Regional Integration- at what cost?

Take a look at the business cards that you've received recently and you'll notice that quite a number of companies would have SIN/MAL+/-INDO/BRU following the title. Regional integration have become commonplace, with SIN/MAL being the most prevalent.

Integration surely has its advantages, most regional offices would have researched and studied widely into its feasibility before embarking on such an approach. Having been implemented into so many companies just goes to show that the pros probably outweighs the cons.

Detractors may argue that the markets are vastly different, in terms of product mix, pricing due to currency differences, LCM, etc. But the underlying impetus for such a integration is cost, the need to reduce cost comes at a time when the global pharma industry is facing increasing challenges and a relativey dry pipeline. Merging countries that are geographically, culturally and commercially similar (identical is an impossibility) does make excellent business sense.

The difficulty lies not in the integration process. (this is afterall a top down initiative) but rather, the development of a viable business model that is able to transcend any potential differences, form operative synergies and complement the styles of the various countries.

Many organizations have attempted and others exploring. Depending on the objectives set, these organizations have seen varying levels of success measured in terms of overall cost reduction. Some companes adopt a SBU model, one company makes its senior managers travel between the countries, another company makes its marketers cover two countries. Ultimately whatever approach the management decides to implement, it should give serious considerations about how the integration is going to impact the existing business and workforce. Some amount of analysis would be useful in determining if whatever cost reductions would be significant and sustainable.

Most importantly, my personal mantra is "if it ain't broke, why fix it?" if an organization is already running on a cost-effective model and productivity is optimized, meeting projected profits with minimal spend, following best practice guidelines, why go through all the hassle?

Take one large pharma for eg. a couple of years ago, this company saw a couple of new product launches which yielded grand profits and staff motivation was an all time high. When the company announced a merger with MAL, the GM equivalent was reassigned, almost all the product managerial positions went to MAL candidates, a couple of SIN PMs retained their jobs but are required to cover both countries, some PMs were demoted to reps. The marketing dept were made to report to the Marketing director in MAL while the local director was given another regional posting. The sales were relatively unaffected. Almost overnight, staff morale plummeted. While there weren't any noticeable job cuts, the indications were clear. career development is limited. besides competing locally, the talent pool has just gotten wider and its obvious MAL calls the shots. Existing managers who kept their jobs were penalised by having to work harder, to learn about another market, devise strategies and cope with the demands and pressures of new bosses.

What followed was an exodus of some of its brightest talents, weak sales, loss of market share and poor customer relations. 2 years on, the split of operations finally occured. Much to the delight of many still in the company, the damage persists. the company may have regained its momentum in the sales of its products, but in terms of its HRM, it has failed miserably. the original strong team of marketers have now been reduced to a group of quickly promoted and inexperienced reps who may not have the strong market insights necessary to manage a successful brand. i lament the unrealised potential of some of its megabrands and wonder if it would ever recover from a bad case of integrative mismanagement.

My point is. Singapore may be a small market, but it is still a highly individualised market with its own regulatory authorities, healthcare system and policies. DO what is best for the individual setups first before considering integration. The true cost to the company may not only be in dollar and cents.