Analysis of McKesson Corporation's Challenges and Proposed Changes

This report provides an analysis of McKesson Corporation, an American company focused on pharmaceutical distribution, health information technology, and care management tools. It begins with an overview of McKesson's background, including its establishment in 1833 and its substantial revenue. The report identifies key challenges faced by the organization, such as the rising costs in the healthcare industry and mismanagement in operations. It proposes changes, including cost-cutting strategies like employee reductions and selling excess inventory. The potential benefits of these changes, such as improved operational income and reduced costs, are also discussed. The report considers potential obstacles to the changes, such as employee resistance. Finally, it concludes that McKesson can improve its product development processes through cost-cutting measures.

Running head: BUSINESS MANAGEMENT
BUSINESS MANAGEMENT
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Introduction
The management of organizations helps in improving the position of the business in the
international markets. The discussion will be focused on understanding the background of
McKesson Corporation and the challenges that are faced by the same. On the other hand, the
discussion also enumerates the different changes that might be undertaken by the same in order
to mitigate the challenges. The different resistances that might be faced by the organization while
undertaking the changes is also enumerated.
Background of McKesson
The concerned company, McKesson Corporation, is an American company that aims at
distributing pharmaceutical products and undertakes systems relating to health information
technology and care management tools. The organization came into existence in the year 1833
and thereby undertook different innovative methods in order to sustain in the competitive
markets. The revenues of the organization were around $198.5 billion computed by the end of
the fiscal year 2017 (Nenni, Giustiniano & Pirolo, 2014). It portrays the sustainable functioning
of the business in the competitive markets. The organization is aimed at providing extensive
network infrastructure for the health care industry.
Challenge faced by the organization
The growing needs of the healthcare industry in providing economic medical facilities to
the patients is one of the major challenge that is faced by the organization due to rising cost of
the raw materials (Khanna, 2012). Exorbitant rise of the drug prices has affected the
development of the pharmaceuticals, which is based on the assessment of the diverse needs of
the patients. The accounting, inventory and operations management departments of the

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organization are held responsible for the mismanagement of stock intakes. On the other hand, the
over- staffing has affected the organizational capabilities of providing payrolls to the employees.
Recommended change
The organization might undertake different cost cutting strategies relating to the
reduction of employees and thereby undertaking lean management procedures. Reduction in the
number of employees and thereby undertaking recruitments of skilled or semi- skilled workforce
will be helping the organization in enhancing the operations of the same. The organization might
also consider on selling out excess inventories and stocks in order to support the innovative
approach as per the healthcare needs of the patients. On the other hand, the organization might
also undertake steps to bring forth modifications in the payroll operations.
Changes People responsible Time frame
Employee reductions HR department of the
organization
2- 7 weeks
Selling off excess inventory Inventory manager 1- 4 weeks
Reductions in the payroll Accounts department 3 – 4 weeks
Potentiality of the changes
The change will be helping the organization in minimizing the different costs that are
incurred by the organization due to Retaining the skilled workforce and thereby cutting off the
employment of rest of the employees will be helping the organization in minimizing the costs
and thereby facilitate the improvements in the product development processes (Adamo et al.,

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2016). On the other hand, the reduction in the costs through selling off the unused machinery
will be helping the organization in enhancing the operating income of the same.
Obstacles to the changes
The organization might face a considerable amount of challenge from the side of the
employees while implementing the change in the organizational structure, as large number of
employees might be terminated in the process of the change. The change might affect the interest
of the stakeholders, which might result to resistances (Schuhmacher et al., 2013). On the other
hand, the identification of the assets that might be sold by the organization in order to facilitate
the smooth functioning of the processes is based on assumptions, which might not correlate to
the real situation.
Conclusion
Therefore, from the above discussion it can be concluded that McKesson Corporation
might bring forth changes in the product development process through cost cutting. The
discussion enumerates the issues that are faced by the organization and the manner in which
changes can be promoted for sustainable operations of the business.

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References
Adamo, A., Beingessner, R. L., Behnam, M., Chen, J., Jamison, T. F., Jensen, K. F., ... & Stelzer,
T. (2016). On-demand continuous-flow production of pharmaceuticals in a compact,
reconfigurable system. Science, 352(6281), 61-67.
Khanna, I. (2012). Drug discovery in pharmaceutical industry: productivity challenges and
trends. Drug discovery today, 17(19-20), 1088-1102.
Nenni, M. E., Giustiniano, L., & Pirolo, L. (2014). Improvement of manufacturing operations
through a lean management approach: a case study in the pharmaceutical
industry. International Journal of Engineering Business Management, 6, 24.
Schuhmacher, A., Germann, P. G., Trill, H., & Gassmann, O. (2013). Models for open
innovation in the pharmaceutical industry. Drug discovery today, 18(23-24), 1133-1137.