Merck began in the United States in 1887 as a branch of the German company E. Merck AG of Germany. In its original incarnation, the company was a marketer of drugs produced in German. Merck began drug manufacture in the United States in 1903.
Merck became a public company as a consequence of the entry of the United States into the First World War. At that time, George Merck, grandson of the founder of the German company, owned 20 percent of the equity stock in Merck (United States), while the German parent company owned 80 percent of the equity stock. George Merck retained his 20 percent of the equity stock, but transferred the 80 percent equity interest held by the German parent company to the United States government. Following the end of the First World War, the United States government sold its 80 percent share in the company to the public (HooverÆs Inc., History, 2003).
There is an aura of legal impropriety about the transfer of stock that he did not own by George Merck, and the subsequent sales of that stock by the United States government. Those actions, nevertheless, launched Merck as a public company in the United States.
In 2002, Merck recorded $51.8 billion in sales, a level that was 8.5 percent higher than the preceding year. The companyÆs $7.1 billion net profit in 2002 was a 13.7 percent return on sales, and, in dollars, was 1.8 percent higher than profits in the preceding year (Merck & Co., Inc., 2002 Annual Report, 2003).
Merck is a New Jersey-based company that operates globally. The company states its mission as follows (Merck & Co., Inc., Mission Statement, 2003):
à to provide society with superior products and services by developing innovations and solutions that improve the quality of life and satisfy customer needs, and to provide employees with meaningful work and advancement opportunities, and investors with a superior rate of return.
The external environment within which Merck funct...