CAPSTONE PAPER

CAPSTONE PAPER
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CAPSTONE PAPER
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Capstone Paper
Tylecia Westbrook
Walden University
MMSL 6905
Dr Marilys de Long Taylor
July 8, 2022
Capstone Paper
The research question: How do organizational leaders contribute
to continuous learning, research, and development to facilitate
effective change implementation?
Change has become a common issue in today's firms. Various
variables are transforming the corporate world's landscape,
including additional technology, acquisitions to downsizing,
and other changes, all of which necessitate firms to implement
change processes or risk becoming obsolete (Suh, 2021). Thus,
it can be said that the change process is driven by external and
internal causes, which necessitate the need to adapt to new
methods of doing things. Every time a new paradigm shift
occurs, organizations find themselves in an epoch of paradigm
shift when a set of assumptions that had previously been

regarded as the standard are no longer relevant. Since the
marketplace is continually evolving, firms need to devise
strategies and frameworks that may keep them on top of their
game.
The success of any change in the organization is achieved when
the top management is change leaders, especially the CEO that
is expected to create an environment favorable to facilitate the
adoption and implementation of change (Patfield et al., 2021).
In this research, more focus is directed towards evaluating how
the top executive management creates an environment for
change by considering adopting education learning and research
as the framework necessary always to prepare the employees
ready to comfortable to agree and support changes.
I hope to accomplish the perspective that executive leaders
should be change-oriented and open-minded, ready to bring new
energy to the organization on a continuous basis by funding
research, education, and learning that ensures that the
employees are competitive (Swain, 2019). I target researching
about the leadership qualities that the CEO has to have to
deliver the best guidance to the junior staff in the organization
that eases the adoption of new technology changes or any other
changes and achieves success. Every change brought to an
organization aims to improve processes, follow market trends,
and remain relevant and competitive in the industry.

References
Patfield, S., Gore, J., & Harris, J. (2021). Shifting the focus of
research on effective professional development: Insights from a
case study of implementation. Journal of Educational Change.
https://doi.org/10.1007/s10833-021-09446-y
Suh, B. (2021). Workplace learning: how to build a culture of
continuous employee development. The Learning
Organization, 28(4), 457-459. https://doi.org/10.1108/tlo-05-
2021-269
Swain, P. (2019). Organizational learning: developing leaders to
deal with continuous change ‐ a strategic human resource
perspective. The Learning Organization, 6(1), 30-37.
https://doi.org/10.1108/09696479910255693
Sample Paper - Merck PharmaceuticalExternal Environment
Daft defined external environment as the group all the
factors that have an indirect or direct, either short-term or long-
term impact on the company’s operations in a specific industry
or in the overall market.[footnoteRef:1] External environment
analysis enables strategists to understand upcoming
opportunities and prevalent threats in a specific sector which
directly impact specific organization in terms of
competitiveness, performance, and brand value. [1: Daft, R.L.,
& Armstrong, A. (2015). Organization theory and design (3rd
ed.). Toronto, ON: Nelson Education. ]
Table 1. External Factor Evaluation (EFE) matrix of Merck
Key External Factors
Weight

Rating
Weighted Score
Opportunities
Increased global healthcare expenditure
0.1
3
0.3
Aging global population
0.1
3
0.3
Increasing chronic illness patients globally
0.1
2
0.2
Global supply chains expansion
0.02
2
0.04
Advance tech for clinical trials & patient monitoring
0.1
4
0.4
Increasing industrialization
0.1
2
0.2
Collaboration for R&D, and production
0.15
4
0.6
Threats
Corporate tax rate & import duties
0.05

2
0.1
Increasing generic competition
0.1
3
0.3
Patent litigations0.
0.02
2
0.04
Uncertainty in supplier & distribution channels
0.03
2
0.06
Trade restrictions
0.03
3
0.09
Government & policy restrictions on pricing
0.1
4
0.4
Total
1
3.03
Source: self-made according to EFE guidelines from David text
David text explains how organizations either act defensive
to react or adapt aggressively through strategy formulation,
giving them the early mover advantage while mitigating
possible risks.[footnoteRef:2] External environment can be
broadly divided into five categories: economic; socio, cultural,
demographic, and natural environment; political, government,
and legal; technological; competitive forces.[footnoteRef:3] All
aforesaid factors create definite set of opportunities and threats
for any business operating posing a significant impact on the

business performance. Table 1 above, enlists some of the major
opportunities and threats posed against Merck from its external
business environment, computed through External Factor
Evaluation (EFE) framework. Thus, for Merck to succeed, it
should actively analyze the external business environment and
adapt accordingly, in order to maintain its leading position in
the industry ahead of aggressive competitors. [2: David, F. R.,
& David, F. R. (2013). Strategic management: Concepts and
cases: A competitive advantage approach. Pearson.] [3: David,
F. R., & David, F. R. (2013). Strategic management: Concepts
and cases: A competitive advantage approach. Pearson.]
Industry Sector
By nature, biopharmaceutical sector is highly capital
intensive and regulated industries with an aggressive investment
towards drug discovery and development. It was estimated
about $190 billion was spent by global pharma companies
towards R&D alone in 2019 which is expected to spur by 10-
20% in next five years. However, increasing cases of anti -
microbial resistance (AMR) is posing an immediate threat to all
the drug discovery firms globally who are now finding ways to
discover antibodies to fight the superbugs caused because of
AMR. According to a report by the National Health Institute,
the CDC estimated that the cost of antimicrobial resistance is
$55 billion every year alone in the United States where $20
billion for health care and about $35 billion is for loss of
productivity.[footnoteRef:4] If AMR could cost the US alone an
additional spending of $55 billion, its impact across Europe,
Asia, Latin America and Oceanian nations is
unknown[footnoteRef:5] indicting an immediate emergency.
Under such world circumstances, Merck as one of the top
biopharma companies in the world has partnered with various
health institutes and the WHO in combating the adverse impact
due to AMR by conducting partnered research through AMR
Action Fund,[footnoteRef:6] thereby indulging in a sustainable
competition. [4: Dadgostar P. (2019). Antimicrobial
Resistance: Implications and Costs. Infection and drug

resistance, 12, 3903–3910.
https://doi.org/10.2147/IDR.S234610] [5: Chen, H. H.,
Stringer, A., Eguale, T., Rao, G. G., & Ozawa, S. (2019).
Impact of antibiotic resistance on treatment of pneumococcal
disease in Ethiopia: an agent-based modeling simulation. The
American Journal of Tropical Medicine and Hygiene, 101(5),
1042-1053.] [6: Merck & Co. (2019, October 1). Working
together to create a sustainable market for antibiotics. Retrieved
from: https://www.merck.com/stories/working-together-to-
create-a-sustainable-market-for-antibiotics/]
As a pioneer in the oncology and developing vaccines,
Merck today has its basket full of blockbuster cancer treating
drugs such as Keytruda, Gardasil & MMR-II raising tens of
billions in annual revenues since 2017. Merck, from time-to-
time has involved itself in mergers and acquisitions
strengthening its global position by catering to specific needs of
various international markets such as Japan, Europe, and China.
Some of the preeminent M&As such as acquisition of Sharp &
Dohme in 1953, merging with Schering Plough in 2009, selling
blockbuster drugs such as Clarinex, Claritin, Vytorin, and
Temador for brain tumor led to the unprecedented journey of
Merck in both US and international markets. With the recent
acquisition of Peloton Therapeutics, Immune Design, and
Themis show that Merck is taking a different approach in
building its business by converting itself into a pure science-
based research organization. Under such strategic imperative,
Merck has also announced its new spinoff of its trusted legacy
brands, biologics, and women healthcare units into a new
company called as Organon & Co., which is expected to
complete by 2021.[footnoteRef:7] In addition, since December
2019, world is startled by the newly discovered SARS COV-2
virus causing millions of deaths globally. Merck announced its
active developing process of two vaccine candidates for fighting
COVID-19 along with an oral antiviral drug[footnoteRef:8]
which is expected to set Merck’s market share at par from many

of its competitors. With such wider portfolio of research
candidates in its pipeline, Merck is all set to compete expecting
to secure increased market share. Having said that, its prime
competitors such as Pfizer, Johnson & Johnson (JNJ),
GlaxoSmithKline (GSK), AbbVie, Abbott, Roche, Sanofi, and
Novartis are also globally established organizations actively
competing for increased market share, in turn challenging
Merck’s quest for developing breakthrough drugs in order to
survive and succeed in the fierce competition. [7: Merck & Co.
(n.d.). Merck 2019 Annual Review. Retrieved from:
https://s21.q4cdn.com/488056881/files/doc_financials/2019/q4/
2019-Form-10-K-Final.pdf] [8: Merck & Co. (2020). MSD
2019-2020 Corporate Responsibility Report. Retrieved from:
https://www.msdresponsibility.com/access-to-health/vaccines/]
Raw Materials Sector
Figure 1. API suppliers for US pharma
Data Source: Center for Drug Evaluation and Research, US
Food and Drug Administration
Pharma industry serves markets across the globe by procuring
raw materials from all the four corners of the world. Developing
economies such as India and China are growing to be the top
providers of APIs for most of the US pharma companies
marketed drugs. As shown by figure 1, most of the API
manufacturing facilities are located in the US, Europe, India,
and China majorly procuring raw materials from respective
economies. Merck operating in more than 125 world countries
has major manufacturing setups in China, India and the US
procuring solvents, APIs, and intermediate drugs explicitly from
India and China. Merck develops, produces, and sells drugs and
vaccines to patients both in the US and international markets,
thus, mandates all of its suppliers to follow prescribed supplier
code of conduct.[footnoteRef:9] Merck’s supplier code of
conduct and policies are in line with those of the US FDA
mandated US Current Good Manufacturing Practices (CGMPs)
ensuring the quality and useability of the procured

materials.[footnoteRef:10] Having such norms in place makes
Merck to actively seek suppliers who have an ability to abide
those rules by providing raw materials efficiently both in terms
of quality and quantity. It further restricts firm’s ability to
direct raw material suppliers wholly to act according to only
one’s interest thus inducing healthy competition in the system.
Aspects such as forecasting, producing, accessibility, access,
and pricing to resources also govern companies to choose their
supplier partners as in case of Merck. [9: Merck & Co. (n.d.).
Company Overview: Suppliers. Retrieved from:
https://www.merck.com/company-overview/suppliers/] [10:
United States Food and Drug Administration. (n.d.). Guidance
and Manuals on Pharmaceutical Quality. Retrieved from
https://www.fda.gov/drugs/pharmaceutical-quality-
resources/guidances-and-manuals-pharmaceutical-quality]
According to their corporate website, Merck commits itself to
empower its suppliers mix through diversity and inclusion
policies in place. Pharmaceutical supply chain (PSC) is one of
the most complex and continuously changing supply chains in
the industry because drug usage is quite unpredictable. The
National Institutes of Health, US (NIH) data shows that due to
lack of optimum target inventory, high Supplychain costs, and
inaccuracy in forecasting are some of the major problems that
create drug shortages.[footnoteRef:11] Under such
circumstances, Merck tries to minimize its costs by procuring
major raw materials from Asia followed by the US and Europe.
Merck also active in leveraging science to create supply chain
solutions where it has digitally transformed its manufacturing
facilities by using predictive control monitoring and lab
monitoring technologies. With the Restructuring Program since
2016, Merck has invested about $2 billion in transforming its
production into a real-time data driven global supply chain.
Establishing environment friendly factory setup as well as
technologically advanced packing systems are some of the
initiatives taken by Merck in order to adapt to increasing

demand of drugs due to external changes in the business
environment. [11: Moosivand, A., Rajabzadeh Ghatari, A., &
Rasekh, H. R. (2019). Supply Chain Challenges in
Pharmaceutical Manufacturing Companies: Using Qualitative
System Dynamics Methodology. Iranian journal of
pharmaceutical research : IJPR, 18(2), 1103–1116.
https://doi.org/10.22037/ijpr.2019.2389]
Human Resources Sector
One of the core values of Merck includes ‘respect for its
people’ according to their corporate website which portrays
Merck’s commitment towards its partners.[footnoteRef:12]
Human resources are crucial in the pharma sector as expertise
makes a difference in the performance of a specific
pharmaceutical organization. Merck is a registered federal
lobbyist in the US committing to assist federal government in
drafting regulations promoting public health policies and drug
discovery processes.[footnoteRef:13] Apart from the science of
discovery, Merck is also known worldwide for its drug manual
that encloses various medication procedures along with drug
usage effects in long-term, known as Merck Manual, widely
used medical reference across the globe. Merck’s handbook
focuses explicitly on conduct and behavioral policies for every
person connected with the company including the executives,
employees, suppliers, and other stakeholders. According to the
CEO, Ken Frazier, skilled workforce is the prime driver of
Merck succeeding in both R&D and manufacturing abilities.
Merck is referred as one of the best workplaces to work in the
US, voted by worldwide employees as the culturally strong
organization, according to their corporate sustainability report,
2019. Merck’s executives insist employees on actively
challenging themselves inside the business processes, boosting
work ethic and morale for wider development of skills. All in
all, aforesaid practices mark Merck’s ability to uti lize human
resources for attaining an advantage over competitors for
effective global market performance. [12: Merck & Co. (n.d.).
Company Overview: Mission, Vision & Values. Retrieved from:

https://www.merck.com/company-overview/
] [13: Scutti, S. (2019, January 24). Big Pharma spends record
millions on lobbying amid pressure to lower drug prices. CNN.
Retrieved from: https://www.cnn.com/2019/01/23/health/phrma-
lobbying-costs-bn/index.html]
Financial Resources Sector
Merck reported annual revenues of about $40.3 billion,
$42.3 billion, and $ 46.9 billion in 2017, 2018 and 2019 years
respectively[footnoteRef:14] which show the unlikely impact of
foreign currency exchange rates as well as one-time tax
liabilities to be fulfilled in both the US and other global
locations. Merck along with obstacles from R&D, is also posed
with hindrances from federal government for price reduction in
the US as well as major global markets such as China, Japan,
and Europe. Merck has limited its price increase to less than
10% every year in the US beginning from 2020 after the policy
makeover by the Trump administration.[footnoteRef:15] Merck,
in order to sustain its global position began formulating strategy
by turning itself into a research-based organization by spinning
off slow growing units of trusted legacy brands, biosimilars,
and women healthcare products into Organon & Co., by first
half of 2021. Merck realizes blockbuster revenues from sales of
Keytruda, Gardasil, MMR-II, Pneumovax, Clarinex, Emend, and
Lynparza.[footnoteRef:16] Nevertheless, with growing generic
competition, Merck has secured its place by getting approval for
more than 20 drugs along with many combination treatments of
Keytruda. It can be noted that Merck is all set to drive away the
generic competition by stronger drug portfolio and R&D
pipeline by building up counteractive strategies and operating
long-term sustainability. [14: Merck & Co. (n.d.). Merck 2019
Annual Review. Retrieved from:
https://s21.q4cdn.com/488056881/files/doc_financials/2019/ q4/
2019-Form-10-K-Final.pdf] [15: Financial Post. (2020,
January 03). Novartis, Merck, and Allergan join those raising
U.S. drug prices for 2020. The Financial Post. Retrieved from:
https://financialpost.com/pmn/business-pmn/novartis-merck-

and-allergan-join-those-raising-u-s-drug-prices-for-2020] [16:
Merck & Co. (n.d.). Merck 2019 Annual Review. Retrieved
from:
https://s21.q4cdn.com/488056881/files/doc_financials/2019/q4/
2019-Form-10-K-Final.pdf]
Market Sector
By selling drugs and vaccines in more than 140 nations
with 280 global locations, Merck absorbs its revenues from all
five continents in both human and animal health sectors.
Merck’s international revenues rose to more than 50% mainly
from 2011 and continues through 2019. Merck had international
revenues of about 56.6% in 2019, 56% in 2018, and 56.5% in
2017 with China, Japan, and Europe as major single markets.
With 144 external manufacturing facilities globally, 35
corporate alliances, and 98 regional alliances, Merck provides
access internationally to its drugs, vaccines, and health services
especially in the US. It was estimated that global pharma was
$1.25 trillion for 2019 fiscal which is expected to raise with
CAGR of 6-8% in next five years of which prescription drug
market is forecasted to reach $1.5 trillion. With such growth,
Merck is all set to be the leading biopharmaceutical companies
for catering growing demand in the coming years acquiring
increased market share.
Figure 2. Market forecast for branded drugs[footnoteRef:17]
[17: Waters, R. & Urquhart, U. (2019). World Preview 2019,
Outlook to 2024. Evaluate Pharma. https://info.evaluate.com/]
Technology Sector
Merck over years is known to be a pro in implying
technology for boosting its operational performance as well as
drug discovery. Merck’s worldwide research and development
division known as Merck Research Laboratories, operates and
collaborate within some of the leading bio-pharma ecosystems
including the San Francisco Bay area, California;
Boston/Cambridge, Massachusetts; New Jersey; Pennsylvania
and Canada.[footnoteRef:18] Main areas of research by Merck

include oncology, vaccines, infectious diseases, cardio-
metabolic disorders, neuroscience along with separate division
for COVID-19. As part of its restructuring program since 2016,
Merck is transforming its manufacturing into digital and
interconnected network driven by real-time demand for drugs
and vaccines. Merck is also known for its exclusive 3D printing
development facilities explicitly working on tissue cultures, cell
responses, and designing specific manufacturing models for
expedite production. Merck also advances itself by investing in
AI, and cloud computing along with data analytics for efficient
patient monitoring and clinical trials data and analysis. Merck
also has designed Merck Global Health Innovation (GHI) Fund
where it invests in change creating firms aimed at extravagant
solutions in the healthcare industry. [18: Merck & Co. (n.d.).
Research and Products. Retrieved from:
https://www.merck.com/research-and-products/]
Economic Sector
Operating globally, Merck has significant impact from
global economy as a whole as well as individual economies such
as the US, China, Japan, and Europe. With the global pandemic
since early 2020, alternative spending has come down while
expenditure on expedited research for COVID has gone up.
Thus, along with inflation and interest rates, foreign exchange
fluctuations, GDP, economic cycles of respective nations,
pandemic is also affecting Merck’s activity. With its far -fetched
product line and vaccines, Merck is still at par in 2020 despite
significant backlash in the market due to pandemic. Merck’s
investment has been significantly growing over years which
accounted for nearly $10 billion in 2019. Data and privacy laws
are pivotal to Merck’s operations as they impact Merck’s
discovery and patent exclusivity. The EU General Data
Protection Regulation, effective since May 25, 2018 along with
the California Consumer Act effective as of January 01, 2020
are some of the strongly impacting economic reforms on
Merck’s operations.[footnoteRef:19] [19: Merck & Co. (n.d.).
Merck & Co 2019 Annual Review. Retrieved from:

https://www.annualreports.com/HostedData/AnnualReports/PDF
/NYSE_MRK_2019.pdf]
In addition, with the enactment of TCJA in 2017, Merck
reported onetime tax payment of $5.5 billion along with
spending $4.5 billion, $1.5 billion, and $4.9 billion, in income
taxes for years 2019, 2018 and 2017 respectively towards
corresponding fiscal year against the income.[footnoteRef:20]
During 2019 and 2018, Merck reported unrealized losses of
about $13 million and $26 million respectively in other
(income) expense, net due to investment with unfavorable
impact of foreign exchange.[footnoteRef:21] Merck also had
favorable impact of 11% from foreign exchange on the whole
despite 3% decrease from foreign exchange in animal health
segment. For developed nations like the US, pharma sector
forms the backbone which accounts for 4% of total GDP.
Operating in such a sophisticated industry, Merck also has
formed alliances for developing focused medicines as well as
acquired companies such as Peloton Therapeutics for breast
cancer drug development, partnering with Samsung’s Bioepis
for biosimilar version of Herceptin against Roche. Thus, Merck
with its focused business activity is trying to maximize its gain
from all its international operations despite varying economies
across the world using cost maximization initiatives. [20:
Merck & Co. (n.d.). Merck & Co 2019 Annual Review.
Retrieved from:
/NYSE_MRK_2019.pdf] [21: Merck & Co. (n.d.). Merck & Co
2019 Annual Review. Retrieved from:
/NYSE_MRK_2019.pdf]
Government Sector
Daft explained government sector as a component of
external environment where political stability, economic
performance, intellectual property rights (IPR), human
resources policies (HR), foreign investment policy, trade policy

and tax reforms, healthcare sector norms, and administrative
policy altogether contribute to an organization’s performance.
Political instability and inflation are major concerns for Merck
while operating in Latin America and African nations with
interference from politicians and bureaucrats. Quality standards
is another major issue for pharmaceutical companies which
imply companies to follow certain specified standards for
conducting business in respective nations. IPR laws are
essential because infringements are definite threat for drug
companies linked to their drug development, marketing and
selling rights. Merck, in 2017 was cyberattacked where its
global network was disrupted which led to interruption of all its
operations globally. Foreign trade and tax regulations are also
other attributes under government which have direct impact on
Merck such as TCJA, Brexit, and norm change under EMA. In
2018, under an act to stop unusual pricing increase in pharma,
President Donald Trump had introduced International Pricing
Index (IPI) model to limit rises across the US seizing the
increase to less than 10% annually. Japan also mandated
biennial price reductions for specific vaccines and drugs in
2020. Hence, Merck seems to continue its pricing and cost
maximization efforts by adapting to the definite policy change.
Sociocultural Sector
Aspects such as demographics, lifestyle, disease patterns,
urbanization, immunity analysis, epidemic history, and disease
history are some of the components that provide understanding
of kind of drugs needed for development in specific nations.
Merck uses this data in conducting and developing novel drugs
addressing the diseases whose usage vastly depends on culture
towards science and medicines as well as government’s
interference in the discovery and approval processes. Market
intelligence equips Merck with focused and unprecedented data
serving R&D and manufacturing activity. Patient empowerment,
changing patient demographics, and increased risk exposure
influence Merck’s development procedures which evolve on a
periodic basis. Moreover, Merck is also committed to serving

global population by working very near to attain UN SDGs by
focusing at SDG-3,SDG-5, SDG-6, SDG-7, SDG-8, SDG-12,
SDG-13, and SDG-17 by 2030.[footnoteRef:22] Merck is well-
known for its Vioxx scandal in which its anti-steroidal drug was
causing three to fourfold increased myocardial infections such
as heart attack and stroke in patients. Merck has also provided
access to medication across Africa for mitigating river
blindness along with its blockbuster streptomycin, M-M-R II,
and HPV vaccines.[footnoteRef:23] Merck is also in process of
developing two mRNA-based vaccines for SARS COVID-19
along with an oral antiviral drug reported by the
FDA.[footnoteRef:24] Thus, Merck fosters its business action in
line with changing sociocultural attributes attaining maximum
advantage for its sustenance. [22: Merck & Co. (n.d.). MSD
Corporate Responsibility Report: Sustainable Development
Goals (SDGs). Retrieved from:
https://www.msdresponsibility.com/reporting/un-sustainable-
development-goals/] [23: Merck & Co. (n.d.). Company
Overview. Retrieved from: https://www.merck.com/company-
overview/history/] [24: Merck & Co. (2020, September 8).
Biopharma Leaders Unite to Stand with Science. Retrieved
from: https://www.merck.com/news/biopharma-leaders-unite-to-
stand-with-science/]
International Sector
Table 2. Merck’s revenue distribution[footnoteRef:25] [25:
Merck & Co. (2020). Merck 2019 Annual Review. Retrieved
from:
https://s21.q4cdn.com/488056881/files/doc_financial s/2019/q4/
2019-Form-10-K-Final.pdf]
Above table shows Merck’s increasing international
revenues over years with skyrocketing sales of Lenvima and
Keytruda. Merck reported $46.84 billion sales in 2019 of which
only 44% was from the US while the rest 56% from foreign
markets. Foreign revenues accounted only 30% for Merck

during previous decade which saw a significant raise in 2011
through 2019 with China, Japan, and Europe as major outside
markets. Global demand is expected to rise specially from the
pharmerging markets, as coined by the WHO. IQVIA along with
consensus from WHO, characterized pharmerging market as
nation with less than $30k GDP/capita and greater than $1
billion absolute prescription drugs market growth potential
between 2014 & 2019.[footnoteRef:26] China, Brazil, India,
Russia, Mexico, Turkey, Poland, Saudi Arabia, Indonesia,
Egypt, Philippines, Pakistan, Vietnam. Bangladesh, Argentina,
Algeria, Colombia, South Africa, Chile, Nigeria, and
Kazakhstan are termed as pharmerging markets whose growth
potential is rapidly increasing.[footnoteRef:27] With oncology
and cardiovascular diseases as one of its major areas of focus,
Merck is all set to strive in serving raising global demand
retaining its top five position in the world biopharmaceutical
market. [26: Rickwood, S. (2017). Prescription Medicines
Trends: An Overview and Perspective on Two Therapy Areas.
IQVIA. https://www.who.int/phi/2-SarahRickwood.pdf ] [27:
Rickwood, S. (2017). Prescription Medicines Trends: An
Overview and Perspective on Two Therapy Areas. IQVIA.
https://www.who.int/phi/2-SarahRickwood.pdf]
However, in 2018, Trump administration strengthened the
regulatory norms under Foreign Investment Risk Review
Modernization Act (FIRRMA) which expands the scope of the
Committee on Foreign Investment in the United States
(CFIUS)’s watch on foreign investments especially creating
panic among Chinese investors who withdrew their investments
from the US firms.[footnoteRef:28] Following the stringent
norms under FIRRMA, investment in the US pharma has come
down to 30% or less in 2019 and zero in 2020 following the
change in policies as well as hit by pandemic. In order for
Merck to continue its growth in global market, Merck should
utilize its market intelligence and competitive intelligence
teams. As Daft emphasized, any organization irrespective of

industry should seek ways to adapt according to its external
environment for maximizing growth through definite set of
opportunities. Thus, it is mandatory for Merck to actively adapt
to the external business atmosphere and change accordingly in
order to squeeze maximum opportunity leading to increased
competitiveness in the international drug sector. [28:
Congressional Research Service. (2020). CFIUS Reform Under
FIRRMA. Retrieved from:
https://fas.org/sgp/crs/natsec/IF10952.pdf]
Internal Environment
As emphasized by David text, any organization attains
sustainable competitive advantage by exploiting its internal
strengths in adapting to changes in the external business
environment.[footnoteRef:29] Internal audit allows strategists
to design goals and objectives for the organization through the
lens of exploiting its strengths for creating distinctive
competencies. David text provided a framework which can be
applied to Merck and evaluate its current position in holding
effective internal strengths. The Internal Factor Evaluation
(IFE) matrix enlists peculiar characteristics possessed by Merck
which either are promoting its performance or obstructing its
performance given its weaker characteristics. Below table shows
that Merck has weighted score of 3 while assessing all its
internal factors using IFE indicating Merck is comparatively
using its internal factors to succeed among the competitors in
marketplace. [29: David, F. R., & David, F. R.
(2013). Strategic management: Concepts and cases: A
competitive advantage approach. Pearson.]
Table 3. Internal Factor Evaluation Matrix of Merck
Key Internal Factors
Weight
Rating
Weighted Score
Strengths

R&D - capital & pipeline
0.15
4
0.6
Product portfolio
0.1
3
0.3
Financial capital
0.1
3
0.3
Global presence
0.1
3
0.3
Strong organizational culture
0.05
3
0.15
Focused restructuring
0.15
3
0.45
Weaknesses
Loss of patent exclusivity (LOE)
0.15
3
0.45
Drug shortfall
0.1
2
0.2
Reducing working capital
0.05

3
0.15
Supply chain complexity
0.05
2
0.1
Total
1
3Management
Merck ascertained its position serving as one of the
prominent business case studies for management and policy
governance in the industry during late 20th century. However,
Merck had seen denigrating performance early 2000s coupled
with declining sales, product expirations and slow growing
business segments such as consumer healthcare products. With
the leadership transition in 2011 when Richard T. Clark was
succeeded by Kenneth C. Frazier as the CEO, Merck underwent
strategy formulation and began increasing expenditure towards
R&D.[footnoteRef:30] Company achieved several tens of FDA
and EMA approvals since 2010 creating extravagant revenues
through Gardasil, MMR-II, Lynparza, Lenvima, and Keytruda.
[30: Businesswire. (2011, October 06). Merck Announces
Retirement of Chairman and Former CEO Richard T. Clark.
Businesswire.
https://www.businesswire.com/news/home/20111006006018/en/
Merck-Announces-Retirement-of-Chairman-and-Former-CEO-
Richard-T.-Clark]
Strategic management concept emphasizes that there are
five major functions performed by management which include
planning, organizing, motivating, staffing, and controlling. It
seems that Merck’s executive and management team has been
performing these functions on a regular basis which can be
observed through their divestments, restructuring, and business
development activities. Merck today spends an average of $8

billion towards drug discovery and development which was
almost $10 billion in 2019 making the second after
Roche.[footnoteRef:31] Executives at Merck divested their
consumer healthcare unit effective October 01, 2014; they have
also planned major spinoff of women’s healthcare products,
biosimilars, and trusted legacy brands into Organon & Co., a
separate public corporation in order to turn into a focused
organization.[footnoteRef:32] Merck’s ongoing strategic
partnerships with Bayer AG, AstraZeneca, and Eisai for
respective drug development, marketing and selling marks their
executive vision and commitment to building a sophisticated
organization. Operating in a matrix structure, Merck has
effectivecorporate governance policies in place demanding
transparency and value creation as means of organizational
growth. A Harvard study explained how better corporate
governance significantly contributes in achieving long-term
goals as well as in value creation which can be noted through
Merck’s performance. With the diversified 13 Board members
along with 11 managers in executive team, Merck is committed
to its shareholders and serving community by pursuing UN
SDGs. Therefore, creation and provision of blockbuster drugs
and vaccines making a difference in global patients’ lives has
been prime goal of Merck’s management. [31: Merck & Co.
(n.d.). Merck & Co 2019 Annual Review. Retrieved from:
/NYSE_MRK_2019.pdf] [32: George, J. (2020, February 07).
What to expect from new Merck spinoff, according to the CEO.
Philadelphia Business Journal.
https://www.bizjournals.com/philadelphia/news/2020/02/07/wha
t-to-expect-from-new-merck-spinoff-according-to.html]
Marketing
Marketing forms a major share of pie in Merck’s
operations or for any pharma for acquiring market share by
selling more drugs to define markets. Merck reported $10.21
billion, $8.55 billion, and $8.04 billion in selling and
administrative expenses excluding D&A (depreciation and

amortization) in 2019, 2018 and 2017
respectively.[footnoteRef:33] It is estimated that Merck has
spent about $190 million in DTC (direct-to-consumer)
advertising Keytruda as monotherapy for various
immunotherapies in the US. Research shows that infectious and
respiratory disease drug market has grown about 75.84% while
consumer health and vaccines have grown about 76.11%
opening wider opportunities for Merck. According to branding
and marketing agency in the US, Merck and JNJ were in a tie
where both of them spent nearly $14 billion on branding in
2016. [footnoteRef:34] Merck had also spent exclusively $95
million on DTC advertising only in 2019 indicating its
segregation power of financial resources through years. [33:
Retrieved from:
/NYSE_MRK_2019.pdf] [34: Brennan, Z. (2019, July 24). Do
Biopharma Companies Really Spend More on Marketing Than
R&D?. Regulatory Focus. https://www.raps.org/news-and-
articles/news-articles/2019/7/do-biopharma-companies-really-
spend-more-on-market]
Aforementioned aggressive branding has fostered Merck’s
sales for its Gardasil and Keytruda and other products giving
tough competition in the market. Merck’s strengthened
marketing and business development activities has also fostered
its pipeline development boosting its market capitalization
which has increased over 11% by the end of 2019. Global
pharmaceutical sector accounted for $953 billion $1.3 trillion in
2018 and 2019 respectively majorly from oncology,
immunology, diabetes, and cardio-vascular markets. Thus,
Merck gained global market share of 4.44% placing itself as the
world’s fourth largest biopharma firm. Top ten firms in terms of
market share globally were Eli Lilly & Co (2.57%), Bayer AG
(2.84%), AbbVie Inc (3.45%), Sanofi (4.11%),
GlaxoSmithKline (4.19%), Johnson & Johnson (4.27%), Merck

& Co (4.44%), Roche Ltd. (4.69%), Novartis (8.44%) and Pfizer
Inc (5.6%).[footnoteRef:35] Also, in the US in order to regulate
the direct advertising and marketing efforts of the drug
companies, government agencies such as Office of Prescription
Drug Promotion (OPDP; previously known as the Division of
Drug Marketing, Advertising and Communication (DDMAC)
renamed in September 2011) or the Advertising and Promotional
Labeling Branch (APLB) of the FDA Center for Biologics
Evaluation and Research assess and issue warning letter to
respective companies for their misconduct in the
market.[footnoteRef:36] Such issue of warning letters or
untitled letters received by Merck from 2014 through 2020 were
zero showing their unhindered commitment to creating value
while serving patients through their expertise and sciences.
Wall Street analysts estimate that Merck’s Keytruda to be one
of the best-selling drugs creating blockbuster revenues crossing
Humira by AbbVie in sales by 2025.[footnoteRef:37] All in all,
marketing initiatives taken by Merck are imperative in
themselves creating a long-term position for it in the global
markets. [35: Pharmaceutical Technology. (2020, January 24).
The top ten pharmaceutical companies by market share in 2018.
Retrieved from: https://www.pharmaceutical-
technology.com/features/top-pharmaceutical-companies/] [36:
Merck & Co. (n. d.). Ethics & Values: Sales and Marketing
Practices. Retrieved from:
https://www.msdresponsibility.com/ethics-values/sales-
marketing-practices/ ] [37: Hooper, C. L. & Henderson, D. R.
(2020, March 05). FDA Shouldn’t Keep Safe Drugs off the
Market. Wall Street Journal. https://www.wsj.com/articles/fda-
shouldnt-keep-safe-drugs-off-the-market-11585175286]
Production/Operations
Research suggests that pharmaceutical supply chain (PSC) is
one of the most complex supply chains in the industry
globally[footnoteRef:38] with compound production,
distribution, and procurement activities. Merck has its suppliers
all over the world mainly importing APIs and various chemical

solvents from China, India, and Europe. A McKinsey study
shows that 35% of pharmaceutical industry’s profit and loss can
be attributed to their supply chain operations[footnoteRef:39]
which involves a global network of suppliers, contractors,
manufacturing agencies as well as global distributors.
According to corporate responsibility report 2016/2017, Merck
began executing its restructuring program by reducing their
real-estate holding across the globe and digitally transforming
their manufacturing network globally for achieving cost
effectiveness and capacity maximization. [38: Slone, R. E.,
Mentzer, J. T., & Dittmann, J. P. (2007). Are You the Weakest
Link in Your Company’s Supply Chain? Harvard Business
Review, 85(9), 116–127.] [39: McKinsey & Company. (2012,
August 01). Pharma Manufacturing for a New Era. McKinsey &
Company.
https://www.mckinsey.com/industries/pharmaceuticals-and-
medical-products/our-insights/pharma-manufacturing-for-a-
new-era#]
Restructuring in terms of manufacturing is aimed at developing
their external 80 manufacturing sites along with other 20
internal sites coupled with revamping their supplier
collaborations and integrated supply chain.[footnoteRef:40]
Merck is striving to imply Lean and Six Sigma initiatives inside
its global manufacturing network aiming for cost optimization
creating a global competitive advantage. Merck seems handy in
transforming its manufacturing network which today makes
about 10,300 varieties of products that constantly need data to
be synced to a universal network. Merck has already invested
about $3 billion towards reinvigorating its supply chain by
globally integrating its supply-side to real-time data-driven
network in order to prevent product short fall in vari ous global
markets.[footnoteRef:41] Henrik Frojdh, Supply Chain Planning
Lead at MSD, said that the only way Merck saw transforming its
system was by connecting systems as in providing a single-step
solution by integrating demand and supply

chain.[footnoteRef:42] Merck reported that it has allocated over
$4 billion for all its restructuring program which is expected to
be finished by 2023; seems to be intuitive in nature actively
seeking changes to the structure flourishing their future
performance. [40: Lopez, E. (2017, March 3). Why Merck &
Co. turned to supply chain integration to save costs.
Supplychain Dive.
https://www.supplychaindive.com/news/merck-co-supply-
demand-planning-manufacturing-integration/436496/
] [41: Merck & Co. (n.d.). Merck & Co 2019 Annual Review.
Retrieved from:
/NYSE_MRK_2019.pdf] [42: Cheater, A. (2017, February 16).
MSD’s journey to remove silos in its end-to-end supply chain.
Kinaxis. https://www.kinaxis.com/en/blog/ msds-journey-
remove-silos-end-end-supply-chain]
Finance/Accounting
Table 4. Cash assessment of Merck
Above table suggests that Merck has been improving its
cash holding abilities over years especially in terms of working
capital. However, working capital has taken toll due to its
investment towards revamping its manufacturing abilities
through restructuring program since 2016. Cash from operations
is indicating its cost effectiveness initiatives which has
improved over 50% from 2017 to 2019. In comparison with its
peers both Johnson & Johnson (JNJ) and Pfizer, Merck is
relatively in a better position holding on to its assets and cash
performance over years. Its cash receivable turnover ratio of
6.91 ascertains its ability of operating in terms of cash and
efficiency of account receivables. Shareholders equity, on the
other hand, indicates that Merck is relatively on higher side of
accumulating debt given its restructuring and focused business
strategies which are quite capital intensive in nature.
Table 5. Profitability assessment of Merck

Above table presents how Merck is utilizing its financial
resources in outperforming peers by acquiring increased market
share over years. Merck has vastly improved its ROE and ROA
driven by increased sales and net profits mainly because of
Keytruda since its approval in 2017. Merck is also
outperforming its peers in terms of owners’ equity ratio of 3.25
in 2019 when compared to 2.61 of Pfizer and 2.65 of JNJ. Thus,
net profit margin is also increasing over years marking as the
outcome of its stretched research pipeline leading to definite
growth in next few years.
Figure 3. Cashflow performance of Merck[footnoteRef:43] [43:
Retrieved from:
/NYSE_MRK_2019.pdf
]
Research & Development
Figure 4. R&D expenditure trend of Merck and peers
Active and early research and development of novel drugs have
been prime objective under the global strategy of Merck
fostering its commitment to society by providing innovative
medicines for patients across the world. Through active
technological collaborations as well as strategic partnerships,
research candidates of Merck are underway to transform
patients’ lives. Merck is an active partner in AMR Action Fund
which is aimed at research and developing antibodies fighting
the superbugs (AMR).
Figure 4. Merck’s pipeline as of July 31, 2020[footnoteRef:44]
[44: Merck& Co. (2020, July 31). Research & Products:
Pipeline. Retrieved from: https://www.merck.com/research-and-
products/product-pipeline/]
In addition, Merck also actively partners with tech companies

which are committed to create a difference using AI, cloud
computing, data analytics, eClinical trials, and patient
monitoring and analytics platforms. Merck, by far has 1,146
registered patents in 68 countries along with additional 305
protection certificates in 19 nations floating under its brand
sold globally. Below picture shows Merck’s pipeline while it
has also received 19 approvals for various drugs in its pipeline
as of February 2020 from FDA and EMA. Among which
Keytruda alone has about 14 approvals that can be used as both
monotherapy and combination therapies to treat various NSCLC
carcinoma and other types of carcinoma. After three clinical
trials under R&D, Merck also has under review stage where all
its analysis is reviewed for final time by FDA before the
approval and commercialization. Final stage real-world data is
where Merck has their Center for Observational and Real-World
Evidence (CORE) dedicated to understanding how their
medicines are contributing to the functioning of patients in the
real world.[footnoteRef:45] Merck claims the importance of
final stage in the R&D process saying that the crucial nature of
drug as well as any adversities if encountered or any chance of
multi-disease utility is determined in this stage. Merck employs
one-fifth in R&D facilities located in 8 regions across the US,
which also includes their technology-driven labs such as 3D-
tech labs. Being an active member of PhRMA (Pharmaceutical
Research and Manufacturers of America) who spent about $79.6
billion in the US, Merck spent about 21.3% of its total revenues
in the 2019 fiscal year. Hence, over years, Merck has been
imperative in achieving astounding results through early
discovery and owing to sell some of the best drugs in the
industry such as Keytruda. [45: Merck & Co. (n.d.). Research
& Products: Discovery & Development. Retrieved from:
https://www.merck.com/research-and-products/discovery-
development/]

Verizon- Strategic Plan
Points for paper
A) External Environment
(Must include external factor evaluation matrix of Verizon- For
reference you can look provided sample) table 1
· Industry Sector
· Raw material Sector
· Human Resource Sector
· Financial Resource Sector
· Market Sector
· Technology Sector
· Economic Sector
· Government Sector
· Sociocultural Sector
· International Sector
B) Internal Environment
(Must include Internal factor evaluation matrix of Verizon- For
reference you can look provided sample) table 3
· Management
· Marketing
· Production/Operations
· Finance/Accounting
(Must include Cash assessment table 4 and Profitability
assessment table 5)
· Research and Development
1You must have an APA formatted title page with every
application.
Capstone Research Project
Chapter 1 –Introduction/Overview (week 3)
The Importance of Introductions/Overview:

Setting the stage for a study, the introduction establishes the
issue or concern leading to the research by conveying
information about a research problem. Unfortunately, too many
authors of research studies do not clearly identify the research
problem, leaving the reader to decide for himself or herself the
importance of the issue that motivates a study.
Further the research problem is often confused with the research
questions—those questions that the investigator would like
answered in order to understand or explain the problem.
The introduction needs to create reader interest in the topic,
establish the problem that leads to the study, place the study
within a larger context of the scholarly literature, and reach out
to a specific audience.
You will write an introductory overview providing the reader
with sufficient facts about the subject of study. If the study is
about an organizational or community issue, then you will
describe the dynamics, including how long the problem has been
occurring. You should provide enough specific and credible
scholarly data from your search of the literature so that the
reader can fully understand the circumstances and dynamics
with which you are working.
Chapter 2 – Problem Statement (week 3)
The Importance of the Problem Statement:
When researchers begin their studies, they start with one or
more paragraphs to convey the specific research problems or
issues. They also present in the first sentence information to
create reader interest in the sentences that follow the first
sentence, authors identify a distinct research problem that needs
to be addressed.
In applied social science research, problems arrive from issues,
difficulties, and current practices. The research problem is the
issue that exists in the literature, in theory, or in practice that

leads to a need for the study. The research problem in a study
begins to become clear when the researcher asks, “What is the
need for this study?” or “What problem influenced the need to
undertake the study?”
You will write a precise explanation of the specific problem to
be solved. While symptoms often lead to the discovery of more
deeply rooted problems and they are important to identify, it is
imperative that you differentiate between the symptoms and the
problem or you will be offering the wrong solutions, which may
be fatal in the real world.
For example, while it is common to say that "the problem is that
morale is low" this is only symptomatic of a much larger
problem such as a failure of leadership. Another example is
saying that "the problem is gang violence in my community and
it is on the rise." This too is symptomatic of a larger problem
such as a scarcity of resources or a sense of hopelessness.
Therefore, be sure to not only discuss the symptom(s) which
help the reader understand the larger framework of the problem,
but to also clearly identify the problem that is to be solved.
Chapter 3 – Purpose/Significance (week 4)
The Purpose Statement:
Whereas introductions focus on the problem leading to the
study, the Purpose Statement establishes the direction for the
research. In fact, the purpose statement is the most important
statement in an entire research study. It orients the reader to the
central intent of the study, and from it, all other aspects of the
research follow. In other words, the Purpose Statement indicates
why you want to do the study and what you intend to
accomplish and is the central, controlling idea in a study.
Clearly state what the purpose of the study is and explain the
study's significance. The significance is addressed by discussing
how the study adds to the theoretical body of knowledge in your

field or expertise.
Explain how your research makes an original contribution to the
body of knowledge. You will address the significance of the
study and its importance to your organization or community.
It is especially critical that this chapter be well developed.
Without a clearly defined purpose and strong theoretical
grounding, your Capstone project is fundamentally flawed from
the outset.
Chapter 4 – Research Question(s) (week 4)
Identify at least one, but no more than two, research questions.
The research questions will guide and shape the rest of your
paper. Specifically connect the research questions to the
Problem Statement (in Chapter 2) by elaborating on how you
think the two are related.
Begin the research questions with the words “what” or “how” to
convey an open and emerging design. Focus on a single
phenomenon or concept. Use open-ended questions without
reference to the literature or theory unless otherwise indicated.
Chapter 5 – Methods (week 5)
In this section, describe the methods you used in order to solve
the problem. If you used interviews, surveys, or observations,
then describe those procedures in this section and include a
description of how you conducted them.
Include detailed measures you used to protect any participants
who might participate in surveys and/or interviews.
If you did not conduct interviews, surveys, or observations,
explain what you would do in the future if they were needed to
complete your study.
Also, include a thorough description of your literature search
techniques (website links you are using, libraries, accessed,
etc.).
Chapter 6 – Literature Review (week 6)
Use the literature to help you explain the phenomena under

study. In this section, provide a summary of the literature and
discuss how it works in light of the problem you are trying to
resolve. This chapter, however, should not merely string
together what other researchers have found. Rather, you should
discuss and analyze the body of knowledge with the ultimate
goal of determining what is known and is not known about the
topic. The literature review thus describes and analyzes
previous research on the topic
This should be an exhaustive study of the most pertinent
literature on the subject. It will strengthen the paper by
providing some historical context for the evolution of the theory
if this applies. It will also strengthen your paper if articles can
be found that run contrary to the major theories being presented.
It is important for the student to remain completely objective
when writing this paper to ensure that the student is not working
to believe something to be true that otherwise is not. For
example, some take the position that individuals can “lead”
themselves, yet a fundamental definition of leadership is that it
involves followers and without followers you do not have
leadership.
Therefore, the proposition that people can lead themselves
appears to be false. If, however, your position is that you do
believe that a person can indeed lead "self," then it is incumbent
upon you to find literature in the refereed journal resources that
would support this contention. If you are not able to find
literature that supports, your argument then you must clearly
indicate this as part of your findings.
.
Chapter 7 – Findings and Conclusions (week 7)
Describe your findings in this section. What did you learn from
your exhaustive study of the problem? What would be your
anticipated results of your findings if you had used surveys,
interviews, or other tools? What did the literature suggest is the

most appropriate way to solve your social impact problem?
What are the implications for future research? What conclusions
are you able to draw from your research?
Chapter 8 – Recommendations (week 7)
Describe your recommendations as though you were making a
presentation to a meeting of senior managers, a city council, a
community planning board, a board of directors, or government
officials. What have you learned from your study of the problem
that provides the basis for making recommendations to solve the
social impact problem?
Appendices (optional and if used include in week 7)
Include in this section copies of interview forms or survey
instruments used as part of your study. Do not include full
reports that you have cited or an abundance of reference
materials. Label each item separately according to APA
guidelines and rules.
Acknowledgments (optional and if included, include in week 7)
In this section, acknowledge any individual, group, or
organization without whose help your paper could not have been
written. While it is always nice to acknowledge the support of
family members who provide tacit and emotional support for us
to complete our education, this section is to acknowledge
people who provided actual support and without whose help
your paper could not have been written (e.g., librarians, special
advisors, consultants, organizations, etc.). Therefore, do not
include family members unless they provided substantial input
into the creation of this paper.
List of Cited References (ongoing between weeks 3-7)
In this area, include only a list of all of the cited references you
used. Be sure to list all of your refereed journals, books,
monographs, reports, etc., as well as any websites you used to
gather material.

Annotated Bibliography (ongoing between weeks 3-6)
Provide a list of references along with the annotations (see
instructions in Doc Sharing if you need a reminder) you used
during this course. You will begin including your annotated
bibliographies (5 at a time) starting in week three. You will add
five different annotated bibliographies each week for at least a
total of 20 different sources.
Bibliography (optional and included in week 7)
Provide a list of any source material you reviewed but did not
use in this section. Include the links of websites that you visited
but did not use. This will become a helpful resource for you
should you decide to revisit this social impact issue after
graduation. It is also a very helpful tool for other researchers
interested in the same social impact subject.
Assignment 1: The Capstone Project
Research Paper Track
This week, you will formulate your methods section for your
Research Paper. You will also be responsible for reviewing five
articles for your Annotated Bibliography. Please review the
template document found in the Research Project area of
the Course Information page for further information.
Assignment:
This week, you will formulate your methods section for your
Research Paper.
You will also be responsible for reviewing five articles for your
Annotated Bibliography.

Please review the template document “See attachment” of
the Course Information page for further information.
A. ResearchMethods
B. Annotated Bibliography for 5 Research Articles
C. Cited References
D. No plagiarism
E. APA citing

CAPSTONE PAPER

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