they were constantly asking for verification. In turn, the Italians were concerned that the Americans were trying to take over Italian operations. At Upjohn, all workers were subject to testing for drug and alcohol abuse. Upjohn also banned smoking. At Pharmacia's Italian business center, however, waiters poured wine freely every afternoon in the company dining room. Pharmacia's boardrooms were stocked with humidors for executives who smoked cigars during long meetings. After a brief attempt to enforce Upjohn's policies, the company dropped both the no-drinking and no-smoking policies for European workers.

In order to assert more control over the whole operation, the company moved its HQ back to the United States in 1998. In 2000, the company acquired Monsanto and Searle, both large pharmaceutical companies. The new company, called Pharmacia, didn't last long. The company was bought out by Pfizer in 2003.

Questions -

1. What strategic move do the companies in this case implemented?

2. What issues were faced by the company in the implementation of its strategy?