CASESTUDYAMRADCORPORATIONLTD

1. DoyouagreewithDrStockersrationaleforresigning?Explain. Dr Stocker provided three reasons for his decision to resign. Commentary on the rationaleofeachofthestatementsfollows. Stockers statement that his decision to resign on the basis AMRAD was nothis child, like Genetech and Biogren were to their founders, is accurate. AMRADs founding shareholders were four medical research institutes, while Genetech and Biogen were foundedbyentrepreneurialventurecapitalists. A clear distinction can be made between Stocker acting in his capacity as managing director, leading the corporation through the implementation of strategic decisions, and a venture capitalist, driving the corporation forward characterised by their continuedcommitment,determinationandselfinterestintheventure. Stockerstatedhispersonalstrengthswereessentiallyintheintroductorystage,rather than the growth stage of AMRADs business life cycle. While this may be true, this would not be the determining factor in the success of the corporation during the growthperiod. The managing director would bear the brunt of the constant changes, challenges, ambiguities and uncertainties as the corporation transitioned to the growth stage. WhileStockermaynothavebeenastalentedandwellequippedtohandlethegrowth, theselectionofastrongsupportteamcoupledwiththeassistanceoftrustedadvisors wouldenableStockertomanagethechangeeffectivelyasthecorporationevolved. Stockers rationale that AMRAD needed a managing director with commercial developmentandlicensingskillsistoanextentflawed.Asuccessfulmanagingdirector mustdrawupontheexperienceofastrongexecutiveteamandtalentedsupportstaff. Populating the organisation with good people and allocating resources effectively wouldensurehighlevelsoforganisationalperformance. Therefore, AMRAD would not necessarily need a managing director with specific commercial development and licensing skills. To achieve the corporations desired results,Stockerwoulddrawuponinternalandexternaladvisorstoguidehimthrough anycommercialdevelopmentandlicensingissues. On the basis of the above, I do not entirely agree with all of Stockers rationale for resigning. 2. The resignation of Dr Stocker would potentially have a significant impact on the proposedjointventurewithKanekaChemicals.AnimportantfactorthatmadeAMRAD anattractivepartnertoKanekawasStockersreputation.Astrongreputationmakesa jointventurepartnermoreattractivebecausethepartnerisperceivedtobemoreopen andtrustworthy.

TowhatextentwouldDrStockersresignationaffecttheproposedjointventurewith KanekaChemicals.

 Stocker initiated discussions with Kaneka and worked particularly hard at building the relationship and earning the respect of his Japanese counterparts. The relationship strengthenedovertimetotheextentthatKanekawaswillingtoplacetheirorganisation atrisk,byformingajointventurewithAMRAD,astheyfelttheycouldrelyonStocker andhisadvice. StockersdecisiontoresignwouldleaveKanekaexecutivesfeelinguncertainofwhom to truly trust within AMRAD, as Stockers reputation provided a unique comfort. The appointment of the new managing director, John Grace, would require transitional discussionstoensurethecontinuationofthejointventurenegotiations.Thischangein itselfwouldcreatenumerouscomplexitiesandchallenges. On the whole, it is unlikely the resignation of Stocker would alone be enough to persuadeKanekatowithdrawalnegotiationsentirelywithAMRAD.Ashistoryproved, the agreement to a joint venture in 1990, named AMKAID, demonstrates there were overridingfactorsattractingKanekatoapartnershipwithAMRAD,thansolelyStockers reputation. 3.

ConsidertherationalethatbroughtaboutthemergingwithCSL. When considering the rationale which brought about the merger with CSL, considerationmustbegiventothetwoparties. On one side, Zenyth Therapeutics (formally AMRAD) was an organisation primarily focused on the development and commercialisation of Australia medical research. Throughitsexistence,manyleadingAustralianmedicalresearchinstitutes(11by1994) hadacquiredequityinterestsinthecorporation. When considering the decision to merge, these underlying stakeholders would have neededtodeterminewhetherthechangeinownershipwouldnegativelyorpositively impact their primary objectives the development and commercialisation of medical research. Ontheotherside,CSLsrationalewhenconsideringthemergerwasbasedonideology theacquisitionwouldstrengthenitsbusinessesresearchinterestsandaddanadditional portfoliointerestwhichwouldfitwellwithinitscurrentbusinessstructure. ConsiderationoftheinherentprofitabilityofZenythandalsothestrategicvaluebenefit would have been the key drivers behind the decision. Given the existing size and structureofCSL,increaseemphasiswouldhavebeenplacedonCSLsabilitytoexploit theunderlyingassetsandresearchcapabilitiesofZenythfollowingthemerger. Therefore, both parties to the merger had differing rationale and motivations behind exploringtheiropportunitytomerger.