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1 <p><b>PLIVA launches new strategy for the 21st century </b></p>
2 <p><b>PLIVA’s new vision and new strategy represents the company’s response to
3 the challenges that globalisation is setting before pharmaceutical companies.
4 At the same time, it represents an adjustment to the times and circumstances
5 which characterise this industry at the end of the 90’s and will depict the
6 trends in the next decade. The new organisational model focuses on pharmaceutical
7 business as the core area of the company’s activities. </b></p>
8 <p>Zagreb, 17 December 1998 </p>
9 <p>At its meeting held on 16 December 1998, PLIVA’s Supervisory Board supported
10 the PLIVA XXI concept which defines the company’s strategy for the 21st century.
11 The PLIVA XXI project is moving into its implementation phase with a business
12 reorganisation model which is the result of solutions developed earlier regarding
13 strategy and business processes. </p>
14 <p>Although PLIVA is today considered the most successful company in Croatia and
15 largest pharmaceutical company in the region and has in the last five years
16 recorded excellent business results as well as continuous growth and development,
17 it is necessary to redefine its organisational structure for the company to
18 continue to grow and strengthen its position in the pharmaceutical industry.
19 </p>
20 <p>Several major factors influenced this decision being taken. With competition
21 on target markets increasing, including both large multinational companies and
22 local companies, and taking into consideration the anticipated further consolidation
23 of the pharmaceutical industry, it will become ever harder for companies to
24 differentiate themselves and achieve competitive advantages, especially in response
25 to customer needs. Also, it is necessary to create the preconditions that will
26 allow the company to compensate for losses that the company may incur after
27 the patent for PLIVA’s drug azithromycin expires. </p>
28 <p>That is why PLIVA commenced the PLIVA XXI project in co-operation with PriceWaterhouseCoopers
29 more than a year ago with the intention to redefine its vision and business
30 strategy. The goal of the new vision and strategy is to ensure continuous long-term
31 growth of the company, increase shareholders’ value, and develop key processes
32 and skills, as well as the corporate culture that will support PLIVA’s strategy.
33 </p>
34 <p>The PLIVA XXI project is divided into three phases. Initial activities were
35 focused on analysing the current situation, which helped to determine what areas
36 needed to be changed and to what extent. Throughout the entire process the guiding
37 idea was a new vision of PLIVA as the leading pharmaceutical company in Central
38 and Eastern Europe, able to generate superior response to customer needs and
39 expand in other markets (USA, Western Europe and Asia) while continuing to invest
40 largely in research and development, and thus become the most significant middle-sized
41 pharmaceutical company on a global level. The main strategic feature of future
42 business operations is the Customer Intimacy concept, which is a new business
43 philosophy which hasn’t been applied totally in the pharmaceutical industry
44 up to now. The basic characteristic of this concept is understanding customer
45 needs better than the competition and responding to them with products and operating
46 solutions which exceed the expectations of customers. </p>
47 <p>After defining the strategic concept, the second phase was concentrated on
48 developing solutions by re-engineering key support processes such as: strategic
49 planning and budgeting, developing new products, production and marketing planning
50 and integrating primary and secondary production. At the same time, the task
51 of the project team at that stage was to prepare the company to accept the necessary
52 changes and use new ways of working and new behaviour which would result in
53 establishing an entrepreneurial and winning corporate culture that supports
54 the company’s goals. Prior to the implementation phase, a new organisational
55 model was designed in order for the implementation of solutions to be fully
56 supported with an appropriate organisational structure.</p>
57 <p> The new organisational model is in line with the new strategy and key processes.
58 It defines the pharmaceutical business as the core business of the company and
59 the business activity which is most responsible for achieving corporate goals.
60 Therefore, all internal resources have been allocated for that purpose. The
61 intention is to also have integration on a horizontal level, thus giving PLIVA
62 Krakow, and all pharmaceutical companies owned by PLIVA in the future, the same
63 level of independence in decisions, as well as responsibility, as the central
64 pharmaceutical operations have. Such an organisation should result in faster
65 and better response to the needs of local customers.</p>
66 <p> Within the process of integrating all the pharmaceutical aspects of the business
67 into one unit, New Product Development has been established as an independent
68 organisational unit which reflects the dedication of the company to innovation
69 as one of it major values. On the other hand, the newly appointed Portfolio
70 Management Board will enable research and development activities to be fully
71 focused on achieving pharmaceutical goals. While the implementation of designed
72 solutions is underway, the organisational model will be further developed in
73 accordance with a previously defined transitional plan until the new organisational
74 model is fully implemented. </p>
75 <p>Commenting on the new strategy and organisational structure, Zeljko Covic,
76 President of PLIVA’s Management Board said: “PLIVA has shown its willingness
77 to change, accepting capability to change as an asset that distinguishes successful
78 companies. Even though PLIVA has good financial results and keeps strengthening
79 its growth, the company has decided to undertake a significant business restructuring
80 process because the management wants to ensure all the preconditions for long-term
81 sustainable development, which in concrete terms means equipping the company
82 to be able to acquire new skills for the 21st century. I believe that the new
83 strategy and new organisational model will define PLIVA as a company whose major
84 activities are focused on further strengthening its core-business - pharmaceuticals.
85 This will enable PLIVA to become a fully integrated company that can continue
86 to increase shareholders’ value.” </p>

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