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In what ways, if any, does the financial area at Merck add value beyond what you would expect from a

typical large-company finance group? Please be specific

!he financial area of Merck developed numerous ways in which they added value to the company "ne of the first ways they did was by changing the culture of the finance department from a traditional accounting focused department to one that focused on providing financial services to internal clients at Merk !his service oriented model allowed the finance department to become involved earlier and more directly with business decisions made at Merk !he finance department created models to asset risk, return by pro#ect prior to committing to $ % & pro#ects !o that extent, the finance department developed Monte 'arlo

simulation software that would eventually become known at Merk as the $esearch Planning Model !he finance department was also responsible for introducing more analytical techni(ues into Merk)s capital budgeting decisions !his allowed for more (uantitative statistical assessments of risk and return to be part

of all ma#or spending decisions

*hat were the essential ingredients or preconditions that enabled Merck)s finance group to develop its capabilities?

"ne of the ma#or ingredients that allowed Merck to develop their capabilities revolved around their diversified employee base and hiring practices Merck developed a college recruitment program that targeted the top !his program was also uni(ue because it Merck)s finance

M+,)s from business schools throughout the -nited .tates

expanded Merck)s talent base beyond the traditional finance departments business focus

department employed scientists, mathematicians, computer programmers as well as professionals with a business concentration !his allowed for the development of many of the cutting edge forecasting models

developed by Merck)s finance department

'ould other companies develop similar capabilities? If so, could they do it as Merck did, or would a different development process be necessary?

!he uni(ue capabilities and corporate functionality of Merck)s finance department is one that can be emulated by other corporations It would take the ability of an organi/ations executive leadership team to

think differently than the traditional business model It would take an organi/ation that have the foresight to see the value of mathematical models such as game-theoretic analysis and how it can be applied to core

business functions such as competitiveness analysis

It would also take an organi/ation that would be willing

to value and accept the analytical and statistical expertise of the finance department and allow them to expand their influence into areas of the business not traditionally associated with finance