MBA50 Organisation Case Study: Millennium Health Sciences Assessment 1 Answer
Organisation Case Study – Millennium Health Sciences (MHS)
The establishment of MHS took place in 1968 by two scientists. They had wanted to develop skin care products which were dermatologically tested. Therefore, they developed many skin care products which were ahead of their time. This company has moved into a number of unrelated businesses. It has two business units which are Dermatec and Neutrino, Dermatech produced only advance skin care products while Neutrino manufactures Nutritional and Vitamin supplement.
The term of disruptive innovation has been coined by Christensen (Christensen, C., Raynor, M. and McDonald, R., 2011). He had described this process as a process through which any service or products are rooted initially at the bottom of a market and then it moves up in the market relentlessly and displaces the established companies (Christensen, C.M., Raynor, M.E. and McDonald, R., 2015). The MHS capacity for disruptive innovation is analyzed with the help of four perspectives given as follows.
In this subset, an analysis of the human resources, allocation of resources, organizational structure and culture are assessed for the capacity to innovation disruptively (Yu, D. and Hang, C.C., 2010).
- The human resource of the company has its most senior staff from science field. Nearly 60-70 percent of them have a degree either in microbiology or pharmacology.
- The structure of this company is such that each of these four units are headed by a general manager. And the decision making is in the top-down fashion where decisions are made at the top comprising of general managers and the executive teams.
- The culture of the organization has one specific element which is experience with this particular company. This is considered in the promotion of the executives regardless of their experiences elsewhere.
- Most of the earnings of the company are given to the shareholders to maintain the share price. And meagre resources are allocated for research and development.
The organizational capacity to innovate from an internal perspective shows that it has a capable staff for innovating however, it lacks in the areas of structure, culture and resource allocations as these are acting as obstacles in the generation of new ideas which can be adopted by the company immediately.
It considers the external forces which does not allow for companies innovating disruptively (Petrick, I.J. and Martinelli, R., 2012). It can be pressures from the suppliers and other resource providers, lack of financing systems and entrepreneurship, market trends.
- The executive committee does not want to allocate more funds to the research and development as the shareholders who are the primary suppliers of finance.
- There is a lack of financing in the company as it is lacking funds to increase its research and new product development activity.
- There is also a lack of intrapreneurship as the young and talented people are seldom given opportunities to lead the company.
- The market trend for their products have stagnated in their domestic market which provides them an opportunity to develop new products.
Therefore, from an external perspective the company is lacking in having the capacity to innovate as it is witnessing an increased pressure from the shareholders, there is lack of intrapreneurship and funds needed for research and development.
The company was established because of the scientific developments in the skin care products done by two scientists. It is essentially a research and development company and therefore much stress was laid on the technological development of the new products in the initial years of the company. However, with the growth of this company the research into skin care products have not accelerated in tune with the market. This is evident from the fact that not many new products were developed after its inception. This has led to stagnation of the company in the domestic Australian market.
Hence from this perspective, the company needs to invest in more resources to accelerate the new product development and enhance the organizational capacity to innovate.
The company is mostly comprised of staff who have a science background particularly from pharmacology and microbiology. Even in the marketing department the personnel were previously working as a scientists and then they had moved to the marketing department. This has created a problem for the company as the personnel not having marketing experience are not having the capacity for innovation in the field of marketing.
The company had good sales figure in the domestic market of Australia however it is started to stagnate. This shows that the personnel in this department failed to understand the need for new product for this market. Also the declining sales figures of the products in this market is accompanied by rise in the demand of the same products in the markets of Indonesia and China. The marketing personnel have not focused on any other country except these two for establishing their products.
There are good opportunities in the Asian markets as the products of the company is suited to the Asian skin types and are also willing to pay an increased amount. The disruptive innovation in such high end markets can be fruitful for the company (Akbar, M.F. and Ozuem, W., 2019). However, the company has not taken effective promotion and other marketing activities for establishing their brands in these foreign market. This is also to be noted that exports comprise of 30 percent of the company’s revenue and still little efforts have been done to increase the foreign market share.
This is due to the lack of expertise amongst the personnel of the marketing department who are unable to devise innovative ways for marketing their products. There is too much focus on the domestic market and the potential of foreign market particularly the Asian market is ignored which can provide significant revenue to the company.
It is thus concluded that MHS has the innovative capacity from an internal and technological perspective. As most of its employees are from pharmacological and microbiological background and also the company has good laboratories for product innovation. But the company faces obstacles from the poor marketing of its products and pressure from the external sources which does not allow to invest more in research and development of new products. Therefore, it is recommended that the company must increase its marketing activities in the foreign market. This will help in getting more revenue from its existing products. With this generated revenue they can develop new products for their domestic market where the sales of their existing products have stagnated. This will increase the organizational capacity to innovate.