Managing a Severe Crisis: PharmaCorp in Ukraine

In early 2015, the newly appointed country head of PharmaCorp’s operating unit in Ukraine faced internal and external challenges in managing the global pharmaceutical company’s operations in the crisis-ridden country. Since November 2013, Ukraine had undergone massive disruptions, including riots in Kiev, the annexation of Crimea by Russia, and a war in its easternmost region. Amid these economic and political turbulences, PharmaCorp Ukraine experienced plummeting sales, increased workload, amplified human resources issues, and decreased market share. Furthermore, the multinational corporation’s internal routines became less effective in the context of the crisis. Although the regional headquarters in Lausanne, Switzerland, offered guidance and resources, inefficiencies in responding to local issues emerged during the crisis. Should PharmaCorp exit the market? Or should it stay in Ukraine and revise its local marketing strategy by offering more innovative products? Should it implement cost-saving measures? Should the business model be revised to gain more autonomy for its operations? The country head was scheduled to meet with representatives from the regional headquarters and needed to prepare a comprehensive strategy for improving the local situation.

The case is suitable for undergraduate and MBA courses in strategic management, international business, or political risk management. Students will deepen their knowledge about the decision-making processes in multinational corporations, the management of headquarters–subsidiary relationships, crisis management, and political risk management. After completion of the case, students will be able to perform the following actions:<ul><li>Illustrate how a multinational corporation manages the tension between pressures for global integration and adaptations to local contexts.</li><li>Explore how a crisis in a host country challenges management at both a multinational corporation and at one of its subsidiaries.</li><li>Assess the role of a country head, serving as the link between multinational corporation headquarters and local operations.</li><li>Develop suggestions to manage local operations and evaluate their applicability in the context of a crisis in a host country, given the global standards and procedures of the multinational corporation.</li><li>Demonstrate how political risk in a host country affects the management of a multinational corporation, and show how such risk can be handled.</li><ul>

• subsidiary management, emerging market subsidiary, headquarters-subsidiary relations, crisis management, political risk, regional headquarters