Porter's Five Forces
European Journal of Interdisciplinary Studies
Global Innovation –
Lessons Learned from the Novo Nordisk Case
Nina BIRKMOSE, Ruxandra POPOVICI ruxandra.popovici@gmail.com Copenhagen Business School
Abstract
This paper looks at the possibilities of Western multinationals to efficiently and effectively relocate research and development to emerging markets. In order to exemplify the findings, we will use the case of Danish pharmaceutical company Novo Nordisk and their approach to the Chinese market. Thus, the research question of this paper is: Which lessons are to be learned from the case of Novo Nordisk in China?
Keywords: global strategy, foreign market entry, offshoring, R&D, pharmaceutics
JEL Classification: F21, F23
1. Introduction and Method
The forces of globalization are continuously changing the business landscape.
Outsourcing and offshoring have been used by multinationals for decades. Global value chains stretch across the world and incorporate a diverse range of people and cultures.
With this type of internationalization, new challenges arise. Each company must find a business model that fits their needs and adds the most value to their operations.
The traditional outlook on offshoring is keeping research and development close to headquarters and assembling abroad. China’s rise is partially based on it becoming “the world’s workshop”: numerous companies moved their production there in order to take advantage of the cheap labour offered.
However, a general attitude shift seems to occur when it comes to manufacturing in
China. Wages have risen by 69% between 2005 and 2010 and it is estimated that by 2015, the US and China will be just as attractive for manufacturing. (The Economist, 2011)
There is an increasing need to manufacture close to the place of consumption.
Therefore, China’s role is undergoing a radical transformation. Still, its relevance is not dwindling. With its population of 1.3 billion and its rising middle
Global Innovation –
Lessons Learned from the Novo Nordisk Case
Nina BIRKMOSE, Ruxandra POPOVICI ruxandra.popovici@gmail.com Copenhagen Business School
Abstract
This paper looks at the possibilities of Western multinationals to efficiently and effectively relocate research and development to emerging markets. In order to exemplify the findings, we will use the case of Danish pharmaceutical company Novo Nordisk and their approach to the Chinese market. Thus, the research question of this paper is: Which lessons are to be learned from the case of Novo Nordisk in China?
Keywords: global strategy, foreign market entry, offshoring, R&D, pharmaceutics
JEL Classification: F21, F23
1. Introduction and Method
The forces of globalization are continuously changing the business landscape.
Outsourcing and offshoring have been used by multinationals for decades. Global value chains stretch across the world and incorporate a diverse range of people and cultures.
With this type of internationalization, new challenges arise. Each company must find a business model that fits their needs and adds the most value to their operations.
The traditional outlook on offshoring is keeping research and development close to headquarters and assembling abroad. China’s rise is partially based on it becoming “the world’s workshop”: numerous companies moved their production there in order to take advantage of the cheap labour offered.
However, a general attitude shift seems to occur when it comes to manufacturing in
China. Wages have risen by 69% between 2005 and 2010 and it is estimated that by 2015, the US and China will be just as attractive for manufacturing. (The Economist, 2011)
There is an increasing need to manufacture close to the place of consumption.
Therefore, China’s role is undergoing a radical transformation. Still, its relevance is not dwindling. With its population of 1.3 billion and its rising middle
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