Merck and Medco Case AnalysisEvery organization, business that is, that would like to enter in several distinguished agreements with other organizations that involve financial balancing  should see to it that the assets of the business do not suffer but instead progress through the implication of the said decision.

In this case, Merck is already an established business having a number of assets working for its progress. The said assets are rather physical and actual in terms of financial gains, strong operational programs as well as effective organizational system that actually processed its way towards the successes that the organization itself is enjoying right now. This is the reason why it is very important for the said organization to balance its views towards the implication of possible changes and risks upon agreeing on certain business contracts such as accepting or buying shares from Medco which is an organization within the same industry that Merck is involved with.In a direct picture of the situation, it could be noted that upon signing to the agreement, Merck would risk its finances in incurring at least $5-$6 Billion which naturally affect the immediate finances of the organization but also the incoming profit sales of the company. The question then is that, are all these risks reasonable enough for Merck to plunge into? What is it in the contract that would appear to be much beneficial on the part of Merck which appears to be in great risk as they would enter the agreement?Basing from a risk-based measurement, there are other ways by which Merck itself could do away with the worries of spending as much for the agreement proposed to them by Medco. Most likely, seeing the case in an abrupt manner whereas the present situation is the measurement of risk, it could be noted that the assets of Merck are indeed in huge jeopardy. However, seeing the system in a more futuristic manner shall subject the case in a more reasonable aspect that would show how much is Medco really worth to the assets of Merck.

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To understand the case further, it is important to see if the business is worth carrying contract with. Most likely, the duration of the contract is for a probationary level of at least three years whereas its effects to Merck shall be observed. During those three years, it could be noted that several business forecasting procedures could help in the process of assisting the organization avoid simply loosing the $5 Billion through regaining the assets in a shortened time. Assuming that the value of the business opportunity proposed today is at least $50 Billion which would be guaranteed a $5 billion continuous profit for straight ten years, Merck would be able to gain back the returns of what they have spent and appear to simply drop down to at least $1.

29 billion which is at least 20% lower than that of the actual spending amount. In this way of scaling the business possibilities shown herein, it could be noted that there are indeed possibilities by which a huge expenditure could be viewed in a better perspective through the usage of other approach in scaling the advantages and the disadvantages of the agreement to the business organization financing the changes. Through a strategic disposition of the situation, it could be observed that seeing the picture in a much futuristic manner helps the decision to take in a more reasonable process of scaling the effects of the agreement on the organizations at stake. References: Fran Hawthorne. (2005). The Merck Druggernaut: The Inside Story of a Pharmaceutical Giant. Wiley Publishing Company.P.

Roy Vagelos. (2004). Medicine, Science and Merck. Cambridge University Press.