Organizational Structure in the Pharmaceuticals Industry

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Organizational Structure in the Pharmaceuticals Industry

Pfizer and Johnson & Johnson are the largest and most successful pharmaceutical companies in the world today. Each company has a massive workforce and conducts business in countries all over the globe. Both companies have used a high degree of horizontal differentiation in order to manage their business units more effectively. Operating companies are grouped together by their function, as well as the type of product the produce. There are concerns about the lack of control that results from decentralization. The benefits, however, appear to outweigh the risks, as evidenced by the successes enjoyed by Pfizer and Johnson & Johnson.

Organizational Structure in the Pharmaceuticals Industry
Johnson & Johnson and Pfizer are both pharmaceutical companies that can be found near the top of the Fortune 500 list. Johnson & Johnson was ranked 33 and Pfizer 50 on this year’s list (Fortune 500, 2010). The complexity of this industry requires a very large workforce with many specialized roles. More specialized roles in an organization call for more differentiation within the company. There is a great deal of all three types of differentiation within each company: horizontal differentiation, vertical differentiation, and spatial differentiation. This high level of differentiation results in a very complex organizational structure (Nelson & Quick, 2011). Globalization presents significant challenges to all organizations that operate in many different countries. These challenges are typically created by the cultural differences that may exist among the countries in which a company operates. Hofstede believes work-related attitudes are formed by five dimensions of cultural differences. These dimensions are as follows: individualism vs. collectivism, power distance, uncertainty avoidance, masculinity vs. femininity, and time orientation (Nelson & Quick, 2011). It is...
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