Best Way of Spending Holidays free essay sample

Best way of spending holidays. In my views camping is the best way of spending holidays. It is hard to argue with fact that camping is one of the most popular recreational activity in the world. Whether it involves families, friends, couples or youths, everyone just enjoys a good camping outdoors. Connecting with nature is definitely considered to be one of the most fun ways to invest a vacation. Why invest your vacation in expensive hotels when you can also enjoy your time with your own companions outdoors where it’s closer to mother nature.Camping appeals to the inner subconscious of us human’s desire to interact with nature. The wilderness, trees and shrubs, plants, wildlife, fresh air, humans in general discover all of the over pleasant. There are numerous reasons why camping is extremely popular. It is due to the many benefits and benefits that camping brings. Outside camping is a recommended way to spend period together with people who are dearest to you. We will write a custom essay sample on Best Way of Spending Holidays or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Whether it is with your family or even special someone, the occasions that you will be spending together outdoors will surely give all of you memories that you may all never forget. There are times that we always as well preoccupied with something may it be work or school, so we don’t get to spend time with our loved one as much as you want to. So you want to really make it up to them? Outdoor camping is the ideal answer in this kind of situation. Why? If you are camping, you will have no access to computers, cell phones or a television therefore it just your group and mother nature. So which means no more distractions and also you got each other’s single(a) attention. Camping is also a great way to relieve your stress.If you’re working long hours and therefore are always tired then it’s highly likely that you are stressed out. Relieve your stress threshold by bonding with mother nature. Instead of breathing the usual polluted air of the town, by camping outdoors you will get to breathe cool as well as fresh air. And instead of filing an endless quantity of paperwork or being in front of the computer the whole day, you get to enjoy activities like outdoor bbq, fishing, swimming and other fun activities that might take your mind off work. Camping will surely have a positive effect on your stressed mind and the body.

Working for the Youth Essays

Working for the Youth Essays Working for the Youth Essay Working for the Youth Essay Establishing a social group to help the out-of-school-youth is one way to help the youth attain their dreams and be productive members of the society. While this would take a lot of effort and determination from volunteer groups, doing this would bring about some changes in the lives of the beneficiaries and their families. In this paper, we elaborate on the ten considerations posted by Author in establishing and facilitating a group. We apply each consideration to the establishing or a group committed to serve the out-of-school-youth. Working for the Youth Establishing a community group to help out-of-school youth will be one great contribution to the improvement of our nation. However, establishing a group is not an easy task. One needs relevant knowledge, skills, and determination to ensure the success of the group. Author (year) offers ten considerations every group should take when establishing and facilitating a group. Taking a look at these could help a lot to make the group carry out its tasks properly. First, Author suggests anticipating the positives and negatives of working together as a group. In establishing a group for out-of-school youth, the group should anticipate that not all the members have the same motive for joining, and not all are equally committed. Ideally, the members should have a common passion (World Vision Canada Web site, 2008). But since this is not possible, the members should be prepared for negative consequences to come about. For instance, the founder of the group may simply want to help the youth, while others want to serve their own purpose. In the case of establishing a group for the out-of-school youth, some could expect to benefit from the activities by having the right to do referrals of their relatives and friends. Also, some could think of using the group to earn societal influence and power especially when they are running for elections. To avoid this, the group should clarify with the member the purpose for joining, and make sure each understand s the goals of the group. In addition, the group members cannot expect the leader to be all-knowing and always be available. Leaders have other activities to attend to aside from the concerns of the group. Therefore, it will help if members could share in the responsibilities as they may be assigned. The positive things that the group can expect is the fulfillment each one can feel when they are able to accomplish their goals. If the group works hard, they could expect to help out-of-school youth by making them finish schooling and work at the same time. Next, the group should consider undergoing different phases or cycles. Author claims that just like the life cycle, each group will go through childhood, adolescence, adulthood, old age, and retirement. The out-of-school youth group to be established will initially go through difficulties of finding members, encouraging the youth to take part, finding resources to finance the activities, and making the youth achieve their goals. When it is already fully established, it will need to sustain support to its members by finding additional resources and recruits. Later on, it might also need to add services or people. In each stage, assessing performance against the goals is needed to document the difficulties and success in each cycle. The third consideration is to keep focused on the goals. Each member needs to know why the group for out-of-school youth is founded. As a social and recreational group, its main goal is to respond to the needs of the out-of-school youth to obtain education and guidance. Secondary to it are the desire to keep them away from drugs by providing recreational activities, and helping them earn a living. The fourth consideration is to identify activities of the group. These activities include maintenance activities and program activities. The first includes the work of the staff, such as setting up the place of work, collaborating, finding sponsors, making a newsletter or other forms of communication. Program activities are those from which the out-of-school youth would benefit. These may include educating them and designing programs to sustain their interest in the group. It is important to ensure they have the basic necessities in life, and make them feel accepted and loved. Being out-of-school, some of them may already be working at a young age. Therefore, aside from food, shelter and clothing, some may need time to play and express themselves through art. In this consideration, it might help to provide art classes and games where they would enjoy and find other means of self-fulfillment. The fifth consideration is to identify who may take part in the group. Definitely, there should be a leader to hold the group and guide it towards its goals. In the group to be created, there should be at least five members of the staff to initialize the planning and design stage. Being the beneficiaries, the out-of-school youth also play a key part. As such, there should be a target from the start of who will receive the benefits. Coordinating with community officials will help identify the youth needing intervention, and the support group willing to help in the project. The fifth consideration is the structure by which the group will accomplish its goals. Without a planned structure, achieving the goals of the group will be unclear. As such, the group should set the structure during the first phase, in order to identify roles and responsibilities of the key persons.   Structures can be easily defined according to the purpose they serve. In the group to be created, two structures are very clear: one is the education structure, and the other is the recreational structure. Those with relevant skills in education should be assigned in the first structure, while those who have experience holding recreational activities for the youth should be assigned of the second. This way, the goal of providing education and guidance to the beneficiaries will be sustained. The sixth consideration concerns the leader of the group. Importantly, the role of the designated leader should be identified. Doing this would also determine the kind of leadership role the group needs. In the group for out-of-school youth, the task-centered leader is needed to attain success. The leader of the group should have pertinent knowledge and skills to identify the needs of the group, gain resources, designate roles accordingly, arrive at the best communication system, and maximize participation from all stakeholders. Although the leader may be very knowledgeable and skilled, the help of the members should be equally valued. As such, the leader must maintain rapport with the members and two shall support each other in every undertaking. Finding a good working environment is the next consideration. As the group focuses on out-of-school youth, the meeting place or office should be near the dwelling of the beneficiaries. It should be free from any obstructions, and must provide room for recreational activities in the future. In addition, it should be free from hazards as taking care of the youth involves other safety requirements not found in adult environments. The way the leader would communicate with the members is also another important consideration. Open line communication is ideal for every social and recreational group. Importantly, the leader should serve as the model to the members in setting up an ideal environment where people can express their ideas and feelings in relation to the affairs of the group. To do this, the leader should employ ways to make each member express oneself. For example, in meetings, the members should be given a chance to raise their suggestions. This way, not all decisions would come from the leader but from the members as well. Moreover, in assessing the performance of the group, appreciation should be give to the relevant person, making all feel the importance of hard work and productivity. Mehra (2006) points out that the leader’s external communication skill is also necessary. This means that aside from communicating internally, the leader should also establish communication from outside networks especially those that can help in the organization. Freeman (2005) confirms the advantage of establishing social networks not just of the leader but also the members. Furthermore, members of the group should support each other verbally and nonverbally. Since the group to be created composes of two apparent structures, the members of each should have bonding with their group as well as with the others. The structures should not be a way to divide the members, instead it should serve as opportunity for support and appreciation. The assessment part where the group considers how well they perform is the last but not the least in Author’s suggestions. Assessment can sometimes create factions or conflicts in groups. To avoid this, respect should be exercised, especially in verbal language. The author points out that members should carefully construct statements when addressing others. For example, instead of saying, â€Å"You ignored me† one can say, â€Å"I felt ignored.† Notice that the change in the initial word from â€Å"you† to â€Å"I† could make a big difference. With these considerations come hard work and fun. In every situation, the group to be established should always make it a point to enjoy what they are doing so the work does not seem like work but a way to have fun. ASSIGNMENT 2 One of the groups that I joined was a religious group where I had a chance to teach people in the streets. The group did not actually intend to teach the Bible. Instead, we had basic math, language, art, and science. I was assigned of teaching language to kids in the street. I gained a lot from this experience and until now I still value the learning that I had. Just like any group, our group went through four stages as Tuckman (year) suggests. First, I saw it â€Å"forming.† During this stage, the leader of the group went about recruiting people who can commit some of their time during the weekends to teach street folks. Everyone joined in the planning where we had some â€Å"storming† or ideas. We tried to identify what needs to be taught in the subjects mentioned. The leader set up meetings for us to express our ideas and together come up with a standard. Each one was heard, regardless of the time we joined the team. During â€Å"norming† stage, we got more acquainted with each other. By this time we were very already very comfortable to express ourselves, and confide in each other. Also, the people we were already well acquainted with us, and they expected us to come at a certain time in the designated area. Next stage was the â€Å"performing† stage. When everything has been planned accordingly, we were ready - schedule, materials, target students, etc., we were prepared to teach. We bought our materials and taught the street people the basic lessons that we designed. For my part, I taught the people some words, then gave them exercises on sentence construction, then guided them to write a paragraph to express themselves. The people were very happy for what we did for them. One of the men even expressed that they benefited a lot from the activities. Also, the efforts we made allowed them to express themselves. As for us, we learned important insights about life in the streets, and the problem of lack of education. During assessments, we were happy to report our accomplishments, and recognized each other’s hard work and patience.† The lessons I learned from the organization I joined are truly valuable. However, just like some groups, ours reached its â€Å"adjourning.† As the members of group got married and later had kids to take care of, we soon had to give up the community service but we vowed to still be of service to those we will meet in the future.

Socially Desirable Merit Goods Essay Example | Topics and Well Written Essays - 1250 words

Socially Desirable Merit Goods - Essay Example As the paper declares  the government has the responsibility of ensuring implementation of expended schools initiatives and provision of financial support to schools to facilitate smooth learning environment. The government also has the responsibility of providing public schools with recreational facilities and further gives better education opportunities to all children. UK government must ensure that every child gets quality education with a very good start and further helping schools in delivering education strategy. Mainly the government has to ensure that schools have good infrastructure and provides students with better skills.This study discusses that  the government should ensure that education provided to the public is very beneficial, effective and universal to all the learners. The intention of providing education by the government is to equip learners with high level skills that are relevant to the betterment of the economy and instilling skills that are useful in the modern life.  Government should ensure enough funding especially in the universities and colleges due to the importance of graduates in the economic growth. According to OECD report studying for a degree greatly benefits individuals because they earn a lot of money compared to non-graduates.  The report further suggests that the educated individuals were never affected by the economic crisis as it affected the uneducated. The economic crisis and recession was caused by unsuccessfully educated individuals.... According to OECD report studying for a degree greatly benefits individuals because they earn a lot of money compared to non-graduates. University graduates also benefits the governments from the high taxes earned from higher earnings by the graduates. The report further suggests that the educated individuals were never affected by the economic crisis as it affected the uneducated. The economic crisis and recession was caused by unsuccessfully educated individuals. The government should subsidize higher education since university education is important to the UK’s economic recovery because it leads to receipt of high taxes and reduced level of unemployment. All these show the unending benefits of education thus justifying why it cannot be left on the hands of private sector. Educated people get good employment and earn good money compared to uneducated individuals. Learned individuals also acquire knowledge and skills that help them in rational thinking and decision making pro cess thus reducing risks of economic crisis and recession. University education is considered vital in individual’s innovation capability due to the knowledge acquired (McMahon 2009, 180-200). There are several benefits to governments and society that result from studying for a degree such as increased receipt of taxes and social cohesion. University graduates assist individuals in obtaining lucrative jobs thus reducing the level of unemployment in the country. The employed persons will reduce the level of crime in the society because most people are able to economically sustain themselves. Graduates always acquire skills and knowledge that may help them make wonderful innovations that are crucial

A decade of development Assignment Example | Topics and Well Written Essays - 500 words

A decade of development - Assignment Example With the introduction of the Microsoft suite of products that were designed to be used on a license basis and the resultant need for patches and upgrades met only through paying for the same instead of having a way to program the upgrades by the users themselves. Particularly telling is the instance of how Richard Stallman could not insert his code into the working of the printer software thereby having to wait for the upgrade from the manufacturer. This example typifies the approach of free software activists towards the concept of paying for the software. They insist that the source code of the software must be made available to everyone and those additions and insertions to the source code should provide a way of customizing the software according to the needs of each individual. Similarly, Lessig’s approach of making the content free is discussed as well. Lessig’s approach is the backbone of what is called as the â€Å"creative commons† license. According to this paradigm, content should be free of commercial attributions and once the source code or the content is developed, anyone should be free to add his or her code or content to the existing base and use the modified version without paying any fees. Of course, the creative commons license specifies how the original developer needs to be acknowledged for his or her work and in the later years; this became a bone of contention as well. The most famous example of free content and one that can be editable by anybody is the case of Wikipedia. This is an online encyclopaedia that anyone can edit and add information to the existing body of knowledge. Considering the fact that this site is one of the most popular sites on the internet and the visitors to this site run into the millions, the concept of free content and open knowledge has indeed caught on. However, as the article points out, there were several hiccups along the way as evidenced by the

Narration and description Essay Example | Topics and Well Written Essays - 500 words

Narration and description - Essay Example My grandmother was a college professor with a doctoral degree in education, in addition to being a good cook, a relentless laundry woman, an intelligent consultant, a loving mother to an only child (my father), and the dotting granny at her best. I found her unusual and unpredictable since, despite her age, she manifested vigor and strength analogous to my mother. At one time I see her cooking and an instant she was dressed in flashy gold outfit ready for an evening party with members of her favorite civic organization. She wore extremely large earrings and fixed her hair high with the help of a hair spray. She was gregarious, highly sociable, cunning, intrusive and sometimes, impossible. She would give me and my brothers’ daily tasks to comply such as watering the plants, cleaning the yard, picking out withered leaves in the middle of our play time. She would demand to be taken to almost forgotten scheduled itineraries by my apprehensive father, with us crying siblings driving along. What I loved most about my grandmother was her genuine love for the family. She would go out of her way to prepare lavish dishes and buy special gifts for each of us to commemorate extraordinary days. She loves setting the dining table in intricate and elaborately designed table cloths and chooses the daintiest dishes, depending on the occasion. Christmas and New Year are the best holidays due to the diversity in foods prepared and the number of colorful and shiny gifts wrapped in ribbons of red, green and gold under the tree. She told me when I was grown up and she has immensely aged that what matters most in life is that we have identified what we want to pursue and that we have designed ways and means to fulfill our goals. Also, she told me to remain steadfast in our faith and to believe in the ethics of reciprocity: that of doing

Social Enterprises for Community Development

Social Enterprises for Community Development Provide an account of the history of the emergence of social enterprise and community development in the U.K. Social enterprise is a social mission driven organisation which essentially trades in the goods or services for a uniquely social purpose. These social enterprises aim to achieve their objectives in not only financial but also in the social and environmental. They are profit making ventures set up to attempt to acknowledge the environmental and social need. The reason that these enterprises are unique is due to their central purpose being either social or environmental. These social enterprises are more interested in generating profit in order to further their environmental or social goals. In all industrialised countries, there is a growth in the social enterprise sector which is also known as the ‘non profit sector’ (Defourny 2001, p.1) or third sector situated in between private and public sector. These organisations are representative of the renewed expression of a civil society among an economic crisis, difficulties which are facing the welfare state and the weakening of social bonds in society. Social enterprise is considered as comprising co-operatives, mutual’s (Credit Unions) and voluntary organisations (charities and foundations). Many of these categories were founded in the last century and they play an important part in the economic landscape. Social enterprise can be traced back as far as the 1840’s in Rochdale, where the first workers’ co-operative was founded to provide affordable, quality food in a response to exploitative factory conditions. It was in the mid 1970’s when these social enterprises began to emerge into the mainstream. They had already been active in other areas and began to come to the forefront with increasing economic difficulties deepening and it was against this background that the interests in other economic organisations became strongly reactivated. It was the late 1990’s that a resurgence in social enterprise was experienced in the UK, with different traditions coming together. These organisations are strongly rooted in solid and long standing traditions as most of these organisations had already existed for more than a century and had been constantly growing. The first agency in the UK, was Social Enterprise London (SEL) which was established in 1998 between co-operative businesses and a number of co-development agencies. From this the British government in 2002 launched a unified Social Enterprise Strategy and established a Social Enterprise Unit (SEnU) to help implement it in England and Wales. From this policy development has been increasingly influenced by the organisations in the non profit sector. There are now many organisations which are classed as social enterprises, John Lewis, The Eden Project, The Big Issue and Jamie Oliver’s restaurant – Fifteen. Identify two models of good practice existent in the U.K. There are three characteristics of social enterprises as defined by Social Enterprise London: Enterprise Orientation – directly involved in producing the goods or providing services to a market, seeking to be viable trading organisations with an operating surplus Social Aims – explicit social aims such as job creation, training or the provision of local services. Ethical values are important and they are accountable to their members and the wider community for their social, environmental and economic impact Social Ownership – they are autonomous organisations with governance and ownership structures based on participation by stakeholders or by trustees. The profits are distributed as profit sharing to the stakeholders of used to benefit the community. Two such models of good practice existent in the UK are Jamie Oliver’s restaurant – Fifteen and The Big Issue. Jamie Oliver’s restaurant Fifteen was opened in London in 2002. This was inspired by Oliver and was broadcast on TV. Its name is derived from the first cohort of fifteen young people. Oliver has combined two ambitions – to open a top class restaurant and to give disadvantaged youth a chance to gain the professional training they require to set them up to be independent, inspired and to have a chance at a productive life. It is a registered charity as well as a commercial business and it a chef apprenticeship for 18 to 24 year olds. It is indeed a social enterprise offering a produce with a purpose, a high end dining experience where the best of produce is prepared by great chefs and served by professional people. Its main purpose is the empowerment of young disadvantaged people, giving them a second chance to establish themselves in the restaurant industry. With the success of the London restaurant it has also been established in Amsterdam, Cornwell and Melbourne, with their own foundation and apprenticeship schemes. The strength of the Fifteen brand as of one of the leading global social enterprises. Jamie Oliver is passionate about this issue and wants to help young adults to be able to have prospects for the future. The Big Issue exists as a social enterprise to offer homeless and vulnerably housed people a chance to earn a legitimate income. It is one of the UK’s leading social businesses, which continues to help those in need earn an legitimate income. It was launched in the UK in 1991 by Gordon Roddick and A. John Bird as a response to the amount of rough sleepers in London. The main aim behind this is to help people help themselves and the founders were determined to offer an alternative to begging. I n November 1995, The Big Issue Foundation was launched with the aim to deal with the underlying issues which cause homelessness. The founder’s definition of success is encouraging and influencing people to make life changes positively. The organisation is made up of two entities, a limited company which produces and distributes the magazine to the street vendors and a registered charity which exists to help those same vendors gain control of their lives. The vendor must prove that they are homeless or vulnerably housed, undergo an induction process and sign up to the organisations code of conduct. Asses the significance of such schemes in terms of: a) the development of social policy b) their contribution to the national economy (500 words). The development of social policy Development of social policy is influenced by our beliefs, interests and values. Social policy is the guidelines for changing, the maintenance or creation of living conditions which are conductive to human welfare. It is part of public policy which has to do with social matters. Social policy aims to improve on human welfare, and to meet the need for health, housing, education, and social security. It also refers to policies affecting the social condition under which we live. Other important areas of social policy include: health insurance, unemployment benefit, accident insurance, labour regulation etc. Policy teams are set up in some organisations to be actively involved in influencing public opinion and the decision makers at all levels to make sure that social enterprises remain high on the UK’s policy agendas. The social enterprise organisations work together to strive to improve the business environment and they identify any barriers to growth and advise both government and public bodies on practical solutions as well as develop papers etc. Social enterprises are able to contribute to the creation of a greater impartiality of economic power and a more sustainable society. The aims of these groups is to be recognised and supported for their contributions. Alongside the development of social policy, these groups also aim to raise the awareness and understanding of social enterprise among both politicians and society. They work to influence the political parties and to ensure that social enterprise is both understood and supported. Their contribution to the national economy Social enterprise organisations by using solutions to develop not for profits aims hold a distinct role in helping to create a strong, sustainable, inclusive and prosperous society. These organisations play an important role in helping to deliver to the national economy by helping to drive up competitiveness and productivity, contributing to a socially inclusive wealth create, the enablement for communities and individuals to work together to regenerate their local neighbourhoods, showing new ways of delivering public services and helping to develop active citizenship and an inclusive society. With the presence of a non profit sector, this is an indicator of a healthy economy in local and national financial measurements depending on its size. With growing numbers in the non profit sector, which are focused on the environment, education, social services etc, the non profit sector is central to the health and well being of society. The non profit sector is an excellent outlet for society’s labour and skills. Social enterprise organisations such as Fifteen or The Big Issue have been set up to give people a chance. They are increasingly taking people off the streets and redeveloping their talents into marketable entities especially in the case of Fifteen, who give underprivileged young people the opportunity to train to be the best they can and to contribute to society and the economy, instead of collecting their benefit each week and being a drain on society. The Big Issue offers those without adequate housing the opportunity to earn an income to better themselves and to make the individuals feel better about themselves. Using examples from a chosen organisation compare and contrast some of the values and principles underpinning social enterprise and community development. The Eden Project. The Eden Project was constructed in a 160 year exhausted china clay quarry near St. Austell, Cornwell and was established as one of the Landmark Millennium Projects to mark the year 2000. It is an educational charity which consists of a world class visitor attraction, a botanical garden and a unique regeneration venture. The Eden Project, like its plants are continually growing and developing. The Eden Project reports to a board who then report to the trustees, to ensure that they are meeting their charitable aims. The Project is owned by a registered charity – The Eden Trust and is operated on behalf of the Trust by Eden Project Limited, a subsidiary who wholly by the Eden Trust. The Eden Project, as an educational charity, uses exhibits, workshops, events and educational programmes to educate people to what nature gives to us and to help people learn how to look after it in return. All the monies raised by the Project are returned to the Trust to further the aims. The programmes include work with schools, colleges etc as well as any individuals who want to learn about nature. The organisation believes in learning by doing and to find positive solutions for the future. The project enforces all three of the characteristics of social enterprise as laid down by Social Enterprise London. Enterprise orientation, The Eden Project is directly involved with providing a service to the marketplace – educated individuals about nature and how to protect and nurture it. They are also producing goods, i.e. bio domes, wind turbines etc to help develop ways of saving the environment. They have explicit social aims, in that through the Project jobs have been created as well as a environmentally friendly structure. They provide educational training to those who either want or require it. The Eden Project believe in their ethical values and see them as important to all and they are accountable to their members through both their board and their trustees. The Project is also accountable to the wider community in the teaching and also the producing of produces which are helpful both to them and the wider community. The Eden Project are an autonomous organisation which has governance and ownership structures which are based on participation by the teams reporting to the board who in return report to the trustees. They exist through donations and are a major consumer of goods and services in the Cornwell area, therefore keeping the local economy striving, which in itself is a benefit to the local community. The project feel that it is important to give those who have not previously afforded it, or those with other issues a chance to experience nature. They also provide with Cornwell College an opportunity for local people to work towards a qualification. Provide an evaluation of your own learning together with evidence of transferable skills which have been used in this assignment. These should include communication, teamwork problem solving and self management. To evaluation learning which has been used in this assignment, a number of factors need to be assessed. On the approach to the assignment I had to use my communication skills in order to firstly understand what I had been asked to do within the five tasks. This communication also helped me regarding research and analysis skills on using the internet and to evaluate the data which I had sourced. Self management has also been evident in that I had to plan both the assignment and the time management so as to not get behind schedule on the issues which I had to investigate. Team work problem solving was not an issue as I can work well both within a team and on my own and it was just a matter of assigning different tasks.   References Borzaga, C., Defourney, J., (2001) The Emergence of Social Enterprise, Routledge Burch, H.A., Michaels, D.G., (1991) They Why’s of Social Policy: Perspective on Policy, Praegar Publishers Spreckly, F., (1981) Social Audit – A Management Tool for Co-operative Working, Local Livelihoods http://www.sel.org.uk/ Social Enterprise London

Regents of the University of California v. Bakke :: American America History

Regents of the University of California v. Bakke Established in 1968, the medical school at the University of California implemented a special admissions program to increase the representation of minorities in each entering class. There was one underlying problem with their special admissions program that was not addressed until 1973 when Allan Bakke submitted his application to the University of California. Their special admissions program worked by reserving sixteen percent of the entering class for minorities. The minorities entering through this special admissions program were processed and interviewed separately from the regular applicants. The grade point averages and standardized test scores from the special-admissions entrants were significantly lower than the grade point averages and standardized test scores of the regular entrants, including our dear friend Allan Bakke. In 1973 Allan Bakke applied to the medical school at the University of California. His application was rejected because it was turned in near the end of the year and by the time his application was up for consideration they were only accepting those who had scored 470 or better on their interview scores. Bakke had only scored a 468 out of the possible 500. When he learned that four of the special-admissions spots were left unfilled at the time his application was rejected he wrote a letter to Dr. George H. Lowrey, the associate dean and chairman of the admissions committee, stating how the special admissions system was unjust and prejudiced. When Bakke applied again in 1974 he was once again rejected. This time Bakke sued the University of California. His position was that the school had excluded him on the basis of his race and violated his rights under the Equal Protection Clause of the Fourteenth Amendment, the California Constitution, and civil rights legislation. The trial court ruled in Bakke's favor, however they did not order the University of California to admit him. Bakke appealed to the California Supreme Court where they ruled that the school's admissions programs were unconstitutional and ordered the school to admit Bakke as a student. The school appealed this decision and brought it to the Supreme Court to argue their case on October 12th 1977. The Supreme Court upheld the California Supreme Court's decision with a 5-4 vote. The Court also ruled that the special-admissions program constituted reverse discrimination and was therefore illegal. The Court also said that schools could continue to look at race as a factor when accepting applicants, but they could not set up a quota system or look at race as the only deciding factor. Regents of the University of California v. Bakke :: American America History Regents of the University of California v. Bakke Established in 1968, the medical school at the University of California implemented a special admissions program to increase the representation of minorities in each entering class. There was one underlying problem with their special admissions program that was not addressed until 1973 when Allan Bakke submitted his application to the University of California. Their special admissions program worked by reserving sixteen percent of the entering class for minorities. The minorities entering through this special admissions program were processed and interviewed separately from the regular applicants. The grade point averages and standardized test scores from the special-admissions entrants were significantly lower than the grade point averages and standardized test scores of the regular entrants, including our dear friend Allan Bakke. In 1973 Allan Bakke applied to the medical school at the University of California. His application was rejected because it was turned in near the end of the year and by the time his application was up for consideration they were only accepting those who had scored 470 or better on their interview scores. Bakke had only scored a 468 out of the possible 500. When he learned that four of the special-admissions spots were left unfilled at the time his application was rejected he wrote a letter to Dr. George H. Lowrey, the associate dean and chairman of the admissions committee, stating how the special admissions system was unjust and prejudiced. When Bakke applied again in 1974 he was once again rejected. This time Bakke sued the University of California. His position was that the school had excluded him on the basis of his race and violated his rights under the Equal Protection Clause of the Fourteenth Amendment, the California Constitution, and civil rights legislation. The trial court ruled in Bakke's favor, however they did not order the University of California to admit him. Bakke appealed to the California Supreme Court where they ruled that the school's admissions programs were unconstitutional and ordered the school to admit Bakke as a student. The school appealed this decision and brought it to the Supreme Court to argue their case on October 12th 1977. The Supreme Court upheld the California Supreme Court's decision with a 5-4 vote. The Court also ruled that the special-admissions program constituted reverse discrimination and was therefore illegal. The Court also said that schools could continue to look at race as a factor when accepting applicants, but they could not set up a quota system or look at race as the only deciding factor.

Merck Case

Pharmaceuticals: Merck Sustaining Long-term Advantage Through Information Technology Hiroshi Amari Working Paper No. 161 Working Paper Series Center on Japanese Economy and Business Columbia Business School December 1998 Columbia-Yale Project: Use of Software to Achieve Competitive Advantage PHARMACEUTICALS: MERCK Sustaining Long-term Advantage Through Information Technology Prepared by Hiroshi Amari Research Associate, Yale University William V. Rapp and Hugh T. Patrick Co-principal Project InvestigatorsCenter for International and Area Studies Yale University New Haven, CT 06520 203-432-9395 (Fax: 5963) e-mail: william. [email  protected] edu Revised December 1998 Table of Contents 1. Introduction: Objective of this Study 2. The Pharmaceutical Industry in a Global Context 3. Product R&D and Clinical Trials 4. Manufacturing and Process R&D 5. Technological Factors Structure-Based Drug (â€Å"Rational Drug†) Design Structure-Based Drug (â€Å"Rational Drug†) Design 6. Merck 7. Managerial Decision Making 8. Decision Making on IT projects 9. Joint Ventures 10. Information Technology and Organization 11.Appendix I – Summary Answers to Questions for Merck – Strategy & Operations 12. Appendix II – INDUSTRY AND FIRM BUSINESS DATA 13. Bibliography 2 Introduction: Objective of this Study This case study of Merck was completed under a three year research grant from the Sloan Foundation. The project's purpose is to examine in a series of case studies how U. S. and Japanese firms who are recognized leaders in using information technology to achieve long-term sustainable advantage have organized and managed this process. While each case is complete in itself, each is part of this larger study. This pharmaceutical industry case together with other cases2 support an initial research hypothesis that leading software users in both the U. S. and Japan are very sophisticated in the ways they have integrated software into their management stra tegies and use it to institutionalize organizational strengths and capture tacit knowledge on an iterative basis. In Japan this strategy has involved heavy reliance on customized and semicustomized software (Rapp 1995) but is changing towards a more selective use of package software managed via customized systems. In turn, U. S. ounterparts, such as Merck, who have often relied more on packaged software, are doing more customization, especially for systems needed to integrate software packages into something more closely linked with their business strategies, markets, and organizational structure. Thus, coming from different directions, there appears some convergence in approach by these leading software users. The cases thus confirm what some other analysts have hypothesized, a coherent business strategy is a necessary condition for a successful information technology strategy (Wold and Shriver 1993). These strategic links for Merck are presented in the following case. Industries a nd firms examined are food retailing (Ito-Yokado and H. Butts), semiconductors (NEC and AMD), pharmaceuticals (Takeda and Merck), retail banking (Sanwa and Citibank), investment banking (Nomura and Credit Suisse First Boston), life insurance (Meiji and USAA), autos (Toyota), steel (mini-mills and integrated mills, Nippon Steel, Tokyo Steel and Nucor), and apparel retailing (WalMart). The case writer and the research team wish to express their appreciation to the Alfred P.Sloan Foundation for making this work possible and to the Sloan industry centers for their invaluable assistance. They especially appreciate the time and guidance given by the center for research on pharmaceuticals at MTT as well as Mr. Sato at Takeda. This refers to cases for which interviews have been completed. See footnote 3. These and other summary results are presented in another Center on Japanese Economy and Business working paper: William V. Rapp, â€Å"Gaining and Sustaining Long-term Advantage Through In formation Technology: The Emergence of Controlled Production,† December 1998 strategy (Wold and Shriver 1993). 3 These strategic links for Merck are presented in the following case. Yet this case along with the other cases also illustrates that implementation and design of each company's software and software strategy is unique to its competitive situation, industry and strategic objectives. These factors influence how they choose between packaged and customized software options for achieving specific goals and how they measure their success.Indeed, as part of their strategic integration, Merck and the other leading software users interviewed have linked their software strategies with their overall management goals through clear mission statements that explicitly note the importance of information technology to firm success. They have coupled this with active CIO (Chief Information Officer) and IT (information technology) support group participation in the firm's business and decision making structure.Thus for firms like Merck the totally independent MIS (Management Information Systems) department is a thing of the past. This may be one reason why outsourcing for them has not been a real option, though their successful business performance is not based solely on software. Rather as shall be described below software is an integral element of their overall management strategy and plays a key role in serving corporate goals such as enhancing productivity, improving inventory management or strengthening customer relations.These systems thus must be coupled with an appropriate approach to manufacturing, R, and marketing reflecting Merck's clear understanding of their business, their industry and their firm's competitive strengths within this context. This clear business vision has enabled them to select, develop and use the software they require for each business function and to integrate these into a total support system for their operations to achieve corpo rate objectives. Since this vision impacts other corporateThese and other summary results are presented in another Center on Japanese Economy and Business working paper: William V. Rapp, â€Å"Gaining and Sustaining Long-term Advantage Through Information Technology: The Emergence of Controlled Production,† December 1998 3 4 decisions, they have good human resource and financial characteristics too (Appendix I & ii). Yet Merck does share some common themes with other leading software users such as the creation of large proprietary interactive databases that promote automatic feedback between various stages and/or players in the production, delivery and consumption process.Their ability to use IT to reduce inventories and improve control of the production process are also common to other leading software users. They are also able organizationally and competitively to build beneficial feedback cycles or loops that increase productivity in areas as different as R, design and man ufacturing while reducing cycle times and defects or integrating production and delivery. Improved cycle times reduce costs but increase the reliability of forecasts since they need to cover a shorter period.Customer satisfaction and lower inventories are improved through on-time delivery. Thus, software inputs are critical factors in Merck's and other leading users' overall business strategies with strong positive competitive implications for doing it successfully and potentially negative implications for competitors. An important consideration in this respect is the possible emergence of a new strategic manufacturing paradigm in which Merck is probably a leading participant.In the same way mass production dramatically improved on craft production through the economies of large scale plants that produced and used standardized parts and lean production improved on mass production through making the production line more continuous, reducing inventories and tying production more close ly to actual demand, what might be called â€Å"controlled† production seems to significantly improve productivity through monitoring, controlling and linking every aspect of producing and delivering a product or service including after sales service and repair.Such controlled production is only possible by actively using information technology and software systems to continuously provide the monitoring and control function to what had previously been a rather automatic system response to changes in 5 expected or actual consumer demand. This may be why their skillful use of information technology is seen by themselves and industry analysts as important to their business success, but only when it is integrated with the business from both an operation and organization standpoint reflecting their overall business strategy and clarity of competitive vision.Therefore at Merck the software and systems development people are part of the decision making structure while the system its elf is an integral part of organizing, delivering and supporting its drug pipeline from R through to sales post FDA approval. This sequence is particularly critical in pharmaceuticals where even after clinical trials there is a continuous need to monitor potential side effects. Therefore Seagate Technology may be correct for Merck too when they state in their 1997 Annual Report â€Å"We are experiencing a new industrial revolution, one more powerful than any before it.In this emerging digital world of the Third Millennium, the new currency will be information. How we harness it will mean the difference between success and failure, between having competitive advantage and being an also-ran. † In Merck's case, as with the other leading software users examined, the key to using software successfully is to develop a mix of packaged and customized software that supports their business strategies and differentiates them from competitors. However, they have not tried to adapt their organizational structure to the software.Given this perspective, functional and market gains have justified the additional expense incurred through customization, including the related costs of integrating customized and packaged software into a single information system. They do this by assessing the possible business uses of software organizationally and operationally and especially its role in enhancing their core competencies. While they will use systems used by competitors if there is no business advantage to developing their own, they reject the view that information systems are generic products best developed by outside vendors who can achieve low cost through economies of scale and who can more easily afford to invest in the latest technologies. 4 In undertaking this and the other case studies, the project team sought to answer certain key questions while still recognizing firm, country and industry differences. These have been explained in the summary paper referenced in fo otnote 3. We have set them forth in Appendix I where Merck's profile is presented based on our interviews and other research.Readers who wish to assess for themselves the way Merck's strategies and approaches to using information technology address these issues may wish to review Appendix I prior to reading the case. For others it may be a useful summary. 5 Merck and the other cases have been developed using a common methodology that examines cross national pairs of firms in key industries. In principle, each pair of case studies focuses on a Japanese and American firm in an industry where software is a significant and successful input into competitive performance.The firms examined are ones recognized by the Sloan industry centers and by the industry as ones using software successfully . To develop the studies, we combined analysis of existing research results with questionnaires and direct interviews. Further, to relate these materials to previous work as well as the expertise loc ated in each industry center, we held working meetings with each center and coupled new questionnaires with the materials used in the previous study to either update or obtain a questionnaire similar to the one used in the 1993-95 research (Rapp 1995).This method enabled us to relate each candidate and industry to earlier results. We also worked with the industry centers to develop a set of questions that specifically relate to a firm's business strategy and software's role within that. Some questions address issues that appear relatively general across industries such as inventory control. Others such as managing the drug pipeline are more specific to a particular industry. The focus has been to establish the firm's perception of its industry and its competitive position as well as its advantage in developing and using a software strategy.The team also contacted customers, competitors, and industry analysts to determine whether competitive benefits or impacts perceived by the firm were recognized outside the organization. These sources provided additional data on measures of competitiveness as well as industry strategies and structure. The case studies are thus based on extensive interviews by the project team on software's use and integration into management strategies to improve competitiveness in specific industries, augmenting existing data on industry dynamics,firmorganizational structure and management strategy collected from the Sloan industry enters.In addition, we gathered data from outside sources andfirmsor organizations with which we worked in the earlier project. Finally, the US and Japanese companies in each industry that were selected on the basis of being perceived as successfully using software in a key role in their competitive strategies in fact saw their use of software in this exact manner while these competitive benefits were generally confirmed after further research.The questions are broken into the following categories: General Manage ment and Corporate Strategy, Industry Related Issues, Competition, Country Related Issues, IT Strategy, IT Operations, Human Resources and Organization, Various Metrics such as Inventory Control, Cycle Times and Cost Reduction, andfinallysome Conclusions and Results.They cover a range of issuesfromdirect use of software to achieve competitive advantage, to corporate strategy, to criteria for selecting software, to industry economics, to measures of success, to organizational integration, to beneficial loops, to training and institutional dynamics, andfinallyto interindustry comparisons. 7 The Pharmaceutical Industry in a Global Context In advanced countries that represent Merck's primary market, the pharmaceutical industry is an exceptionally research intensive industry where many firms are large multinationals (MNCs).It is also heavily regulated for both local producers and MNCs. Regulations work as both constraints and performance boosters since drugs are used with other medical a nd healthcare services. Therefore, healthcare expenditures are divided among many industries and providers of which pharmaceuticals are only one. All parties involved are interested in influencing the regulatory environment and in participating in the growth in healthcare services. This means understanding the industry requires appreciating its political economic context.In this regard, healthcare providers in rich nations are currently under pressure to control costs due to aging populations. Regulators who have the authority to change the demand structure through laws and regulations are considering various measures to reduce costs such as generic drug substitution which may mean lower returns for discovering and developing drugs. Still, if drugs are more effective at reducing healthcare costs compared to other treatments, Pharmaceutical companies can benefit.Since R is at the heart of competition, each drug company must respond to these cost containment pressures cautiously and s trategically in competing for healthcare expenditures. Another important aspect of this industry is technological change arising from the convergence of life and biological sciences. Many disciplines now work together to uncover the mechanisms that lie behind our bodies and various diseases. Examples are molecular biology, cell biology, biophysics, genetics, evolutionary biology, and bioinformatics.As scientists see life from these new chemical and physical viewpoints, the ability to represent, process and organize the massive data based on these theories becomes critical. Because computers are very flexible scientific instruments (Rosenberg 1994), progress in information technology and computer science has broadened scientific frontiers for the life and biological sciences. These advances have opened new doors to 8 attack more complex diseases, including some chronic diseases of old age.These therapeutic areas are present opportunities for pharmaceutical companies since they addres s demographic and technical changes in advanced countries. Still, to take advantage of these opportunities requires information technology capabilities. Historically, the drug industry has been relatively stable where the big players have remained unchanged for years. This has been due to various entry barriers such as R costs, advertising expense, and strong expertise in managing clinical trials. It is difficult and expensive for a new company to acquire this combination of skills quickly.However, there are signs the industry and required mix of skills may be changing. There have been several cross national mergers especially between U. S. and European companies. In addition, new biotechnology companies are very good at basic research, which may force pharmaceutical R to transform itself. For example, no single company even among the new mega-companies is large enough to cover all new areas of expertise and therapeutic initiatives. Thus, many competitors have had to form strategic alliances to learn or access new technologies and to capture new markets. Conversely, a stand-alone company can have a lot to lose.The challenge facing large pharmaceutical companies is how fast and how effectively they can move to foster both technological innovation and cost containment without exposing themselves to too much risk. The pharmaceutical industry in all of Merck's major markets reflects these cost containment pressures, the need to harmonize expensive and time consuming clinical trials, and the impact of extensive regulations. Information technology has had its impacts too. For example, to respond to these challenges Merck is using more management techniques based on consensus decision making among top functional managers.This requires better communication support using e-mail and groupware combined with face-to-face communication. This is part of an industry trend towards greater parallel decision making in R&D and less sequential decision making where A must first c oncur on a project before moving to B, etc Now all elements of the firm evaluate the project simultaneously at each 9 stage. In this manner, Merck has significantly reduced coordination costs while centralizing and speeding the overall decision making process. Additionally, first-tier irms have had to follow a trend in R&D strategies that increasingly use information technologies. Exchange of data and ideas across national borders has become relatively easy, and contracts may specify access to another company's database. Because many companies share similar R instruments and methods, one company's instruments may be compatible with other companies'. Indeed, the trend towards greater use of Web-based technology in R and other operations may change our notion of a firm and its boundaries. Firms may eventually be characterized by knowledge creating capabilities (Nonaka and Takeuchi 1995).Having more ways to communicate with other companies makes frequent communication with greater nuan ce possible. This supports the trend towards more strategic alliances unless overtaken by the creation of larger firms through continued mergers. This is also partially due to the nature of the industry which is part of the fine chemical industry where changes in technologies are rapid and often discontinuous. It therefore requires different management skills from other technology based industries, especially as the knowledge required for innovation tends to be more specialized thus demanding less coordination than assembly industries.Transferring mass production know-how to R is also limited. Still, the U. S. and European industries have been undergoing massive reorganization to achieve economies of scope and scale in R and marketing where firms are taking advantage of the fact that the U. S. industry is much less regulated than most foreign industries (Bogner and Thomas 1996). The U. S. companies grew after World War II due to a huge home market combined with the global market for antibiotics this was before British firms began to recapture market share.At that time, European firms did not have the resources to sell drugs directly to U. S. doctors. The European recovery period gave U. S. firms enough time to take advantage of antibiotics. Then, when the U. S. market became saturated, U. S. 10 firms expanded into global markets in the early 1960s. This forced U. S. firms to diversify their R as well. At the same time, in 1962 amendments to the Food, Drug and Cosmetic Act increased the rigor of drug regulation creating an entry barrier to industry R that favored large established firms (Bogner and Thomas 1996).The U. S. effectively tightened their regulations after their industry had acquired sufficient R skills and resources. This timing seems to account for today's industry success. Another factor is that unlike the European industry, U. S. firms had few incentives to integrate vertically. During the War the military distributed antibiotics. Therefore, the U . S. firms were generally bulk chemical producers such as Merck and Phizer or sellers of branded drugs such as Abbott and Upjohn. At the end of the War, only a few firms such as Squibb were fully integrated.However, as promotion and other downstream functions became more critical, controlling functions such as distribution became a strategic objective. To accomplish this they acquired other firms (Merck acquired Sharpe and Dohine and Phizer acquired Roerig), developing expansion via merger and acquisition as a business strategy and core competency. This helped lay the foundation for subsequent industry consolidation. Today, American healthcare is based on the belief that while making progress in science is the best way to solve medical problems, cost containment is also important.As a result, while American healthcare is the most expensive in the world, it is also not available to everyone and is the most subject to cost scrutiny. Indeed, since drugs are just one way to improve heal th, consumers should want to remain healthy and choose cost effective means to do this. However, the reality is that insurance systems covering different services give incentives and disincentives for particular care (Schweitzer 1997). Thus, coordinated adjustment of prices for healthcare is necessary to get markets for healthcare products to work better. In the U. S. , this has led to a public policy push for HMOs.These healthcare purchasers have in turn set the reward schemes available to healthcare providers such as pharmaceutical companies so as to reduce transaction costs (Ikegami and Campbell 1996) 11 and promote innovation. These developments and trends are putting more pressure on major firms to put more resources into R&D, to focus more critically on just ethical drug development for the global market, and to be more careful in gathering information on clinical trials and side effects. The most important market for Merck in this regard is the U. S. where NTH has pursued a u nified approach.This is because the NIH (The National Institutes of Health) has actively supported basic life science research in U. S. universities, especially after World War II. NSF (National Science Foundation) also encouraged collaboration between academia and industry with partial funding by the government. Other federal and state funding has been important to the scientific community as well, especially in biotechnology. In biotechnology, the funding of basic research has led to a complex pattern of university-industry interaction that includes gene patenting and the immediate publishing of results (Rabinow 1996).U. S. drug companies are of course profit motivated but are regulated by the FDA (Federal Drug Administration) which is rigorous about its drug approvals, demanding clear scientific evidence in clinical research as its operation is basically science oriented. Product R&D and Clinical Trials Still, despite this R&D support, industry economics are driven by pharmaceuti cal R&D's very lengthy process, composed of discovering, developing and bringing to market new ethical drugs with the latter heavily determined by the drug approval process in major markets such as the U.S. , Europe and Japan6. These new therapeutic ethical products fall into four broad categories (U. S. Congress, OTA 1993): one, new chemical entities (NCEs) – new therapeutic entities (NTEs) – new therapeutic molecular compounds never before used or tested in humans; two, drug delivery mechanisms – new approaches to delivering therapeutic agents at the desired dose to the desired part of the body; three, 6 Ethical drugs are biological and medicinal chemicals advertised and promoted primarily to the medical, pharmacy, and allied professions.Ethical drugs include products available only by prescription as well as some over-the-counter drugs (Pharmaceutical Manufacturers Association 1970-1991). 12 next stage products – new combinations, formulations, dosing forms, or dosing strengths of existing compounds that must be tested in humans before market introduction; four, generic products – copies of drugs not protected by patents or other exclusive marketing rights. From the viewpoint of major pharmaceutical firms such as Merck, NCEs are the most important for the R of innovative drugs that drive industry success.Since it is a risky and very expensive process, understanding a company's R&D and drug approval process is critical to understanding the firm's strategy and competitiveness both domestically and globally. Statistics indicate that only about 1 in 60,000 compounds synthesized by laboratories can be regarded as â€Å"highly successful† (U. S. Congress, OTA 1993). Thus, it is very important to stop the R process whenever one recognizes success is not likely.Chemists and biologists used to decide which drugs to pursue, but R is now more systematic and is a collective company decision since it can involve expenditures of $250 to $350 million prior to market launch, thus the need for more parallel decision making. Key factors in the decision making process are expected costs and returns, the behavior of competitors, liability concerns, and possible future government policy changes (Schweitzer 1997). Therefore, stage reviews during drug R are common, and past experiences in development, manufacturing, regulatory approvals, and marketing can provide ample guidance.NCE's are discovered either through screening existing compounds or designing new molecules. Once synthesized, they go through a rigorous testing process. Their pharmacological activity, therapeutic promise, and toxicity are tested using isolated cell cultures and animals as well as computer models. It is then modified to a related compound to optimize its pharmacological activity with fewer undesirable biological properties (U. S. Congress, OTA 1993). Once preclinical studies are completed and the NCE has been proven safe on animals, the dru g sponsor applies for Investigational New Drug (IND) status.If it receives approval, it starts Phase I clinical trials to establish the 13 tolerance of healthy human subjects at different doses to study pharmacological effects on humans in anticipated dosage levels. It also studies its absorption, distribution, metabolism, and excretion patterns. This stage requires careful supervision since one does not know if the drug is safe on humans. During phase II clinical trials a relatively small number of patients participate in controlled trials of the compound's potential usefulness and short term risks.Phase III trials gather precise information on the drug's effectiveness for specific indications, determine whether it produces a broader range of adverse effects than those exhibited in the smaller phase I and II trials. Phase III trials can involve several hundred to several thousand subjects and are extremely expensive. Stage reviews occur before and during each phase, and drug develo pment may be terminated at any point in the pipeline if the risk of failure and the added cost needed to prove effectiveness outweigh the weighted probability of success.There is a data and safety monitoring board in the U. S.. This group has access to â€Å"unblinded data† throughout the conduct of a trial but does not let anyone else know what the data shows until it is necessary. For example, they will not divulge the efficacy data until the trial reaches a point where it seems appropriate to recommend stopping it because the null hypothesis of efficacy has been accepted or rejected. The FDA will usually insist on the drug proving efficacy with respect to ameliorating a disease before giving approval.If clinical trials are successful, the sponsor seeks FDA marketing approval by submitting a New Drug Application (NDA). If approved, the drug can be marketed immediately, though the FDA often requires some amendments before marketing can proceed (Schweitzer 1997). However, suc cessful drug development and sales not only requires approval of therapeutic value and validity but also that the manufacturing process meet stringent â€Å"best-practice† standards. To meet U. S. regulations, Phase IV trials are required. Manufacturers selling drugs must notify the FDA periodically about the 14 erformance of their products. This surveillance is designed to detect uncommon, yet serious, adverse reactions typically not revealed during premarket testing. This postapproval process is especially important when phase III trials were completed under smaller fast track reviews. These additional studies usually include use by children or by those using multiple drugs where potential interactions can be important (Schweitzer 1997). Furthermore, because drug development costs are so high relative to production costs, patent protection is another key aspect of a company's management strategy. Under U. S. aw, one must apply for a patent within one year of developing an N CE or the innovation enters the public domain. Therefore, patenting is usually early in the development cycle or prior to filing the NCE. But as this begins the patent life, shortening the approval period extends a drug's effective revenue life under patent. This makes managing clinical trials and the approval process an important strategic variable. Although creating a drug pipeline through various stages of development is relatively standardized, it is changing as companies use different methods to reduce time and related costs of new drug development.Companies are constantly pressuring the authorities to reduce NDA review times. As a consequence, the FDA did introduce an accelerated approval process for new drugs in oncology, HIV (AIDS) and other life threatening illnesses. A familiar feature of this new fast track review is the use of surrogate end points, or proxies for clinical end points which are measured by laboratory values but lack supporting clinical outcomes data. Accel erated approval speeds new drugs to market saving companies tens of millions of dollars in negative cash flow.However, it does not generate clinical values that insurers and managed care organizations demand. Countering this situation is thus the trend among drug firms to increase the complexity of their analyses during clinical trials. Companies have begun to use cost-effective analysis in their evaluation of new drugs in assessing competing product development investment alternatives and by integrating cost effectiveness analysis into their clinical trials. They also try to capture quality of life 15 measures such as how patients perceive their lives while using the new drug.Companies vary their analysis by country (Rettig 1997) since measures of effectiveness shift according to clinical practice, accessibility to doctors, and what different cultures value as important. There are no universal measures of the quality of life. At present, the components measured depend largely on th e objectives of each researcher but some companies are trying to introduce more systematic measures. Nevertheless, no matter what components are chosen for these studies, capturing, storing and using the data requires sophisticated software and data base management techniques which must be correlated with various families of molecules.Also, to avoid the moral hazard of focusing on the weaknesses in a competitor's drug or molecule, some analysts argue companies should examine all domains and their components (Spilker 1996) and move towards agreed performance standards. Furthermore, quality of life measures should only be used when they are of practical use to doctors in treating patients (Levine 1996). Such judgments should be sensitive and informed and should cover criteria related and important to a broad spectrum of patients while balancing measures which can be easily gathered and those that are more complex due to multiple treatments.These trends make clinical trials and data ga thering complex and expensive and put a premium on a firm's ability to manage the process efficiently, including creating and using large patient and treatment databases. Manufacturing and Process R&D The research process differs from production. Yet, both are important, particularly the firm's knowledge of scale-up. This is difficult because production requires uniformity at every stage. Making the average chemical make-up constant is not enough.Careful scale-up is essential to avoid contamination. Variations from the mean in commercial production must be very small. This requires constant control of variables such as the preparation of raw materials, solvents, reaction conditions, and yields. Often, experience will help achieve purer output in the intermediate processes. This better output alleviates problems in later processes. Thus, there is a learning curve in process R which starts at 16 the laboratory. An important distinction is between continuous process and batch process.I n the continuous process, raw materials and sub-raw materials go into a flow process that produces output continuously. This continuous process is more difficult because many parameters and conditions have to be kept constant. This requires a good understanding of both optimizing the chemical process and maintaining safeguards against abnormal conditions. However, continuous processes are less dangerous and require fewer people to control at the site than batch processing where the chemicals are produced in batches, put in pill form and then stored for future distribution and sale (Takeda 1992).The following compares initial process R once a compound is discovered and commercial manufacturing for a representative chemical entity proceeds (Pisano 1996). Comparison research process and commercial production for representative chemical 17 Process R in chemical pharmaceuticals involves three stages: (1) process research, where basic process chemistry (synthetic route) is explored and ch osen; (2) pilot development, where the process is run and refined in an intermediate-scale pilot plant; and (3) technology transfer and startup, where process is run at a commercial manufacturing site (Pisano 1997).Pisano argues that the scientific base of chemistry is more mature than biotechnology and this difference accounts for the more extensive use of computer simulations in drugs made by chemical synthesis than biotechnology-based drugs. Codifying the knowledge in chemistry and chemical engineering in software has a higher explanatory power than in biotechnology. In chemistry, many scientific laws are available for process variables such as pressure, volume, and temperature.Computer models can simulate these in response to given parameters to predict cost, throughput and yield (Pisano 1997). By contrast, biotechnology has aspects that resemble art dependent on an opprator's skill more than science which only requires the proper formulation. This is particularly true for large -scale biotechnology process (Pisano 1997). Simulation is thus less reliably extrapolated to commercial production. An additional factor is the importance of purification after large-scale production in bioreactors in biotechnology-based drugs.It is not rare at this stage of extraction and purification that commercial application becomes impossible, even though the scale-up is successful. Since avoiding contamination is the key in biotechnology-based drugs, extracting and purifying a small amount of the desired materials from a large amount of broth is critical. This process is done using filters, chromatography, and other methods specific to organisms (Koide 1994). Technological Factors All scientific frontiers affect pharmaceutical companies.Since no company can be an expert on everything, what technology to develop in-house and what to license or subcontract have become important issues. In general, pharmaceutical companies were skeptical of new developments in small biotechnolog y firms. Yet the latter now provide new techniques in basic research and fermentation to the MNCs. Other pharmaceutical 18 companies then tend to follow when competitors adopt ideas from less well known biotech companies. This is why many such companies announce platform deals with drug companies to get more financial resources and opportunities.Biotechnology based pharmaceuticals have entered a new development stage which requires the capital, manufacturing and marketing expertise of the large companies. New drug discovery methods and biotechnology each demand skills different from earlier times. Emerging biotech companies offer new ideas and research tools. Other new technologies such as stripping out side effects, specialized drug delivery systems, and â€Å"antisense† which cancels out the disease causing messages of faulty RNA also come from biotechnology (Fortune 1997).These are promising areas of drug research and potential products. Further, these biotech companies de velop new drugs more quickly than large firms. Where they often have difficulty is in managing clinical trials and the approval process, an area where large firms have considerable experience and expertise, including sophisticated software for tracking the large data bases and handling the new computerized application procedure. In addition, biotechnology demands skills in large scale commercial production which smaller startups may not possess.Thus, close association with large firms is logical and efficient, and one should expect more future alliances and joint ventures, though outsourcing to organizations that will manage clinical trials is growing. Another important factor which further encourages specialization in a network of companies is the industry's heavy use of information technology. Indeed, software strategies have become an important part of the industry through their impact on R, drug approval, including clinical trials, and control of manufacturing.If decisions in a science based industry are generally driven by knowledge creation capability dependent on human resources, having information sharing and access mechanisms so complementary capabilities can be efficiently exchanged and used becomes key to successful corporate strategy, especially when that knowledge is growing and becoming increasingly diverse. 19 There is some evidence suggesting when innovation is dependent on trial and error, it is best done when many players try different strategies and are held responsible for the projects they choose (Columbia Engineering Conference on Quality September 1997).If the large drug companies can successfully form principal-agent relationships with biotechnology companies doing advanced research in a particular area in the same way that Japanese parts manufacturers have with large assemblers, there may be opportunities for major breakthroughs without the drug companies having to put such trial and error processes inside the company where they may be less easy to manage. If the make or buy decision in a science based industry is generally driven by knowledge creation capability dependent on human resources, the basis for new product, i. . drug development, becomes more dependent on the nature and facility of information exchange between groups and individuals than asset ownership. Creating information sharing and access mechanisms so that complementary capabilities can be efficiently exchanged and used then becomes the key to successful corporate strategy in knowledge based industries, especially when that knowledge base is growing and becoming increasingly diverse as in the ethical drug industry. Another information sharing issue related to biotech is pharmacology.Classical pharmacology models are often irrelevant for biotech-based drugs. While some proteins express their activities across other species, others can be more species specific. Neither poor results nor good animal trial results need be predictive for humans. Parti cularly difficult problems are those related to toxicology since some animals develop neutralizing antibodies (Harris 1997). Technical support systems are important in biotechnology as well. One is transgenic animals. They provide information on the contribution of particular genes to a disease.This is done by inserting genes that have the function of expressing the phenotype, or interbreeding heterozygotic animals to produce â€Å"knockout animals† that suffer from inherited metabolic diseases. Transgenic animals are relevant to early phase clinical trials since the data from these animals contribute useful data on dose-selection 20 and therapeutic rations in human studies. In addition, they offer hints to which variables are secondary. This simplifies the clinical trial design.In general, significant input in the design and running of phase I and II trials must come from the bench scientists who built the molecule (Harris 1997). Since clinical trials for biotech drugs lack clear guidelines, inhouse communication among drug discovery, preclinical and clinical trials is important, especially due to the increased use of transgenic animals bred to examine inherited diseases. This process in phase I/II trials can be greatly facilitated by information sharing technologies and acts as another driver towards a more integrated approach to decision making using IT.Structure-Based Drug (â€Å"Rational Drug†) Design This is also true of structure-based drug (â€Å"rational drug†) design or molecular modeling which is a range of computerized techniques based on theoretical chemistry methods and experimental data used either to analyze molecules and molecular systems or to predict molecular and biological properties (Cohen 1996). Traditional methods of drug discovery consist of taking a lead structure and developing a chemical program for finding analog molecules exhibiting the desired biological properties in a systematic way. The nitial compounds we re found by chance or random screening. This process involved several trial and error cycles developed by medicinal chemists using their intuition to select a candidate analog for further development. This traditional method has been supplemented by structure-based drug design (Cohen 1996) which tries to use the molecular targets involved in a disorder. The relationship between a drug and its receptor is complex and not completely known. The structure-based ligand design attempts to create a drug that has a good fit with the receptor.This fit is optimized by minimizing the energies of interaction. But, this determination of optimum interaction energy of a ligand in a known receptor site remains difficult. Computer models permit manipulations such as superposition and energy calculation that are difficult with mechanical models. They also provide an exhaustive way to analyze molecules and to save and store this data for later 21 use or after a research chemist has left. However, mode ls must still be tested and used and eventually, chemical intuition is required to analyze the data (Gund 1996).Then the drug must proceed through animal and clinical trials. Still the idea behind this modeling is the principle that a molecule's biological properties are related to its structure. This reflects a better understanding in the 1970s of biochemistry. So rational drug design has also benefited from biotechnology. In the 1970s and 1980s, drug discovery was still grounded in organic chemistry. Now rational drug design provides customized drug design synthesized specifically to activate or inactivate particular physiological mechanisms.This technique is most useful in particular therapeutic areas. For example, histamine receptor knowledge was an area where firms first took advantage of rational design since its underlying mechanism was understood early (Bogner and Thomas 1996). The starting point is the molecular target in the body. So one is working from demand rather than finding a use for a new molecule. The scientific concepts behind this approach have been available for a long time. The existence of receptors and the lock-and-key concepts currently considered in drug design were formulated by P.Ehrlich (1909) and E. Fischer (1894). Its subtleties were understood, though, only in the 1970s with the use of X-ray crystallography to reveal molecular architecture of isolated pure samples of protein targets (Cohen 1996). The first generation of this technology conceived in the 1970s considered molecules as two topological dimensional entities. In 1980s it was used together with quantitative structureactivity relationships (QSAR) concepts. The first generation of this technology has proven to be useful only for the optimization of a given series (Cohen 1996).The second generation of rational drug design has considered the full detailed property of molecules in the three dimensional (3-D) formula. This difference is significant, since numerical parameters in the QSAR approaches do not tell the full story about the interaction between a ligand and a protein (Cohen 1996). 22 This has been facilitated by software and hardware becoming less costly. Thus many scientists are paying attention to computational techniques that are easier to use than mechanical models.This underscores the role of instrumentation in scientific research stressed by Rosenberg (1994). Availability of new instruments, including computers, has opened new opportunities in technological applications and furthered research in new directions. Three dimensional graphics particularly suits the needs of a multi-disciplinary team since everyone has different chemical intuition but appreciates the 3-D image. Rosenberg (1994) notes scientists who move across disciplines bring those concepts and tools to another scientific discipline such as from physics to biology and chemistry.This suggests the importance of sharing instruments, particularly computer images and databases th at help people work and think together. The predominant systems of molecular modeling calculations are UNIX workstations, particularly three dimensional graphics workstations such as those from Silicon Graphics. But other hardware such as desktop Macintoshes and MS-DOS personal computers on the low end and computer servers and supercomputers on the high end have been used. Computational power is required for more complex calculations and this guides the choice of hardware.A variety of commercial software packages are available from $50-$5,000 for PC-based systems to $100,000 or more for supercomputers. Universities, research institutes, and commercial laboratories develop these packages. Still, no one system meets all the molecular modeler's needs. The industry therefore desperately needs an open, high-level programming environment allowing various applications to work together (Gund 1996). This means those who for strategic reasons want to take advantage of this technology must now do their own software development. This is the competitive software compulsion facing many drug producers.In turn, the better they can select systems, develop their capabilities, and manage their use, the more successful they will be in drug development and in managing other aspects of the drug pipeline. 23 The choice of hardware is based on software availability and the performance criteria needed to run it. Current major constraints are the power of graphics programs and the way the chemist interacts with the data and its representation (Hubbard 1996). Apple computers have frequently been used in R because of superior graphics, though this edge may be eroded by new PCs using Pentium MMX as well as moves to more open systems.However, Dr. Popper, Merck's CIO, feels that the real issue, is the software packages for the MAC that research scientists know and rely on but that are not yet available for Windows NT. Thus, MACs continue to be used for Medical R&D which keeps the Windows ma rket from developing. There are, in addition, the elements of inertia, emotional attachment and training which are apparent at major medical schools too. In sum, rational design has opened a wide range of new research based on a firm's understanding of biochemical mechanisms. This means tremendous opportunities to enter new therapeutic areas.However, since rational design is very expensive, it has raised entry costs and the minimum effective size for pharmaceutical firms by putting a premium on those with a sequence of cash generating drugs. It also has favored firms with broader product lines able to spread the costs of equipment over many projects and to transfer knowledge across therapeutic areas, contributing to the increased cost of new drugs through higher R and systems support spending (Bogner and Thomas 1996). A similar analysis applies to the use of other new technologies because major U. S. nd Japanese companies to discover and develop drugs systematically, such as combina torial chemistry, robotic high-throughput screening, advances in medical genetics, and bioinformatics. These technologies affect not only R but also the organization and the way they deal with other organizations as many new technologies are complementary. For example, high-throughput screening automates the screening process to identify compounds for further testing or to optimize the lead compound. Thus, both regulatory and technological change have raised the advantage of developing innovative drugs, even 24 hough it is inherently risky and forces firms to develop better skills in using information technology to support the process. The Pharmaceutical Industry in the United States As explained above, healthcare and the pharmaceutical industry are closely intertwined, especially in the U. S.. Ever since the election of the Clinton Administration, U. S. healthcare has been the focus of heated debate. The pricing of pharmaceuticals in particular is one of the most controversial aspe cts of the industry. Estimates of the cost of bringing a new drug to market are up to over $250 million (DiMasi et. l. 1991). However, once drugs are on the market, the costs of manufacturing, marketing and distribution are relatively small. This loose connection between marginal cost and the market price seems to require further justification for drug pricing. While the obvious answer lies in the high fixed cost of drug development and the expensive and time consuming approval process prior to any positive cash flow, the answer is still not easy. Furthermore, the drug market is very complex for several reasons. First, there are many drug classes for which only a few products exist.Secondly, FDVIOs (health maintenance organizations) and other managed-care plans can negotiate substantial discounts because they are able to control the prescription decisions made by their participating physicians and because they buy in large quantities. These health organizations are highly price sens itive. This means drug prices are substantially determined by the purchaser's demand elasticity. This demand in turn determines investment decisions (Schweitzer 1997). Thirdly, the market for pharmaceuticals is highly segmented, both domestically and internationally, and price discrimination between and within national markets is common.Research studies cannot even agree on a common measure of wholesale price. Indeed, no measure captures actual transaction prices, including discounts and rebates (Schweitzer 1997). Fourth, consumers do not have enough scientific knowledge to assess different drugs. Thus, gatekeepers such as doctors are important (Hirsch 1975). 25 Yet, the current trend is towards managed care and HMOs who closely control costs. This development clearly indicates physicians are losing some autonomy in drug selection. Thus it is not surprising the market share of generic drugs has increased from 15% to over 41% between 1983 and 1996.This has forced the ethical drug man ufacturers to communicate both more effectively with the HMOs and managed care organizations in addition to physicians and to demonstrate the improved efficacy of their products as compared with generics. The acquisition of PBMs (pharmacy benefit managers) by pharmaceutical companies is an important development in this regard. Physicians now have to prescribe drugs available in the formularies of the managed-care organization. PBMs suggest cheaper alternatives to physicians for a given therapeutic benefit to save money.Eighty percent of the 100 million patient/member PBM market as of 1993 is controlled by the five big PBMs (Schweitzer 1997). In turn, when PBMs and mail-order companies expand, the small pharmacies lose the data necessary to examine various drug interactions. Since current U. S. law protects the propriety data of pharmacists and pharmacy chains, information on prescription for those patients who use pharmacies and mail-order companies actually becomes fragmented. It i s likely this development could affect pharmacists' jobs as well. A fifth reason is FDA approval does not mean new drugs are better than old ones.As noted above, this has pressured drug companies to prove the effectiveness in cost and quality of life their drugs bring to patients. Recently, drug companies have often tried to show how their drugs can help patients restore a normal quality of life. As already described, these concerns complicate the design of clinical trials. Consolidation among wholesalers, the greater complexity of clinical trials and globalization favor firms with substantial resources and are part of the reason for the industry's merger trend, especially between U.S. and European companies. The leading pharmaceutical firms ranked by 1994 sales are as follows (Scrip Magazine, Jan. 1996), with five of them the result of cross border mergers. Merck ranks 2d: 26 27 *3: Comparison is based on U. S. dollars *4: Calculation based on the sales of companies before mergers *5: Including OTC (over the counter drugs) *6: Excludes sales through strategic alliances Merck Merck is a multibillion dollar pharmaceutical firm with a long history going back to the 19th century in the U. S. and the 17th century in Germany.While in the past they have diversified into areas like animal health care, they are now very focused almost exclusively on human health, in particular, on ethical branded prescription drugs within human health care since they have found this is their most profitable business area. Also, given the many opportunities that exist, it will demand all their capital and energy for the foreseeable future. It has therefore spun off its animal health care business to a joint venture and sold its specialty chemical business.This strategy and motivation is similar to Takeda's focus on human health, whose market is more lucrative than its other businesses. The company appears to stress their ability to bring innovative drugs to market. Merck briefly tried to produce generic versions of their drugs, but found it was not worth the investment. In addition, they now assume someone else will produce their OTC (over the counter) versions too. This strategic focus is now underscored by their active formation of strategic alliances. For example, in the OTC medicine market in the U. S. nd Europe, but not in Japan, Merck relies on Johnson & Johnson through a joint venture with J to market, distribute and sell the OTC versions of Merck's prescription drugs. This means Merck has seen the OTC market as one way to lengthen the revenue stream for some of its products after their patents expire. In Japan, Merck's agreement is with Chugai Pharmaceutical Co. Ltd. They formed a joint venture in September 1996 to develop and market Merck's OTC medicines there (Merck 1996 Annual Report). Moreover, Merck and Rhone-Poulenc have announced plans to combine their animal health and poultry genetics businesses to form 28Merial, a new company that will be the wo rld's largest in animal health and poultry genetics (Merck 1996 Annual Report). Their primary strategic focus on ethical drugs seems appropriate, but as explained above it is also critical with respect to this strategy that they maintain relationships with those in scientifically related fields. Their work with Rhone-Poulenc must be examined in this light since improving their competence in the genetic business seems a good part of their strategy given developments in biotechnology and the Human Genome Project. This is because biotechnology-related drugs are often species-specific (Harris 1997).More knowledge about the genetic make-up of human and animal bodies may provide some insights into the appropriate choice of animals in pre-clinical trials from which to extrapolate observations to humans. Since this extrapolation is never perfect and you have to do animal experiments anyway, they have added to their competence in genetics via a joint venture with Du Pont called Du Pont-Merck Pharmaceuticals Co, whose investors are E. I. Du Pont (50%) and Merck (50%). This firm has capabilities in fermentation, genetic engineering/rDNA, cell culture, hybridoma, protein engineering, and tissue culture.By forming this alliance, Merck was able to exchange its strengths with Du Pont, an early investor in biotechnology. Du Pont-Merck Pharmaceutical has also developed its own drugs in cardiovascular disease. 7 Like other pharmaceutical companies, they continue to sell their branded products as long as they can once they have gone off patent but at a lower price in order to meet generic competition. Cost conscious HMO's increase this downward price pressure. Yet, according to Merck some demand for the branded product continues once they adjust the price downward.This is due to better quality, consistent dosage, and brand awareness of the original. Strategically, Merck sees itself as a growth company with a growth target of about 15% per year. This signals a continuing need for cash flow, i. e. from existing drugs, and a Merck sold its share to Dupont in 1998 for over $4billion, apparantly due to its ability to manage more drugs itself. 29 constant flow of new drugs, i. e. from R&D. They need this growth to continue to offer their shareholders the return they expect and to attract the personnel they need to develop drugs which is their corporate mission.Their products now cover 15-16 therapeutic categories. In five years this will expand to between 20 and 25 categories depending on the success of various stages of drug testing. Important new products in the pipeline include Singulair for asthma, Aggrastat for cardiovascular disorders, Maxalt for migraine headaches, and VIOXX, an anti-inflammatory drug, which works as a selective inhibitor targeted at rheumatoid arthritis. They are in phase III trials for all of these new drugs. Propecia for male pattern baldness recently received FDA approval. Merck's R is done internationally.To avoid duplicate investmen t, each research center tends to be focused. For example, the Neuroscience Research Centre in the Untied Kingdom focuses on compounds which affect the nervous system. Maxalt was developed in this Centre. The one laboratory in Italy studies viruses; while the one laboratory in Tsukuba, Japan (Banyu Pharmaceuticals) emphasizes the circulatory system, antibiotics, and anti-cancer research (Giga, Ueda and Kuramoto 1996). This concentration pattern often reflects the comparative strengths in R and the therapeutic demand structure in each local market.Still, selecting the appropriate R projects while critical to their success is very difficult. This is because no discipline in science has as blurred a distinction between basic and applied research as biotechnology. The distinction is usually not well-defined because applied research often contributes to basic research. Indeed, in molecular biology, science often follows technology. Still, as a general approach, Merck tries to focus on app lied research and development rather than basic science. They rely on universities and smaller biotech firms for the later.However, they do some basic research. For instance, th