The EU currently is developing a strategy that will help member countries beat back the threat of


The EU currently is developing a strategy that will help member countries beat back the threat of U.S. and Asian competition and develop a strong technological base for new product development. European multinational firms currently are strong in a number of different areas. For example, Germany's Hoechst and BASF and Switzerland's Sandoz and Hoffman-LaRoche are major companies in chemicals and pharmaceutics. Philips of the Netherlands invented compact discs and is dominant in the television market. Many strong European-based MNCs could provide a solid base for the EU to defend itself from outside economic invasion. 

Ruehter Laboratories, a high-tech R&D firm located in New Jersey, holds a number of important pharmaceutical patents and would like to expand its operation worldwide. The company is considering buying a small but highly profitable Dutch insulin maker. "This acquisition will help us enter the European market by getting in on the ground floor," noted the president.

Although the Dutch firm is quite small, it has strong R&D prowess and likely will play a major role in biotechnology research during the years ahead. Ruehter has talked to the Dutch firm, and the two have arrived at a mutually acceptable selling price. While waiting for the lawyers to work out the final arrangements, Ruehter intends to reorganize its overall operations so that the home-office management can work more closely with its new Dutch subsidiary. There are two areas that Ruehter intends to address in its reorganization efforts: 

(1) How the subsidiary will be structurally integrated into the current organization and 

(2) Whether there can be any joint R&D efforts between the two groups.

1. What type of organization design would you recommend that Ruehter use?
2. If there were joint R&D efforts, would this be a problem?

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