Inter-organizational relationships

703 words | 3 page(s)

Health services organizations establish inter-organizational relationships (IORs) with other companies for various reasons. One key reason for them is to get a market for their products and services. Another reason for forming inter-organizational relationships is to secure suppliers. There are two broad types of integration in inter-organizational relationships (IORs); horizontal integration and vertical integration (Longest & Darr, 2014 p. 609). The kind of integration found in Bayers Pharmaceutical is the horizontal type. Horizontal integration refers to the formation of lateral relationships between similar entities performing at the same functional level (Longest & Darr, 2014 p. 609).

Bayers Pharmaceutical has several integrations of this type. Some of the companies in horizontal partnership with Bayers Pharmaceutical include arGEN-X N.V, BioInvent International AB, Broad Institute, Compugen Ltd. All these companies fall within thin the product categories of pharmaceutical, consumer health, crop science and animal (Pharmaceuticals | Bayer, 2017). The main reason Bayer Pharmaceuticals has horizontal integration with these companies is to share knowledge, leverage innovation and take advantage of complementary strengths and capabilities especially for enterprises that deal with the manufacture of cancer-related drugs (Pharmaceuticals | Bayer, 2017). Apart from horizontal integration, there exists vertical integration in Bayer Pharmaceuticals. Vertical integration is the formation of relationships between entities of different stages in the delivery of healthcare services/ products. (Longest & Darr, 2014 p. 610).

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Bayer Pharmaceuticals has recently scaled up its efforts in providing cancer-related treatments. It has a vertical integration with Germany Cancer Research center (DKFZ). The center solely focuses on research of novel cancer therapeutics while Bayer Pharmaceuticals’ work is to develop the drugs. Bayer Pharmaceuticals last year announced their plans to buy Monsanto, a company which has specialized seeds and pesticide products (Bray, 2017). This forms one of the vertical integration.

Bayer Pharmaceuticals has strategic alliances with other entities. In Bayer Pharmaceuticals they believe that they need to complement their in-house knowledge and techniques and expertise, which are rather comprehensive, with the know-how of excellent partners from varying academic fields and industry to realize their innovation strategy (Pharma-bayer, 2017). For instance, to boost their innovation in research, Bayer Pharmaceuticals have made strategic alliances with academic institutes such as German Cancer Research Center (DKFZ) in Heidelberg, Germany and Tsinghua University in Beijing, China. Bayer Pharmaceuticals has made a strategic alliance with licensing companies so that they can have some of the products licensed (Pharma-bayer, 2017).

A good example is the single focused asset licensing agreement between Bayer Pharmaceuticals with Orion Corporation. This agreement allows them to not only co-develop but also commercialize a novel oral androgen receptor inhibitor to be used in treatment of prostate cancer (Pharma-bayer, 2017). The type of agreement between Bayer Pharmaceuticals and Orion Corporation is what is referred to as a joint venture. The joint venture is a type of strategic alliance that is characterized by the presence of contract and a legal entity through which participants pursue some activity at shared cost, revenues and control (Longest & Darr, 2014 p. 610).

In every organization, the duties and responsibilities are divided and delegated to different people or departments. Work efficiency in an organization is achieved when work is divided into specific jobs each having focused duties based on what is to be accomplished by the position (Longest & Darr, 2014 p. 598). Bayer Pharmaceutical is a manufacturing company. The duties are split based on the departments and different product lines. For every product line, some sections are involved in research. Bayers Pharmaceutical has a department for testing and marketing in all their product lines. The functions in every department are different but complement each other. For instance, the role of the research department is distinct from those in the marketing and distribution. The individuals conducting trials also have different duties and responsibilities, but both geared towards manufacturing effective drug.

Span of control which is sometimes referred to as span of supervision or authority of span refers to the total number of subordinates who report directly to a supervisor (Longest & Darr, 2014 p. 598). The number does differ from one job to another, but most theories suggest the number to be about six. The executive has a span of 3-4 employees. The executive has senior level management and middle-level management. In the operative span, the span of control is 5-11(Bayer, 2017 September 15). The several levels of authority contribute to the tall structure in Bayers Pharmaceutical.

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