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In the 1960s thalidomide, a popular new drug considered to be safe and effective, was revealed to cause severe nerve damage and birth defects in newborn infants, prompting health officials to ban the use of the drug and tighten overall restrictions on new drugs and drug use. Twenty years later, after recognizing the positive effects of thalidomide when treating patients with leprosy and its potential role in the treatment of certain types of cancer and cases of HIV/AIDS, the Celgene corporation would be forced to contend with stringent FDA regulations, liability concerns, public skepticism, and poor mass media portrayal in order to secure the drug's approval.

To illustrate how regulators are subject to political pressure, which companies much recognize and consider when making business decisions.

Describes the history of the tobacco industry and its emergence as an extremely effective marketer and non-market strategist. After years of success, both publicly and politically, the leaders of the tobacco industry are faced with mounting political pressure and the financial threat of litigation from class-action lawsuits. The leaders face an industry-wide strategic decision of whether to acquiesce to government demands in exchange for immunity, focus on judicial success, or develop a new course of action.

To evaluate the formulation and implementation of non-market strategies in the context of regulatory, legislative, and legal institutions. To understand how various aspects of the non-market environment interact and how these environments not only change over time, but change market competition within an industry. Further, to formulate and decide between firm-specific and industry-wide strategies. Finally, to appreciate and reflect upon the potential conflict between non-market strategies and ethical concerns.

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This case focuses on organizational development, leadership and HR management questions.

This case is mainly aimed at students specialized in leadership, organizational development and HR, or in MBA and executive education. However, undergraduate students can benefit from it as well and learn about key terms related to organizational development and HR.

Loxon Solutions is a Hungarian technology startup founded in 2000 that develops various software solutions for the banking industry to improve processes such as retail and corporate landing, collateral management and monitoring, among others. The company grew significantly since being founded, and from a small IT company it became a significant player in the banking software industry all around the world. However, with rapid extension comes a drastic internal transformation as well: Loxon now employs 252 people, has 5 physical offices in 2 different countries and is trying to balance an effective organizational structure and a friendly startup environment. It is clear that the company needs to adapt its previously informal structure to fit the now middle-sized organization while maintaining the current benefits of their culture. Also, they require stability and maturity which the current team consisting of mostly junior employees and the significant fluctuation cannot provide. Tamas Erni, the CEO and Kristof Farkas, the founder of Loxon are now working on these pressing issues with the company’s HR department to rethink the company’s organizational structure and policies as well as their hiring and employer branding strategies.

Students should get familiar with typical organizational structure models, the meaning of Employee Value Proposition and main KPIs related to hiring and employee retention.

Teaching notes are available for educators only.

CSS 6: HR Management.