Change Management in Transition from Traditional Sales Force to Key Account Management: Greece Pharmaceutical Companies - Part 2


List of Figures

Figure 2-2 Bowtie: Traditional Sales (Adapted from Shipley & Palmer, 1997)

Figure 2-3 Change Management Toolki

Figure 2-4 “Co-creation of value” (Storbacka & Nenonen, 2009, p. 362)

Figure 2-5 SAMP (Storbacka, 2012, p. 263)

Figure 2-6 Loyalty Ladder

Figure 2-7 Diamond (key account communication)

Figure 2-8 Optimum characteristics for a pharmaceutical key account manager

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Figure 4-1 Education

Figure 4-2 Gender

Figure 4-3 Age

Figure 4-4 Years of experience in pharmacological sector

Figure 4-5 Rank in management

Figure 4-6 Foreign and international company ownership

Figure 4-7 Number of employees

Figure 4-8 Key account management with no other duties

Figure 4-9 Managers dealing with key accounts and linkage to employee performance

Figure 4-10 Understanding of organization of decision-making organization

Figure 4-11 Existence of formal research steps for KAM

Figure 4-12 Consumer and end-user markets identified

Figure 4-13 Necessary supplier involvement for customers

Figure 4-14 Sharing customer solutions in dollar amounts

Figure 4-15 Formal key account procedures

Figure 4-16 Key account strategic and tactical methods

Figure 4-17 KAM in alignment with regional planning

Figure 4-18 Sales communications well organized

Figure 4-19 Regular review of key accounts

Figure 4-20 KAM is outsourced

Figure 4-21 KAM part of internal activities

List of Tables

Table 2-1 Pharmaceutical Cost Cuts, 2010

Table 2-2 Geek Survey Participants by Home-Country Affiliation

Table 2-3 Greek survey participants by pharmaceutical organizational participation

Table 2-4 Perspectives on Crisis of Greek Pharmaceutical Company Managers

Table 2-5 Message to Potential Participants using Adobe Forms Central

Table 3-1 Message to Potential Participants using Adobe Forms Central

Equation 3-1 Response rate

Chapter 1. Introduction and Academic Objectives

1.1 Project Rationale

The research evaluated how the Greek pharmaceutical sector has used management techniques to face crisis and to lead the company through a transition. Change can be forced by external forces such as the national and global economy and competition. Priporas and Vangelinos (2008) pointed out that crisis management forces change. Change has been an integral part of crisis. According to Fink (1986) crisis forces a change that can either bring positive or negative results for a business. The Greek pharmaceutical industry faces national and international competitors; competition is a constant threat (Kasapi & Mihiotis, 2011). Greek companies range from small and local to huge multi-national corporations with customers on several continents. The 2008 global financial crisis caused an impact on Greece’s pharmacy businesses, forcing companies to make changes. The research focused on learning about the change management strategies of Greek pharmaceutical companies. In general, the pharmaceutical industry approached the problem by increasing efficiency. Efficiency was increased by transitioning from traditional sales to Key Account Management (Bhatt et al., 2011).

Changing the sales strategy to Key Account Management (KAM) was a necessary change to aid companies in weathering hard times. The researcher wanted to know how KAM is organized in Greek pharmaceutical companies. KAM calls for both external and internal changes for initiating and refining the customer-centric technique. One of the questions asked by the researcher is how formalized customer relationships are instituted with key accounts. Another question was if the use of KAM internally includes sharing relevant information as a usual practice.

According to Kasapi and Mihiotis (2011), three organizational characteristics were commonly used to co-align business strategy with environment, the organization’s processes and daily tasks, and resources. Environment encompassed all the external factors such as the global economic financial crisis. The internal factors were included in the second characteristics, including the tasks of the implementers of the new strategy. The third characteristic, resources, encompasses the internal activities were focused on reaching the company’s goals. (Kasapi & Mihiotis, 2011)

1.2 Pharmaceutical Sector

The pharmaceutical industry has been an industry most vulnerable to crisis, because it must operate in a global marketplace with many unpredictable variables. (Priporas & Vangelinos, 2008) Efficiency has been the most important variable that can be controlled internally, in order to ensure a company’s capacity to remain a competitive player in the sector. For that reason, the pharmaceutical business sector has been seeking to enhance efficiency in customer relationships management through strategies that involved a transition from the traditional sales force to Key Account Management (KAM). Transitioning to a new management strategy caused change, so change management must also be handled well to meet a company’s goals.

1.3 Greek pharmaceutical sector and the global financial crisis

Greece has faced a particular challenge in its public health sector since the global financial crisis hit Greece in 2009. The strategies of crisis management, KAM and change management in Greek pharmaceutical companies were the focus of this research. The case study of Greek pharmaceutical companies sought to analyze the management used to move the companies through the transition from traditional management to KAM. To achieve the objective, the analysis provides a literature review and an empirical analysis seeking to answer a number of questions that defined the research thesis.

The pharmaceutical industry consists of the business sector that distributes and manufactures pharmaceutical drugs that are legally licensed and regulate. The industry also distributes and manufactures instruments and devices that are used for health care. Regional, national and international laws oversee the industry in the following categories patents, testing, safety and efficacy. Import and export laws regulate the distribution of pharmaceutical medicines and products.

The hypothesis was that a pharmaceutical company’s choices for administrating change management during a period of crisis were imperative to the company remaining competitive in the volatile business environment.

1.4 Current Situation

Greece has about 320 pharmaceutical companies operating in the country. The companies are Greek owned, as well as subsidiaries of foreign pharmaceutical corporations. In general they function as importers. The spending for public health care amounts to approximately 10.6 percent of the total Greek national budget. (Vandoros & Stargardt, 2013) The activities for reducing spending due to the financial crisis was focused upon public spending, specifically the amount public health expenditures spent on pharmaceuticals.

The Greek Government’s strategy to divert as much of the public health budget to other categories in the budget has meant that pharmaceutical companies dealing internally and externally with Greece were faced with a crisis situation. Crisis Management techniques were used to weather the problems associated with the spending cuts in Greece. The approach to this overwhelming problem was to set a goal and that goal was to increase efficiency. The management techniques during the transition were critical to success; therefore crisis management, change management and KAM became crucial tools used to survive the difficult business environment.

1.5 Academic Aims and Objectives

  • To evaluate how transitions requiring a change in management strategies in Greek pharmaceuticals used to implement change in a crisis situation;
  • To evaluate how KAM have been used in Greek pharmaceutical companies;
  • To discuss the importance of KAM in Greek pharmaceutical companies;
  • To name change management strategies implemented in Greek pharmaceutical companies that have resulted from the economic situation in Greece.
  • To identify the range of internal and externally owned Greek pharmaceutical companies;
  • To discuss how crisis management has been perceived in the pharmacy sector and in the Greek pharmacy sector.

The research was a timely study of the pharmaceutical industry management strategies because the industry is particularly susceptible to external factors. The Greek Government’s reaction to the financial constraints of the global financial crisis was to decrease the public health budget amount for pharmaceutical medicines and related products. The opportunity afforded to management studies was a great one for studying crisis management, change management and the reliance on KAM to promote efficiency in the pharmacy sector. The research analysis used a literature review and a questionnaire of management executives in Greece. The research offered results from using both a qualitative and quantitative analysis methods. The outcomes of the research are interesting to managers of pharmaceutical manufacturing companies and pharmaceutical distribution companies. Managers in other business sectors can also gain knowledge from the conclusions if they have an interest in crisis, change management, and the use of KAM to institute efficiency.

1.6 Outline of Chapters

Chapter 2 offered a Literature Review. A comprehensive literature review was conducted on change management, crisis management and KAM in the pharmaceutical business sector. The focus was on the effect of external financial crisis on the Greek pharmaceutical sector. Many peer-reviewed journal articles contained information on the subject written by Greeks in English. Those articles were studied and many are used to cite information in chapter 2. Literature on the effect of the austerity measures established by the European Union on the Greek pharmaceutical sector was reviewed. Change and crisis management were evaluated in relationship to each other because the financial difficulties required adjustments. The strategy of KAM was reviewed as a general marketing technique and then, applied to the Greek situation.

Chapter 3 described the methodology chapter. The global financial crisis presented an opportunity to evaluate the situation in Greece. Therefore a literature review was carried to gain a foundational knowledge of management strategies and the Greek pharmaceutical sector. A survey was designed with questions or statements that could be answered as yes, no or not applicable. A Likert scale with six choices for indicating degree of agreement (or disagreement) was used to learn more about customer account management. (Likert 1932) The participants were managers in the Greek pharmaceutical sector who had been initially contacted through LinkedIn. The survey was carried out online through LinkedIn.

Chapter 4 included the findings and analysis from the survey. The respondents were managers in the Greek pharmaceutical sector. The findings were quantified in terms of percentage and number of respondents (equal to frequency). Analysis on the results was offered per theme.

Chapter 5 discussed the results of the questionnaire in relationship to the information gathered in the literature review. Recommendations were made. Limitations of the study were discussed. Suggestions for future study were made.

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1.7 Chapter 1 Summary

The limited access to physicians in order make direct sales has been a challenge for the pharmaceutical sales force and businesses. For that reason, the pharmaceutical industry has sought to enhance sales through innovative practices that increase their product’s uptake. In that respect, the companies have sought to transform their sales forces to valuable resources by rolling out strategies to manage their key accounts with their key target market, mainly consisting of physicians. This has resulted in a transition to the sales force tactics that were product driven to a new approach which is more customer-centred. Several theories have been offered in the literature and this research has reviewed customer-centred theories that have led to or enhanced the use of KAM. Since Greece pharmaceutical companies operated under an economic financial crisis, recent research on the Greek pharmaceutical sector has been reviewed. The recent research on Greece focused on crisis management strategies; therefore both crisis management and change management were addressed in the following review, along with key account management.

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