Strategic philanthropy and corporate social responsibility: the Merck Company case

¶ … philanthropic strategy a company choice. In approaching question, essay aim explore process philanthropic strategy formulation organization aspects strategy.

Strategic philanthropy is a practice of companies where they target philanthropic and charitable activates around a cause that will support their business objectives. Companies use philanthropy as a way of benefiting their business interests and the interests of the beneficiary organization. According to Thorne, McAlister, Ferrell, and Ferrell (2010)

strategic philanthropy is designed around creative planning, careful execution, focused research, and thorough follow-up, which is intended to achieve the desired results. Strategic philanthropy should be driven by the company's core concerns and values for it to be effective and rewarding. Strategic philanthropy mainly focuses on builds and changes for the future Carroll & Buchholtz, 2009()

Strategic philanthropy should not be confused with charity. Donations or charity tend to be smaller given by many people that go towards an immediate need or cause. Charity is normally given to non-profit organizations, and it makes an impact in only the community. Strategic philanthropy takes charity to the next level. Instead of focusing on an immediate need, strategic philanthropy focuses on the root problem and methods of solving the problem. Strategic philanthropy identifies opportunities that a company can leverage upon in order to gain and strengthen its values. The investments are normally long-term and have some influence on public policy.

Since its establishment in 1891, Merck has been focused on philanthropic strategies, which have enabled the company to integrate its core business values with its philanthropic activities. During the World War II, Merck developed a powerful antibiotic for the treatment of tuberculosis and other infectious diseases. The antibiotic was made freely available to all patients.

Corporate philanthropy strategy for Merck

Merck follows various voluntary regulatory standards in order to protect its brand and reputation. Together with these regulations Merck emphasizes a strict code of conduct, which aligns with philanthropic and ethical responsibilities. Merck Company Foundation was established in 1957 as a not-for-profit organization by Merck. The foundation carries out all the philanthropic activities of Merck. According to public data, the foundation is estimated to have contributed over $500 million in the support of initiatives, which address the needs of society. The initiatives are all consistent with the company's overall mission of enhancing the well-being and health of people in the world. Merck supplements cash contributions to the foundation.

Initial philanthropy work undertaken by Merck were not diffused and focused on the company's goals. This led to the philanthropy activities not yielding the desired results for the company. Merck had to make major changes in its philanthropic activities in order to align them with its core values. Merck had to also narrow its philanthropic portfolio focus. This enabled the company to reduce the number of philanthropic activities undertaken and allow it to focus on the core areas directly affecting its business. Narrowing its portfolio also allowed the company to align its philanthropic activities to its mission, and business capabilities like improving access to healthcare, contributing to local communities, and promoting environmental sustainability Chadwick, 2000()

Merck had to also downsize some of its philanthropic programs. This would allow the company to reduce the amount of money and effort it had put in the programs, which would enable it to focus on other programs aligned with its business strategies. There were other programs that the company had to exit from since they were completely unaligned with its core values and strategies. Exiting from the programs would have a negative impact on the community, but the company had to focus on the long-term objectives of its strategic philanthropy programs. Finally, Merck had to develop new programs that would address the stakeholders' issues while engaging the business. This way the key stakeholders would feel involved, and they would appreciate and support the philanthropic programs. Having the support of stakeholders is vital for the success of any program. Stakeholders provide necessary guidance and support, which the company would use to leverage its efforts.

The programs adopted by the company also need to be measured in order to determine their effectiveness. The measurement will consider the effectiveness of the program to the community and how it contributes in achieving business goals. Philanthropic activities are undertaken in order to improve the company's financial bottom line, while building a civil society. Subsidizing the price of its drugs in developing countries boosts its activities as more people can afford to purchase the drugs. This increases the company's volume sales and boosts its drug prevalence. Having many people using their drugs builds the company's brand image, which in turn makes the company more recognized. Merck not only focuses on its own needs, but also encourages other drug companies to provide affordable drugs to the developing countries Rendtorff, 2009.

Merck has explored methods that other companies can use to sustain their research and development while providing affordable drugs.

Limitations

Vioxx was a drug developed by Merck for the treatment of arthritis. The drug was widely used as it was mostly prescribed for the treatment of the disease. Merck conducted further studies and discovered that the drug had a high risk of causing heart attack. Hill and Jones (2008)

posits that the company adjusted its labeling to reflect this side effect. The company went further to inform the FDA of its intention to withdraw the drug from the market. However, the FDA recommended the drug be used, but a prominent warning should be on its label. Providing the information was the ethical thing for the company, but this resulted in lawsuits by patients who had used the drug. The company was adhering to its mission of promoting health in the community, but this resulted in financial losses as the company had to settle the lawsuits.

There are many other barriers to quality health care and treatment. The company has to contend with these barriers and try to work towards eliminating the barriers. This limitation has slowed down the efforts of philanthropy as the company needs to ensure that its activities will align with its business strategies. Promoting health care and access to drugs requires partnerships with governments, healthcare professionals, donors, and nongovernmental organizations. Partnerships are closely monitored and analyzed to ensure that each partnership will deliver the long-term objectives of the philanthropic strategy. This limits the company's activities and programs as there is some red tape it needs to overcome before the partnerships can be agreed.