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Essay Instructions: Merck and Corporate Social Responsibility

In 1978, a Merck scientist, Dr. William Campbell, discovered an anti-parasitic compound that could potentially be developed into a new drug to treat river blindness, a disease caused by larvae that leads to intense itching, blindness, and even death in some cases. At the time, over 15 million people were afflicted with river blindness, mostly in third world countries. Previous drugs that treated river blindness proved to be unsafe, leading to serious side effects.

At the time, director of Merck’s research laboratories (and future CEO) Roy Vagelos knew that research and development for the drug, Mectizan, would cost the company tens of millions of dollars and perhaps up to a decade to complete. Moreover, once the drug was produced, there was little chance that the drug would make a profit, since there was no guarantee that international funding could be procured.

In 1987, the drug Mectizen was approved, but Merck was unable to raise money from the international community to deliver it to those who needed it most. Shortly after its release, Vagelos and Merck decided to give away the drug for free forever. (In 1987, Merck company was worth about $5.1 billion in assets.) After ten years, the decision cost Merck over $200 million but saved millions of people from the disease.

Today, Merck remains a flourishing pharmaceutical company. Merck’s financial statements for 2003-2007 can be found at http://www.merck.com/finance/reportsannual.html.

Further information about this case study can be found in this book:
"Honest Work: A Business Ethics Reader. Joanne Ciulla, Clancy Martin, Robert Solomon eds., (Oxford University Press, 2007)"


Your task:

Imagine that you are on a committee in which you are asked to give a 4-5 page (double spaced) opinion on Merck’s decisions to research and give Mectizan away for free forever. Did Merck make the right decisions?

It is important that you frame your opinion within the context of corporate social responsibility. Some questions that might guide your opinion:

• What responsibilities does a corporation have to society?
• Did Merck violate its fiduciary duty to its shareholders?
• Do “socially responsible” actions such as Merck’s set a dangerous precedent for a free market society?
• Were there other options that Merck could have exercised that would have been less costly?

The essay will need to include the following:
1. A thesis (stated in the beginning paragraph) that is argued for throughout the paper
2. A clearly articulated and well-defended position on CSR using:
A)Milton Friedman's theory: "The Social Responsibility of Business is to Increase Profits"
B)Utilitarianism

4. Possible objections to your view and a response to these objections, such as:
A)R. Edward Freeman's theory: “A Stakeholder Theory of the Modern Corporation”

The following are also required the essay:
• Footnotes where you quote or use an idea from an outside source
• A bibliography at the end – MLA format preferred.

For the bibliography, you can use the book or other sources.

Essay Instructions: Merck & Co. Inc. and Novartis International AG - Two Pharmaceutial Companies

Merck & Co. Inc


Here's the homepage for Merck.

http://www.merck.com/index.html

Novartis International AG


Here's the homepage for Novartis.

http://www.us.novartis.com/

Required:


Go to each company?s website and review the most recent financial statements for each company and answer the following questions.
?What accounting standards are used?
?What auditing standards are used by the external auditors?
?Analyze and comment on the differences in the annual statements found on the companies' websites. Provide a few specific differences in content and format.
?How comparable are these financial statements?

Prepare a table for a period of three years showing some key financial information for the two companies. Include at least four items from the balance sheet, four items from the income statement, and four items from the statement of cash flow. Having reviwed and analyzed the financial information, please elaborate on the following three questions.
1.Which one of the two companies is the most profitable?
2.Compare growth of revenues versus income over time and between the two companies
3.How can you explain the difference in profitability between the two companies?
4.Indicate in detail the information you used to answer the above questions.

Essay Instructions: We will continue to review the financial statements of Merck and Novartis to learn additional information. The emphasis of this Case is to review the income statement, balance sheet and computation of ratios.

Review the financial statements for the companies and answer the following questions for the last reporting year:

Balance Sheet
?What components of stockholders' equity do each of the companies disclose?
?Do the companies have preferred stock shares outstanding? If so, what special features do these shares contain?
?Do either of the companies report treasury shares? If so, do the companies disclose the reason for reacquiring the shares?

Income Statement
?What are the basic and diluted earnings per share for each company?
?Have the companies reported any discontinued operations?
?Do the companies disclose any stock compensation plans? If so, are they reporting such plans under the fair value or intrinsic value methods? What was the value of compensation expense measured for any outstanding stock option plans?


Financial Ratios


Compute the following ratios. Also, interpret and assess each group of ratios for the company. What type of story are the ratios telling the analyst?
?Profitability ratios: ?Gross profit margin
?Net profit margin
?Return on stockholders' equity

?Liquidity ratios: ?Current ratio
?Quick ratio
?Inventory turnover

?Leverage ratios: ?Debt-to-assets
?Debt-to-equity
?Times-covered ratio


What type of information do you find in footnotes to the financial statements?

Do you find the balance sheet, income statement or other measures such as ratios the most informative? Comment on the advantages and disadvantages of using ratios for analysis.


Modular Case Assignment Expectations

It is important to answer the questions as posed. The discussion should be from 3 to 5 pages and written in a clear and concise manner. Support your discussion with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved.

Essay Instructions: ?REQUESTING WRITER USERNAME: obsidiankc?

Assignment 2: Compensation Plan Outline On Merck Inc.

Using the same company (Merck Inc) you researched in Assignment 1, evaluate the company?s compensation plan to determine how it could be improved.


Write a six to eight (6-8) page paper in which you:
? Evaluate the existing compensation plan to determine if it is the most appropriate for your company. Explain your rationale.
?
? Determine the most beneficial ratio of internally consistent and market consistent compensations systems for the company you selected.
? Evaluate the current pay structure used by your company and assess the recognition of employee contributions.
? Make two (2) recommendations for improving the effectiveness of the discretionary benefits provided by the company you selected.
? Evaluate the types of employer-sponsored retirement plans and health insurance programs provided by the company you selected and compare them to that company?s major competitors.
? Use at least three (3) quality references. Note: Wikipedia and other Websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:
? Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; references must follow APA or school-specific format. Check with your professor for any additional instructions.
? Include a cover page containing the title of the assignment, the student?s name, the professor?s name, the course title, and the date. The cover page and the reference page are not included in the required page length.

The specific course learning outcomes associated with this assignment are:
? Evaluate the effectiveness of traditional bases for pay (seniority and merit) against incentive-based and person-focused compensation approaches.
? Compare and contrast internally consistent and market-competitive compensation systems.
? Evaluate the role of benefits in strategic compensation.
? Use technology and information resources to research issues in compensation management.
? Write clearly and concisely about compensation management using proper writing mechanics.

Grading for this assignment will be based on answer quality, logic / organization of the paper, and language and writing skills, using the following rubric.