Business Strategy - GlaxoSmithKline (GSK)
Running Head: Business Strategy- Strategic Planning GlaxoSmithKline (GSK) Business Strategy GSK Name of the Student Student ID Name of the University Author Note NOTES for tutor Please complete tasks highlighted in yellow, 3.1, 4.1, 4.2, 4.4 Calibri 12, 1.15 line spacing, Harvard referencing, Please try to reference websites as much as possible. 800 to 1000 words excluding references. 3.1 Porters 5 forces http://fernfortuniversity.com/term-papers/porter5/analysis/1777-glaxosmithkline-plc.php 4.1 Porter’s generic Strategies See uploaded PP slide LO4 Porters Generic 4.2 Growth Strategies See uploaded PP slides Week 5 session 2 Growth Strategy 4.4 Strategic plan (linked with task 4.3) See uploaded PP slide week 9 Strategic Planning https://www.gsk.com/media/5349/annual-report-2018.pdf Many thanks. Task 1 (This task provides evidence for P1 M1 D1) Intro Leave blank P1 M1 D1 1.1 Environmental Analysis conducted on GlaxoSmithKline using PESTLE What is PESTEL? PESTEL is a tool or framework used by marketeers to analyse as well as monitor the macro environment of an organisation. It is imperative that when conducting this analysis, factors affecting an organisation must be assessed once identified. PESTEL stands for the following factors: Political: These control the way and to what extent a government and their policy may affect an organisation or industry. This could include overseas markets, political stability, foreign trade restrictions, environment laws etc. Economic: These factors consider events that impact how an organisation operates its daily business and to what extent the internal or external economic environment can influence its profitability. Factors include interest and exchange rates, inflation, the cost of raw material, unemployment rates etc. Social: These factors take into consideration the shared belief of the community and identifying emerging customer trends. Factors include, cultural trends, changes in lifestyle, demographics, global warming etc. Technological: This factor considers events related to new technological innovations and developments that affects a market. This can help organisations to be up to date with new IT and assist them in producing or updating their goods and services. Environmental: This factor considers the impact on environmental and ecological aspects. Over the years this element has become more noticeable due to demands from customers. Factors include climate change, sustainability, waste disposal, temperature etc. Legal: This factor has to do with legislation that organisations must adhere. Factors include consumer law, trade regulations, health and safety, employment law, taxations etc. Figure 1 illustrates a diagram of PESTEL. Figure 1: PESTLE Diagram · Using PESTLE, critically analyse the impact and influence of the macro environment, on your chosen organisation and its business strategies. PESTLE model to support detailed critical analysis of the macro environment and Business Strategies on GlaxoSmithKline. Macro environment takes into consideration of external factors that affect a business and impacts the market strategy of the company. This is important to analysis since the external factors are uncontrollable by the actions of the company and doing an analysis helps the organization to tackle the challenges that may arise due to these factors. The macro environmental factors like demographic, economic, natural, technological, political, social and cultural each have their individual impact on GSK. Analysing these factors in adequate time helps in estimating and countering any business losses that may arise due to unexpected behaviour. For example, understanding the trade cycles, estimating the economic resources, and distribution of income and wealth can help in making strategies for budget of a specific product. The consumers’ buying behaviour and spending patterns can be easily understood and changes can be brought accordingly in the marketing plan. Similarly, any rapid change in technology can help GSK to overcome any losses if the organisation acts and takes measures quickly. Any organisation that is aware of and will not ignore the technological demands of their customers can make predictions about their needs. Political Factors The political stability of the country impacts the business which also influences the market strategy as the restrictions changes for manufacturing and selling products. The changing political climate results in changes in regulations to manufacture products and raw materials which results in deficiency in long term planning for GSK. Political interest has been generated as healthcare has now increased the burden both financially and socially. It is very important for GSK to conduct business by complying with the government authorities to avoid any potential business losses occurred due to changing political climate. This can help in protecting the investment made by the company for long term growth. Economic Factors The company has seen a better growth in Asian countries specifically in India and China as compared to other markets. Changing market conditions in European market can be named as one of the primary reason that has resulted in slightly lower production. US market has been the fastest growing market with overall sales accounting up to 60% of global sales (GSK, 2018). This has been strategically of high importance as the market growth is increasing. Social Factors The bigger aim of any pharmaceutical company is to make efforts for better personal and social wellbeing of the society. GSK has been making efforts for meeting the society needs and have made substantial efforts in research and development for cure of diseases like SARS, AIDS, Malaria, Tuberculosis etc. (GSK, 2019). The efforts have grabbed media attention which has motivated the company to concentrate more in this direction and help in maintaining a good relationship between the government and industry. The business of GSK also impacted the social factors like lifestyle of people and attitude towards the healthcare products. People have become more educated and are getting aware of benefits of maintaining a healthy lifestyle which has resulted in better sales of healthcare products manufactured by the company. Technological Factors The adaptation of latest technology has been affecting the sales of drugs due to non-conformity of the license of drugs. The company has been focusing on developing and investing on the latest technologies to manufacturer drugs at a faster pace. They have focused on constant innovation to keep up the competition with the existing and upcoming companies. For instance, to treat chronic ailments they have been working on electroceuticals (Kollewe, 2017). Environmental Factor The weather plays a major role in creating various products that GSK produce. Global warming is one of the factor that makes an impact on the business of the company. Therefore, it is imperative for GSK to follow procedures involving their research and development and comply with environmental protections laws. By doing this they will help to save the environment and build a good and responsible brand image. Furthermore, investing in corporate social responsibility activities linked to saving the environment can result in increased sales. Also, the stakeholders’ interests are necessary to keep things together while making strategies. Legal Factors This creates a direct and indirect impact on the business of GSK as various rules and regulations can change the strategy that GSK is working on. The European laws and various international trade rules are necessary to be taken care of and the organisation needs to comply with it. In addition to this, local legislation is also making an impact when local distribution of product is considered. Compliance is required because pharmaceutical products are put to strict monitoring in various places and can lead to ban for sale in a particular region in case any sort of violation is found. If certain drugs are banned in particular areas, then they will need to come up with alternative solutions and ensure that their sales are not much affected. M1 D1 1.2 Organisational audit conducted on GSK using SWOT What is SWOT? SWOT analysis is a tool or strategic planning technique that is used to evaluate a business’ competitive position. It can help a company to carve a sustainable niche on the market and craft a strategy that will help them to distinguish themselves from their competitors. SWOT is an acronym that stands for the following: Strengths: factors that describes where the company excels at Weaknesses: factors identified which can be harmful for a company Opportunities: positive situations that can bring competitive advantages Threats: negative situations which can impact the company Figure 2 illustrates a diagram of SWOT. Figure 2: SWOT Diagram · Using SWOT, critically analyse the impact and influence of the macro environment on your chosen organisation and its business strategies. SWOT Analysis to support detailed and critical analysis of the macro environment and Business Strategies on GlaxoSmithKline. Strengths The approach of the company has been consumer centric and focus on innovation has helped them to get competitive advantage. The investment has been made on research and development for product expansion which has not been done by many players in the market. The investment has been as high 3.6 billion pounds in the 2016-17. The number of vaccines that GSK has developed has covered 6 main areas which causes majority of diseases in the current situation. In addition to these the company has focused in developing partnership which can help them gain strategical advantage. This covers various biotech institutes, academic bodies and pharmaceutical companies which forms a strong base for their research and development team. These efforts in collaboration has resulted in improved product development and strengthened their market position. The control in various ‘over the counter’ and ‘oral’ health products has helped GSK to become a strong brand in these categories. Some of the major achievements has been in Voltaren and Theraflu where they have gained number one market position in these categories. The strong footprint will help them sustain for a longer term across different market sectors. The company has been able to develop a robust market infrastructure and has achieved huge success in global sales in the category of prescribed pharmaceutical companies. The market count has reached over 150 which has helped them strategically in terms of expansion and also in doing collaborations with the local industry players and key stakeholders (Zaman, 2011). Weakness There have been recent cases where GSK’s brand has been involved in various healthcare settlements in US and charges like bribery has been pressed against the brand. This has impacted the brand image and made the customer conscious about consuming their products as it is directly related to their health division. The trail of legal issues which GSK has been tackling and has now taken a huge burden. The allegations have been many but some of them which really impacted the brand image of the company has been safety of consumer data, reporting of false prices and usage of illegal methods of promoting antidepressants. These activities have been taken up in public legislations and the organization has been fined up to £3 billion which is one of the largest settlement done in the in the pharmaceutical industry. The company is still doing good in the anti-depressant category, but it has largely impacted the brand image which is considered as non-monetary loss and might continue for some more years. It is important during these duration that the brand is able to tackle the competition and does not get left behind in the race. Opportunities