NVO » Topics » Spotlight on globalisation

This excerpt taken from the NVO 6-K filed Feb 6, 2006.

Spotlight on globalisation



THE BIG PICTURE

Plug into the
global economy

I know of a New York restaurant that has outsourced its reservation service to a company in India. That’s my favourite metaphor for globalisation. What they’ve done is to take advantage of the digital revolution to move one function – just the one function where it makes perfect business sense to do so. The chef and waiters stay in New York. You don’t have to disaggregrate an entire business; but if you want to stay competitive, you have to look at what elements can be done better in new ways. That’s how a company can be responsible to shareholders, employees and society.
     There are evidently two sides to glob-alisation. Fundamentally it offers advantages. In emerging economies, by and large Western companies are a force for good. Paying a premium for talent sends a signal that education pays. The biggest

 

hope we have – and the solution to global inequity – is moving these countries in the right direction. Acquire technological skills, knowledge – that’s how we can improve the world. The message to people should be: you can plug into the global economy and prosper.
     The caveat is that there is going to be intense competitive pressure on the workforce in the West. That’s the central dilemma. We owe it to Western workers to enable them to move up the value chain. Those with easily reproducible skills are most at risk. The real challenge is to make massive investments in training and retraining. This requires governments and private organisations to invest and work together – not just take protective measures, which is a short-term defense.

Fareed Zakaria
Editor, Newsweek International

 

THE NOVO NORDISK APPROACH

Striving for
balanced growth

For Niels-Erik Olsen, shop steward for Novo Nordisk’s largest insulin production facility in Kalundborg, Denmark, the company’s strategy to expand its production beyond its traditional production base in Denmark prompts anxiety among some of his fellow workers concerned about their job security.
     In meetings held in 2005 between employees in Denmark and Lars Rebien Sørensen, president and CEO of Novo Nordisk, globalisa-tion was a hot topic: employees wanted to understand the rationale behind the decision to extend production outside Denmark, and they wanted senior management to advocate wage tax reductions in Denmark to lower living costs and the ensuing pressure to retain a high wage level.
     Lars Rebien Sørensen recognises the dilemmas. “Many rich countries with high tax levels and living costs are concerned that glob-alisation will mean jobs moving out. The reality is that in recent years we have managed to create around 2,500 new jobs outside Denmark while at the same time creating around 800 new jobs in Denmark. This has been possible because we are competitive and constantly


Fareed Zakaria was invited by Novo Nordisk to provide a perspective on the hot topic of globalisation and to outline some of the issues currently under debate.
 

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Novo Nordisk Annual Report 2005

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  Dr Masae Minami has type 1 diabetes and works as a diabetes
specialist at her own clinic in Fukuoka, Japan.

 

grow our business. We have also been able to secure existing jobs through new skills development and job transfers. The company’s success is the best job guarantee for anyone. But I can understand that for the individuals exposed to these changes, it causes a lot of anxiety. That’s why we engage in a dialogue with our people and offer competence upgrades.” A Job Transfer Center for production employees in Denmark gives employees from downsized Danish production sites a chance to register their skills and preferences and be referred to jobs and relevant training within Novo Nordisk. Since May 2004, 166 employees have received a new job at Novo Nordisk through the centre. In another initiative, employee trade unions in Denmark and Novo Nordisk management took part in the Future Work Life project to explore conditions for and development opportunities in operations in Denmark over the next 10 years.
     “We appreciate the open dialogue; it’s important that we can talk about these issues,” says Niels-Erik Olsen.

Many faces to globalisation
There is another side to the story: Novo Nordisk’s investments in new and growing markets, often with struggling economies, are also seen as a boon. For example, Athos Avelino, mayor of Montes Claros, Brazil, welcomed Novo Nordisk’s decision to invest substantially in an additional insulin production facility in his city. It meant jobs and a boost to the local economy.
     “The investment brings more money to our community, not just the 600 permanent jobs at the facility, but 2,500 construction jobs and

 

more service jobs to satisfy the needs of the influx of people into the city,” says Mayor Avelino.
     It comes down to balanced growth. Novo Nordisk views globalisation as an opportunity to retain its competitive edge as a focused pharmaceutical company through market expansion, global sourcing and building a diverse workforce. But these are transitions that must be handled responsibly. Novo Nordisk recognises its role in supporting balanced economic growth and assumes a particular responsibility wherever the company has a local presence. Global outreach and a strong international mindset are required in a globalised economy, as well as consistent values, global standards of business conduct and a readiness to deal with the concerns of those affected by the impact of globalisation.

Getting access to talent
Globalisation is not only about moving work-places to locations with lower costs and taxation levels. It is also about getting access to international talent and investments.
     “In today’s business environment, it is critical that we can attract the best people,” says Kåre Schultz, chief operating officer for Novo Nordisk. “Among other things, this means having a presence where we have the best conditions for attracting top talent.”
     That was one of the reasons why the NovoSeven® marketing function was moved from Denmark to Zurich, Switzerland, in 2005. “This decision offers a number of advantages seen from an operational and organisational perspective,” says Kåre Schultz. “The international environment, access to highly qualified people with pharmaceutical experience, and

 

the proximity to two of our regional headquarters make Zurich an attractive location.”

Wider reach, deeper impacts
With its global expansion Novo Nordisk achieves significant business benefits and helps build healthier societies through the provision of its core products and services.
     In addition, the company seeks to measure its economic footprint and its contributions to social benefits and economic growth by providing increased employment, skills development, technology transfer and investments.
     At the same time, establishing business and operations across diverse cultural and political boundaries exposes the company to a host of ethical challenges around issues such as labour rights, human rights and bribery and corruption. This makes it more essential than ever to ensure that business is conducted in accordance with the principles and values laid out in the Novo Nordisk Way of Management and the Triple Bottom Line approach.
     To be better prepared to take on these challenges, in 2005, Novo Nordisk formulated a business ethics policy (see pp 36–37) setting global standards for ethical business conduct. Several support functions launched programmes in response to strategic responsibility challenges. Examples are the People Strategy with its focus on mobility and leadership development (see pp 28–29), and the corporate brand promise ‘changing diabetes’ that builds on the company’s core value propositions.

       

See more about Novo Nordisk’s initiatives in
response to globalisation at novonordisk.com/
annual-report
Click: How we work


Novo Nordisk Annual Report 2005
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