is a pharmaceutical company with selected segments in the health care and related fields. The strongest issue in this case is to decide whether Marion should keep or sell its subsidiary Kalo Laboratories Inc. to reach their main goal of company "fairly rapid" growth. Marion has to evaluate the risks of maintaining or getting rid of Kalo, considering what they will now have to measure to successfully benefit form future profits and sales.
Marion's corporate mission is to "achieve a position of market leadership through marketing and distribution of consumable and personal products ( )," to achieve a "long-term profitable growth through management of high risk relative to the external environment," and to "achieve a professional, performance-oriented working environment that stimulates integrity, entrepreneurial spirit, productivity and social responsibility." In addition, they set a specific sales goal of $250 million with no time frame that should be attained to satisfy the stockholder expectations.
In 1979, Marion was divided into two separate groups: the pharmaceutical and the health product group. Marion's subsidiary, Kalo, encountered in the health products group, operates in a "specialty agricultural chemical market" that works on a cyclical environment: "because Kalo did not have a well diversified product line its operations were more cyclical than the overall agricultural sector." The disadvantage of this cyclical environment is that it brings uncertainty to the future sales and expected growth of the company: "two major factors beyond Kalo's control made its annual performance extremely unpredictable: the weather and spot prices for commodities." Other risks that surround this subsidiary are the "strong competition from large chemical companies, governmental regulatory actions and uncertain future product potential.".
Marion's competitors are unbranded drug companies. Thus, there are two identifiable strategic groups in the agriculture chemical market: large chemical manufacturers including Dow Chemical, DuPont, Stauffer Chemical, Gulf Oil; and "large ethical drug manufacturers" that include Eli Lilly, Pfizer and UpJohn.
