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Read “Transferring Innovation across National Borders”

and prepare answers to the following questions:

1. What triggered the new product strategy at

Minnesota Biolabs (MB)?

2. What prediction would you make for the success

of getting the country general managers in Europe and Japan to adopt the new product?

Explain your prediction.

3. What changes might MB make in its design in

order to better promote the transfer of new prod-

ucts across national borders?

TRANSFERRING INNOVATION ACROSS NATIONAL

BOUNDARIES

Imagine entering a hospital for treatment of a medical condition only to come

down with a far more serious, perhaps even life-threatening disease caused by

that very treatment.30 That, unfortunately, is an increasingly common experience

in hospitals located in the United States and elsewhere. The culprit is often an

infection transferred to the patient through a tainted “injectable”: that is, a needle,

an IV drip, and so forth. This is known as a sepsis infection: an overwhelming

infection of the blood stream resulting from toxin-producing bacteria (endotoxins).

National health regulatory agencies seek to limit such negative outcomes by

requiring that products intended for injection be tested.

Minnesota Biolabs

Traditionally, tests for sepsis infection were performed on live animals—rabbits,

for the most part—lead to the animal’s death. Minnesota Biolabs (MB) was one

of the companies that supplied rabbits to the producers of injectable devices.

Headquartered in suburban Minneapolis, MB served customers—mainly phar-

maceuticals but also university and private laboratories—in over 20 countries.

Europe was divided into three MB national units, MB-France, MB-Germany, and

MB-United Kingdom. A fourth country unit, MB-Japan, served Asian markets.

Each of those four units—France, Germany, the United Kingdom, and

Japan—was managed by a country general manager. That general manager was

typically left alone to operate his or her unit autonomously. Corporate headquar-

ters set annual growth goals for the units and measured their profit and loss. As

long as the units performed according to those goals, the managers were paid a

bonus and mostly left alone. Strategies, product decisions, and acquisitions were

determined by corporate executives in the States and communicated to these country managers.

MB’s CEO frequently said that he liked this approach to management

because it delineated clear lines of authority and responsibility. Country manag-

ers also preferred this autonomy. They were allowed, they believed, to decide on

local strategies that best served their customers while maintaining good relation-

ships with the national regulatory agencies to which they needed to respond.

MB’s exceptional history of sustained, profitable growth reinforced the belief of

managers that this was a well-designed organization. The Search for an Alternative Test

In the early years of the 21st century, MB began to look for an alternative method

of testing for sepsis infection in injectable products. As animal rights became

increasingly important,MB sought a methodology that would leave the animals

alive. Because most of MB’s growth over its history had come from acquiring

other businesses and integrating their products into the company’s offering, that

is what MB executives sought to do now.

An opportunity arose when a small, Rhode Island-based company received

government approval for a test known as Sepsis Detection Test (SDT). Instead of

conducting tests in live rabbits, SDT used blood extracted from horseshoe crabs

for the tests. After extraction, the crabs were returned to the ocean where they

were able to regenerate lost blood. MB purchased the company, and horseshoe

crab-based testing quickly became the standard for the United States. In addition

to leaving test animals alive, SDT was both less costly and more profitable for

MB than the previous rabbit tests.

After several years of rapid growth in its home market, MB executives

urged country general managers in Europe and Japan to move from rabbit-based

tests to SDT. At the annual strategy meeting in Minneapolis, corporate execu-

tives presented the business case for SDT and urged the country general manag-

ers of MB-France, MB-German, MB-United Kingdom, and MB-Japan to switch

over their product line. The country general managers agreed to move forward

as quickly as possible.

Pg 89

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