Glaxo Italia Case
1. What are the relative advantages and disadvantages of co-marketing arrangements versus
direct sales? Why is Glaxo considering co-marketing for its new Zinnat antibiotic?
2. Evaluate Glaxo Italia's criteria for evaluating decisions about sales strategies (i.e., payback
and internal rate of return). What are the strengths and weaknesses of these criteria as
opposed to net resent value? On which criteria would you base your recommendation?
3. Evaluate the forecast. Are all relevant cash flows present? Are the assumptions reasonable?
Should the cost of new sales recruits be included in the forecast?
4. If, in response to the question above, you believe the analysis should be modified, do so and
prepare to discuss the results you obtain. What assumptions are the "key drivers" of your
5. Which marketing strategy should Rottoli recommend?
Description of the Problem
In September 1990, Emilio Rottoli, financial controller of London's Glaxo Italia S.p.
began to evaluate strategies for launching a new product called Zinnat, an oral antibiotic
remedy to current drugs for flu-like feverish diseases. With the existence of an already
massive market, Glaxo's general approach of rapid and massive distribution to capture a
large market share found itself infeasible if the company wanted this product to remain
profitable. As a result, Glaxo is considering two options; the opportunity to either directly
sell the product or to co-market the product. Under the co-marketing distribution method
another company would be given ingredients and rights to produce the same product
under a different brand name in an attempt to increase product marketing. Under the
direct sales approach Glaxo's sales force would be the only medium of distribution.
Decision as to which form of sales methods the company would choose would highly
affect the company's financial criteria, strength of brand equity, or lack...