Risk Management and Organizational Communication: Two Cases in the Pharmaceutical Industry

By Marceau, Guillaume | International Journal of Business, Summer 2012 | Go to article overview

Risk Management and Organizational Communication: Two Cases in the Pharmaceutical Industry


Marceau, Guillaume, International Journal of Business


ABSTRACT

In this article, we propose an organizational communication oriented approach to Risk Management. The business domain studied here is the pharmaceutical industry, which has a high sensitivity to communication. Through two examples, we show how and in which context risk management can be an essential component in corporate management, by laying partially aside financial aspects, although they are usually put forward in this field.

JEL Classifications: I11, M14, O32

Keywords: risk management; organizational communication; crisis; vigilance

I. INTRODUCTION

Some errors in corporate management may cause bankruptcy. Therefore, many methods have been developed and applied to estimate and limit financial, commercial or logistical risks, as shown by the activity of business consulting firms such as Boston Consulting Group (Silverstein, et al., 2000). Until the 90's, however, one could lament about a real lack of tools to manage risk in business communication and especially on its institutional aspects (Clerc de Marco, 1993). Despite advances in this area, it appears that their implementation remains weak (Enright, 2011). In what follows, we propose an approach to risk management in corporate communication developed from the study of two cases in the pharmaceutical industry, the choice of this economic sector being based on its high sensitivity to communication.

In this field where traditional commercial advertising is prohibited on most products, communication is greatly facilitated by the professional nature of the information, of their sources, of their means of delivery and of their recipients. Through the examples studied here, we show how and under what circumstances risk management can take a major role in managing a business by temporarily laying aside financial considerations usually put forward in risk management, as exemplified in previous work on the subject (Marceau, 1998).

We recall that corporate communication is made up of all actions and events that are due to a company and that create, shape and perpetuate its public image. In fact, this communication can be planned and can follow a specific strategy or simply appear as a consequence of the company's life. This study shows the importance of implementing a conscious strategy in this field, as well as in finance, according to the size of the company, of its market and of the sensitivity of this market to particular criteria for judging the company. The aim is to develop methods and tools for managing in a systematic and structured manner the risks of miscommunication or of a simple lack of communication.

Using two examples, we show how the deficiency in communication could be remedied by the work of consultants in this field. The approach is as follows:

- We first analyse the critical data related to the economic sector and to the general problem of the chosen examples.

- Then we present two cases of drug withdrawals, one having taken place in a controlled manner, the other having been suffered by the concerned laboratory.

- We then detail the unique aspects of the resolution method which was followed in the first case and that failed in the second.

- Finally, we conduct a comparative analysis of the positions taken, of the actions made and of their consequences.

II. SECTOR ANALYSIS

The pharmaceutical industry is, in general, highly dependent on current regulations; its characteristics vary from one country to the other, depending on the specific national context. In France, communication often consists strictly in describing the care given to products quality, through the press and through the work of medical sales networks, as there are regulations which limit greatly all commercial advertising.

Pharmaceutical companies generally have to deal with a dual market, "the hospital and the city". If the turnover in the hospital is generally negligible compared with that of the public (or "city"), its main advantage is not to bring any margin; but it actually exists at two levels: to influence the public market through the impact of a given product's notoriousness, and to obtain the renewal of hospital treatment by the "town" doctor when his patient leaves the hospital. …

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