MBA501 - MHS Case Study: Dynamic Strategy & Disruptive Innovation

This case study delves into Millennium Health Sciences (MHS), analyzing its dynamic strategies and disruptive innovation capabilities. It examines MHS's internal structure, highlighting the top-down management approach and competition between business units, offering recommendations for ad...Read More

DYNAMIC STRATEGY AND DISRUPTIVE INNOVATION
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Table of Contents
Introduction......................................................................................................................................3
A. Internal perspective.....................................................................................................................3
B. External perspective....................................................................................................................4
C. Marketing perspective.................................................................................................................5
D. Technology perspective..............................................................................................................6
Conclusion.......................................................................................................................................7
Reference List..................................................................................................................................8
Reference List..................................................................................................................................8
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Introduction
In this highly competitive and changing business environment, ability of an organisation to make
scope for implementation of new strategies has become crucial. Dynamic strategies therefore,
help in responding to such changes. This study emphasises on Millennium Health Sciences
(MHS) where there is need for applying dynamic organisational innovation.
A. Internal perspective
Analysis
From the given case study, it has been analysed that there are basically two business units within
MHS, each of which is headed by a General Manager. These managers in turn are responsible for
reporting to the CEO and Board of Directors. General Managers of Neutrino and Dermatech
have been provided with autonomy and are therefore, required to strictly supervise and control
these two business units. Considering these roles and responsibilities, it can therefore, be
mentioned that internal structure of this organisation is much like “top-down”. This means every
decision regarding selection of projects or appraisal within this organisation are to made by GMs
along with the senior executive team of two business units, then flow down towards the lower
level (Banks et al. 2016).
In accordance with the ideas of Bronzini and Piselli (2016), top-down approach of management
prioritises imperatives as well as vision of the upper management. This approach has
furthermore, been considered to be beneficial as it unifies an organisation in terms of one
purpose, direction and standard. On the contrary, Uhl and Gollenia (2016) argued that this
approach de-emphasizes on passive employees. This indicates that employees without power or
ownership have no scope for forecasting creativity.
MHS supports a culture where senior executives are directed to come up through ranks. For this,
most of the executives have been analysed to be having an extending working period. Average
age of the overall senior executive committee is 53 years with the next leadership close to this
age. From a different perspective, it is the fact that in case an individual has performed any
specified tasks for quite a long time then, he or she is likely to be a better match for a similar
position (Spieth and Schneider, 2016). However, the situation within MHS is contrasting with
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only experience gathered while in this organisation is considered to be the only criteria for
promotion.
In spite of the fact that top-down organizational structure assures unity of command and
subsequently better avoidance of confusion during the crisis however, when it comes to
competing for resources, internal conflict can turn out to be significant (Alley, 2017). The case
study has revealed two business units of MHS compete with each other for availing the most
appropriate resources required for business operations. Although the management supports this
as this is assumed to be competitive. As per the case study, MHS has been providing its
shareholders with dividends since ten years even during years of low profit. Reason behind this
is that the new CFO of MHS believes in maintaining a better relationship with every shareholder.
Contrarily, the Board along with the executive committee has found this to be risky as there are
chances of spreading wrong message and consequently reduced share price.
Recommendation
For an employee to successfully survive in such a competitive working culture, it is
recommended to acquire relevant capacity of adapting to changes. Besides, keeping a track of
own performance is of equal importance. This is due to the reason that performance review helps
in fostering an effective line of communication in between every level of the organisational
hierarchy. Considering the persisting issue related to paying off dividends, it is recommended to
the higher hierarchy of MHS to first adopt a dividend policy which would help in securing the
investment. Teece (2018) further added that this policy in turn would convey message about
financial health along with future prospects based on which, other alternatives to retain
relationship with shareholders needs to be opted for in case of crisis.
B. External perspective
Analysis
As opined by Spieth and Schneider (2016), external factors which affect a business can be
related to economic situation, legal factors, customer demands and surrounding infrastructure.
These factors are not under the control of the organisation. Therefore, in order to encounter these
factors, it is desirable for the business to opt for an effective marketing plan. Economic situation
related factors have been analysed to be relevant with the given case study. This is because there
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is uncertainty related to paying off a certain amount of dividend from profits of MHS. Dividends
are a sum of money which is paid to shareholders on a regular basis (Kempf et al. 2016). In spite
of the fact that regular dividend might end up giving scopes for high-potential long-term R&D
projects however, MHS often witnesses years with lower levels of profitability with direct
impact on paying off dividends. This situation for a prolonged time is likely to affect innovative
capacity of MHS.
Recommendation
It is advisable for MHS to opt for “regular dividend policy” and make an agreement with every
shareholder beforehand. This is because under this policy, MHS would have to pay a certain
amount from profit to shareholders. Moreover, in case of very high profit, the excess amount
would not be distributed to them and would rather be withheld internally as retained earnings
(Foss and Saebi, 2017). MHS on adopting this type of dividend policy is also estimated to
witness stable earnings besides a steady cash flow. Moreover, this recommendation would likely
to lead this organisation towards low-risk investment with regular mode of dividend payments.
C. Marketing perspective
Analysis
The first business unit of MHS, Neutrino manufactures vitamins and supplements. R&D of this
unit is recognised for its in-depth and accurate research besides commercialising herbal extracts.
This Adelaide-based R&D centre have recently developed as well as marketed a new skin
vitality enhancing product that can be orally administered. The Poseidon product range is
expected to generate revenue of $350 million from 2023. However, a synthetic version of the
main active ingredient of Poseidon, seaweed extract has been developed are furthermore, applied
for seeking patent. This has been opposed by some who believes this process need to be a secret
trade. On the contrary, Visnjic et al. (2016) argued that transparency is essential to build trust
and make every associated stakeholders feel that they are under high ethical standards.
Being a R&D-driven company, marketing teams of MHS are expected to go beyond
conceptualisation and development of products. However, most of the marketing staffs of this
organisation are from microbiology and pharmacology background for which, the two marketing
teams are required to work separately. The process of marketing within MHS is such that depth
insights of the market are recorded by this team followed by presenting this report during
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monthly marketing meetings. Sales teams of both the business units the approach same
customers. However, most of the customers are still unaware of the fact that these two businesses
are a part of MHS thereby depicting lack of coordination. It therefore, needs to be the
responsibility of GMs to work together and contribute towards integration, balance and tinning
(Bronzini and Piselli, 2016).
In context to demands from customers, it can be mentioned that although several products of
MHS are available in the market however, it is uncertain that doctors would recommend such to
care users. This is also applicable for skin care clinics and specialised beauticians as there were
instances of unnecessary duplication. In regards to this, the Neutrino Head of R&D cleared out
that a trainee lab technician of Dermatech has revealed existence of this project. However, the
Dermatech business unit denied this thereby making it difficult for the senior executives of MHs
to progress altogether as a company. As opined by Alley (2017), internal conflicts cause delay in
production which makes customers waiting. Customers waiting for a long time become
dissatisfied and opt for alternatives.
Recommendation
MHS is recommended to clarify the root cause behind conflicts with aim to end up every
instance of internal conflict. For this, a written action of plan is required where what needs to be
done to resolve internal conflict would be described (Davis and Smith, 2018). Presence of
examples of different probable internal conflicts would furthermore, prove to be beneficial for
MHS. This is commented based on the consideration that the action plan would make it easy for
the employees of both the business units to identify characteristics of situations which can end up
in conflict. Summarising areas of disagreement and agreement is furthermore, expected to reduce
this internal factors such that external business factors can be facilitated for overall progress and
growth.
D. Technology perspective
Analysis
Innovative process of MHS to be mentioned in accordance with this perspective is that of the
R&D operation and joint venture of Dermatech. Reason behind this is that export markets of this
business unit are operated by distributors in presence of the marketing manager. Besides,
collaboration of several similar companies has fostered development a new R&D centre in
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Singapore. This turned out to be huge success as the Singapore Government is promoting these
types of investments. With this, the CLEO product range of Darmetech flourished and customers
are willing to pay premium price for such.
Recommendation
In order for a process to enhance innovative capacity of an organisation, it is highly desirable to
support both inbound as well as outbound innovation (Li et al. 2019). For instance, inbound
innovation would encompass around sourcing and acquiring relevant expertise whereas outbound
would ensure efficient commercialisation. Similarly, this would make it easy for MHS to scan
the external environment where products of both Neutrino and Dermatech would be launched. At
the same time, this would also enable MHS to opt for technology that would facilitate selling of
every product directly to customers with options for them to give feedback.
Conclusion
From the discussions made above, it can be concluded that dynamic business strategies and
processes are essential providing potential opportunities for growth and innovation. Top-down
management approach has been analysed in MHS with specified roles for everyone within the
organisation hierarchy. However, there are several business gaps which requires for dynamic
strategy to deal with internal conflicts and attain a certain level of coordination.
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Reference List
Alley, R., (2017). Internal conflict and the international community: wars without end?.
Abingdon: Routledge.
Banks, G.C., Pollack, J.M. and Seers, A., 2016. Team coordination and organizational routines:
bottoms up–and top down. Management Decision, 54(5), pp.1059-1072.
Bronzini, R. and Piselli, P., (2016). The impact of R&D subsidies on firm innovation. Research
Policy, 45(2), pp.442-457.
Davis, M. and Smith, J.P., (2018). Recovery and Beyond: Dealing With Triggers and
Setbacks. Trauma-Informed Approaches to Eating Disorders, p.313.
Foss, N.J. and Saebi, T., (2017). Fifteen years of research on business model innovation: how far
have we come, and where should we go?. Journal of Management, 43(1), pp.200-227.
Kempf, E., Manconi, A. and Spalt, O., (2016). Distracted shareholders and corporate actions.
The Review of Financial Studies, 30(5), pp.1660-1695.
Li, X., Gagliardi, D. and Miles, I., (2019). Innovation in R&D service firms: evidence from the
UK. Technology Analysis & Strategic Management, 31(6), pp.732-748.
Spieth, P. and Schneider, S., (2016). Business model innovativeness: designing a formative
measure for business model innovation. Journal of business Economics, 86(6), pp.671-696.
Teece, D.J., (2018). Business models and dynamic capabilities. Long Range Planning, 51(1),
pp.40-49.
Uhl, A. and Gollenia, L.A. eds., (2016). A handbook of business transformation management
methodology. Abingdon: Routledge.
Visnjic, I., Wiengarten, F. and Neely, A., (2016). Only the brave: Product innovation, service
business model innovation, and their impact on performance. Journal of Product Innovation
Management, 33(1), pp.36-52.
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