Case Study: Clinton Pharmaceutical

1. Do Exhibits 1, 2, and 3 suggest any problems that might explain or be related to the profit declines?
It is clear that productivity gains have the potential to contribute to an increase in business profit (Lovell and Grifell-Tatjé, 1996). Similarly, the case study highlighted that, Clinton Pharmaceutical’s key success has always been its high productivity which resulting low unit production costs. However, Exhibit 1 shows that from 1999 to 2003 their productivity has been decreased by 21%. Likewise, their profits also have been down 18 percent during the past two years (1999 = –13%; 2000 = –23%). So, these productivity decline associate with high employee turnover and absenteeism may be the factor of declining their profit.
The result of high staff turnover may causing the company skills base to deteriorate, or perhaps the appointment of new and less effective supervisors to the production department. Moreover, new employees need time to train and get used to the work before they reach full productivity. Clinton Pharmaceutical’s employee turnover has been risen from 14% to 29% within five years as shown in Exhibit 2. Also, the employee absenteeism may leads to decline in productivity. There is scant evidence on the productivity losses from worker absence, despite the fact that absenteeism results in an annual loss of two percent of work time in the U.S (Herrmann and Rockoff, 2011). In Clinton Pharmaceutical, employee absenteeism has been
One of this is lack of training and development. Training and development includes all attempts to improve productivity by increasing an employee’s ability to perform. (Yohanna and Ahmed, 2014) Lack of training increases the amount of time necessary to complete production. Also, supervisors and more experienced employees must have to spend time monitoring untrained workers, which detracts from their