American Home Products Corporation1. CASE SUMMARYAHP Chief Executive"I just don't like to owe money", said William F. Laporte, AHP chief executive, when asked about his company's almost debt-free balance sheet and growing cash reserves. Mr. Laporte had taken over as chief executive of
Description of the CompanyAHP' 1981 sales of more than $4 billion were produced by over 1,500 marketed brands in four lines of business: prescription drugs, packaged drugs (i.e. proprietary or over-the-counter), food products, and housewares and household products. Consumer products included a diversity of well-known brand names, such as Anacin, Preparation H, Sani-Flush, Chef Boy-Ar-dee, Gulden's Mustard, Woolite, and the Ekco line of housewares.
AHP's success in these lines of business was built on marketing expertise. Whether the product was an oral contraceptive or a toilet bowl cleaner, "they sell the hell out of everything they've got", said one competitor.
AHP's Distinctive Corporate CultureAHP had a distinctive corporate culture that, in the view of many observers, emanated from its chief executive. This culture had several components:Reticence. A poll of Wall Street analysts ranked AHP last in corporate communicability among 21 drug companies.
Frugality and tight financial control. Reportedly, all expenditures greater than $500 had to be personally approved by Mr. Laporte even if authorized in the corporate budget.
Conservatism and risk aversion. AHP consistently avoided much of the risk of new product development and introduction in the volatile drug industry. Most of its...