CASE # 1 American Home Products Corporation study

Shizhe Li

Team 3

Oct. 4, 2011

CASE # 1 American Home Products Corporation

American Home Products Corporation has leading company of

Prescription drugs, packaged drugs, food products, and

houseware and household products. SincLaporte, who is chief

executive,has taken charge of AHP, company started its very

few debt and growing cash reserves.The case presents three

alternative strategies:

1)Company kept reticence at communicability.

2)Frugality and tight financial control to keep profit growing.

3)Conservatism and risk-aversion at its product development

to reduce spending and debt.

In analyzing all of the various facts and issues presented in the

case, I believe that the most critical issues are:

1)AHP has the sizable market share, which could allow the

company to keep reticence and conservatism at its products

development. AHP didn’t need spending at introducing to

new market.

2)The drugs industry always produces the same component

products. So that AHP wouldn’t spend in development until

other competitors developed new products, this strategy

would help AHP reduced costs and increased profits.

3)AHP has the unique top management strategy to keep its

policy would be executive exactly by Laporte and AHP was

showing the stable and consistent growth by sales,earnings

and dividends for 29 consecutive years through 1981. Its

excellent financing performance has helped its stock

became most popular one and benefited its market

reputations and market sales, which increased profits at the

end.

4)AHP’s diversified operati ons, it became more competitive

among its competitors. AHP kept its leading position due to

its successful strategies.