COMPANY SCORECARD

BY CHINTANPAL SINGH MASTER INTERNATIONAL MANAGEMENT

Merck KGaA is a German Chemical and Pharmaceutical company. It was founded in Darmstadt , Germany by Friedrich Jacob Merck in 1668, making it the world’s oldest operating chemical and Pharmaceutical company. The Company was privately owned until going public in 1995. Merck has a network of nearly 200 companies in 64 countries and has around 40000 Employees. Merck KGaA operates mainly in Europe, Africa, Asia, Oceanic and Latin America. Since Merck & \Co. holds the right to Merck name in US & Canada, the Company operates under the umbrella brand name EMD Chemicals in North America. The company Manufactures innovative prescription drugs as well as over the counter Products for its Pharmaceutical business sector and the Chemical sector of the comp- Any offers specialty products for electronic ,printing, coating, cosmetics, food, Pharmaceutical and Biotech industries. Merck has taken over Blue chip Companies like Serono SA, Switzerland’s largest Bio- Tech firm and Billerica based Millipore Corporation for EUR 5.3 Billion (US $ 7.2 Bill- ion) Every year Merck spends millions and billions of dollar's on its research to produce quality products. The Company’s Revenue which was recorded in 2009 was EUR 7.747 Billion. The CEO of the company is Mr. Karl-Ludwig Kley.

Eur Mill 1st Quat 2009

1st Quat 2010

change in %

sales 2,022.8 1,756.9 15.1

Commision income

76.1 101.5 -25.1

Total revenue 2,098.2 1,858.5 12.9

Cost of sales -486.6 -456.7 6.5

Gross Margin 1,612.2 1,401.7 15.0

Financial Data of Merck

Mission Statement

To operate a worldwide business that produces meaningful benefits for consumers, market partners and community. To secure an acceptable return on capital for investors, Achieve a competitive advantage through the excellent quality of products, systems and services. Have an obligation to respect the environment and to preserve and prevent human life

Values

based on courage, achievement, responsibility, respect, integrity, and transparency. These values determine our actions in our daily dealing with customers and business partners as well as in our teamwork and our collaboration with each other

Goals to be among the fastest growing companies in our markets and strive for “quality growth” with revenue growth exceeding cost increases. To gain sustainable economic success and achieve profitable growth.

Finan

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STRATEGIC MAP

INCREASE REVENUE

INCREASE PROFITABILITY

INCREASE INTERNATIO

NAL BASIS

INCREASE CUSTOMER

LOYALTY

LOWER FIXED COST

INCREASE TARGETED

ACQUISITIONS

REDUCING WORKPLACE ACCIDENTS

CUSTOMER CENTRIC

INNOVATIVE SOLUTIONS

INCREASE INVESTMENT

PRODCUT PREVENTION (RECORDING

MATERIAL

IMPLEMENTING JOB POSITIONS ACCORDING TO

INDIVIDUAL TALENT

consistency and quality

of HR offerings and

support

INCREASE NUMBER OF

WOMEN IN TOP MANAGEMENT

COMPANY’S VALUE UNDERSTANDING

AMONG EMPLOYEES

COMBATING COUNTERFEIT

MEDICENS

INCREASE PUBLIC

RELATION

MERCK’S STRATEGY STORY

Merck is pursuing a long-term financing strategy based on a strong financial position. The company wants to optimize costs of capital by maintaining a strong equity position, high operating cash flow and by making economical use of resources, Grow by means of their own resources as well as through acquisitions. Their goal is to be the fastest growing company in the market with a strategy of revenue growth exceeding cost increases. In order to reach the goal, Merck focuses on culture of innovation, awareness for high quality products, customer focus and reliability. Its core competencies are the traditionally high quality of products. Understanding the needs of patients and customers in the marketplace ensuring long-term success based on trust which leads to high customer loyalty and satisfaction. Merck want to strengthen position as leading biotech innovator and obtain a further competitive edge through expertise in chemistry and through the cross-fertilization of biotechnology. Special attention is given to expand Merck's market presence in biosciences and biomanufacturing tools therefore spend more than € 1 billion every year on innovation to serve the well-being of many people and to address social issues – while at the same forming the basis for further business success. Merck ensures that its employees find the best prerequisites and continuously expand our research capabilities through acquisitions, partnerships and strategic alliances across the borders of industries and countries. Research and development of innovative drugs and chemicals is crucial to long-term success for this the focus of their research in Pharmaceuticals is on the development of new therapies for cancer, treatments for neurodegenerative diseases. Merck has been recognized by enabling its employees to share in the company’s success for which the company feels that it is the employees which makes an organization achieve goals.

MERCK BALANCE SCORECARD BALANCED SCORECARD

STRATEGIC GOALS MEASURES TARGETS INITIATIVES

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.INCREASE REVENUE .INCREASE PROFITABILITY .LOWER FIXED COSTS

FREE CASHFLOW NET VALUE ADDED(NVA) EBIT

7 – 11 % 3 billion euro EUR 350 Mill

EFFICIENCY IN RESEARCH AND DEVELOPMENT Focus areas, China, India and America No exceptional items

CU

STO

ME

R

PR

ES

PE

CTI

VE

.INCREASE CUSTOMER LOYALTY

.INCREASE PUBLIC RELATION .CUSTOMER CENTRIC INNOVATIVE SOLUTIONS .INCREASE INTERNATIONAL BASIS

CUSTOMER SERVICE INDEX CUSTOMER SATISFACTION INDEX SHARE OF FOREIGN SUCTOMERS

------------------------ SPENDINGS ON INNOVATION

INTERNATIONALISATION OF PRODUCTS

INTE

RN

AL

PR

OC

ES

S

PR

ES

PE

CTI

VE

.INCREASE TARGET AQUISATION .REDUCING WORKPLACE ACCIDENTS .PRODUCT PREVENTION COMBATING COUNTERFEIT MEDICINES

Number of acquisitions LOST TIME INJURY RATE UNIFORM SUBSTANCE DATA MARKET REPORT

NO TARGET 5.0 RECORDING MATERIAL END OF YEAR

------- ------ ------- ------- FOCUSING ON SAFETY AWARDS AND SAFETY CULTURE ASSESMENT issues will be ad- dressed through uniform substance data; PRINTING MANUELS IN SPANISH AND FRENCH

LEA

RN

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INN

OVA

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PE

CTI

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IMPLEMENTING JOB POSITIONSTO INDIVIDUAL TALENT . consistency and quality of HR offerings and support .INCREASE NUMBER OF WOMEN IN TOP MANAGEMENT .COMPANY VALUE UNDERSTANDING AMONG EMPLOYEES

PERFORMANCE REPORT MERCK EMPLOYEE SURVEY PULSE WOMEN EMPLOYEE TURNOVER Percentage of employees taken part in workshops

+ 150 employees + 70 % Positive + 11 % + 60 %

identifying those employees who are candidates for executive positions ------- ------- ------ --- By redefining the executive positions All employees will have attended a Dialog Map workshop.

COMPANY’S PERFORMANCE MEASURES

FINANCIAL PRESPECTIVE the company’s ultimate goal is increase revenue ,higher profits and lower fixed cost .in terms of goals financial success is by operating result and free cash flow as a percentage of total revenues. free cash flow, which is more transparent and meaningful with respect to the financial situation. For higher profitability the company uses GVA (Gross value added) as a key measure. Value added is a measure of the economic strength of a company and indicates how the result is achieved and for what it is used. EBIT is another measure from income statement of the company indicating earnings and costs of the company.

Customer Perspective Merck values its customer and their motto is to meet the expectations of their customers. For Merck entrepreneurial success starts with people. So for the goals like customer loyalty towards their product, company uses customer loyalty index as a key indicator in order to know how loyal the customer are and for customer centric solution, company focuses on customer satisfaction in order to know the satisfaction level of customer towards products and innovation. To know the customer internationally, share of foreign customer is used

INTERNAL BUSINESS PROSPECTIVE 1. INCREASE TARGET ACQUISITION – NUMBER OF ACQUISITION REPORT (Company wants to reach its objective through acquisition, in order to establish a target, a report is made for the acquisition done and how many) 2.REDUCING WORKPLACE ACCIDENT--- LOST TIME INJURY RATE ( Measurement to indicate time loss during injury of workforce. So in order to reduce accidents, measures are taken with the help of set targets and that is done with a KPI) 3. PRODUCT PREVENTION --- UNIFORM RECORDING SUBSTANCE DATA (the material quantities and relevant material data and also providing information on hazardous nature of the product. Therefore a company uses this measurement as tool of information) 4.COMBATING COUNTERFIET MEDICINES– MARKET REPORT ( Company gets feedback and report from the market for these products and acts accordingly

LEARNING AND INNOVATION PRESPECTIVE 1.  IMPLEMENTING JOB POSITION TO INDIVIDUAL TALENT --- PERFORMANCE REPORT (A report of performance of

individual within a company. So with this information the management can assign jobs)

2.  QUALITY OF HR OFFERING AND SERVICE --- MERCK EMPLOYEE SURVEY PULSE ( A survey program developed in company in order to know the needs of employees and a feedback for improvement)

3.  COMPANY’S VALUE UNDERSTANDING AMONG EMPLOYEES – PERCENTAGE OF EMPLOYEES TAKEN PART IN WORKSHOPS ( Company records the number of employees attending the training and workshops so that a company can have a clear picture of what percentage the employees attended and how many not attended)

4.  INCREASE NUMBER OF WOMEN IN TOP MANAGEMENT ---WOMEN EMPLOYEE TURNOVER IN TOP LEVEL ( A key indicator of the figures of women offered a higher position in company. Targets are set and strategic plans are implemented.