Unit 7 Business Strategy GlaxoSmithKline Assignment

Introduction

The following study is a critical examination of GlaxoSmithKline, a global leader in the development and marketing of pharmaceutical and healthcare goods. The following study will assess the company’s current policies and strategies, evaluate its strengths, and look at the company’s future strategies. Business Strategy Unit 7 GlaxoSmithKline Assignment evaluates and performs the organisational audit using some of the important marketing strategies. Furthermore, it provides a comprehensive insight of the company’s current rankings and future prospects.

Task 1: Company overview and strategy formulation

A.Company Profile

GlaxoSmithKline (GSK) is one of the world’s major research-based pharmaceutical firms, discovering, developing, and manufacturing a wide variety of branded human health products. The company’s headquarters are in the United Kingdom, but it also maintains an operating headquarters in the United States of America. It now promotes its products in over 160 countries, with the United States, France, the United Kingdom, Germany, and Japan being its key markets. The company employs about 1,000 people and operates two major business segments. Pharmaceuticals and consumer healthcare items are the divisions. The pharmaceuticals division accounts for more than 85 percent of the company’s sales, and five of the company’s best-selling medications include Seretide or Advair for asthama and Chronic Obstructive Pulmonary Disease (COPD). Anti-malaria medications, Zentel, Pentosam, anti-retrovirals, and TB treatments are among the many other important goods manufactured by the corporation (GlaxoSmithKline 2013).

Vision Statement: We have been working to develop a more balanced business and product range capable of generating long-term sales growth. This is focused on our three business segments: pharmaceuticals, vaccines, and consumer healthcare.

Our objective is to help people achieve more, feel better, and live longer lives.

Objectives and goals

The firm focuses on important issues that serve as its overall goals:

to effectively market and launch their new goods

Continue to invest in critical businesses like as emerging markets, vaccines, and consumer healthcare.

Look forward to future possibilities to narrow their focus and increase the value of their product portfolio.

Furthermore, the company works on a variety of goals, including:

Developing as a diverse business

Provide more valuable products.

Simplify their business models

Develop as a responsible business.

Core Capabilities:The competence and years of experience of the firm that exclusively produces branded items and has its own development R& D team are its core competencies. The company’s consumer healthcare division includes OTC medications, oral healthcare products (Aquafresh, Sensodyne), and nutritional healthcare beverages. GSK’s pharmaceutical sector is the largest and is separated into prescription medications and vaccines. Pharmaceuticals is the company’s main focus, and its R&D team employs over 15,000 individuals across more than 20 distinct facilities (GlaxoSmithKline 2013).

GSK has a centralised worldwide production and distribution network. It has 87 manufacturing facilities and employs over 32,000 people in production. The firm currently has two types of production facilities. The principal manufacturing locations are involved in the creation of active chemicals utilised in the preparation of its medications. The corporation includes 12 production locations in the UK, Ireland, the United States, Singapore, and Australia. Furthermore, the active chemicals are converted into final products at secondary production locations. With over 15 of these locations exclusively in Europe, the firm has extended six in North America, five in Latin America, five in the Middle East, and more than 15 in Asia and Australia combined. The firm has also established four in China and one in Japan. Concerning the vaccine production units, the corporation principally produces them at two distinct sites in Belgium. The firm employs about 44,000 employees in its sales division, making it one of the largest sales forces in the pharmaceutical sector today. GSK has several co-marketing and co-promotion arrangements with a number of other pharmaceutical businesses (GlaxoSmithKline 2013)..

Factors to consider while developing strategic plans

The company’s top priority business aim is to become the world’s largest pharmaceutical company. To do this, the organisation must evaluate a number of things before developing future initiatives. They are as follows:

Improve R&D pipeline: While the firm has done well in developing effective solutions for various health ailments and diseases, it has to improve its R&D projects and turnaround time.

Drug focused portfolio: The emphasis should be on exploiting the units the firm already has and on establishing a drug focused portfolio. This must be supported by in-licensing agreements for their R&D division’s external contracting.

Closely related to commercial operations: The company has invested and continues to spend heavily in developing superior goods and inexpensive solutions in the sphere of medicines and healthcare. To optimise the value of their R&D, the firm should tightly integrate their R&D activities with their commercial operations.

Differentiation: The Company uses integrated marketing techniques to differentiate its products. They have also been innovative in terms of product design and the utilisation of various marketing channels, particularly for their consumer healthcare items.

The Ansoff matrix

Industry Penetration: GSK now controls more than 9% of the European OTC drugs market. It also accounts for more than 7% of the worldwide pharmaceutical market. It has a grip as a participant in its business and is currently the world’s fourth largest pharmaceutical corporation. The company’s advantages include its own powerful distribution channel, partnerships with strong merchants, collaborations with colleges, health care facilities, GPs, and so on.

Product Development: The company received six important clearances last year and has begun working on them. GSK is working on more than 40 different drugs, most of which are in phase II or II of development.

Furthermore, the corporation is trying to produce new essential pharmaceutical goods in response to rising worries about ageing and obesity. They also want to create customised goods depending on certain industry categories (GlaxoSmithKline 2013).

Market Development: In terms of market development, the business has claimed a 60% rise in the quantities of pharmaceuticals provided to LDCs since 2010. It has also achieved the distinction of being the first pharmaceutical business to sign the AllTrials campaign for research transparency in many regions of the world.

Diversification: The company’s total revenue is £26.5 billion. As previously said, the firm has approximately 50 distinct units across the world for various products. They are still investing in essential businesses including as developing markets, vaccines, and consumer healthcare (Daniel Kipley, Alfred O. Lewis, Jau-Lian Jeng 2012).

C. Effectiveness of strategic planning techniques for developing a strategic business plan

Market research is a procedure that gathers information about a certain market, such as potential consumers’ preferences, existing rivals, and the market’s current state. It is a vital tool because it gives insights into client requirements, which may help managers create purpose, objectives, and strategies.

Cost Benefit Analysis: This is a typical type of strategic decision making tool that includes costs as well as possible benefits associated with various courses of action and then selects the optimum course of action that will generate the most profitability for the firm.

SWOT Analysis: A basic yet powerful method commonly used across sectors that includes a review of the company’s strengths, weaknesses, opportunities, and threats. This enables managers to capitalise on their strengths and develop tactics that will diminish their flaws and transform them into strengths. While opportunities and threats assist in strategic decision making by allowing managers to prepare for things ahead of time.

Task 2: Organizational audit

Audit Instruments

We would utilise two separate methodologies and perform an organisational audit to examine GSK’s existing standings. These are the tools:

Porter’s Five Forces: This would offer information on the external competitive environment as well as the degree of influence that each player has on the firm (EY 2013).

SWOT Analysis: As previously said, it would provide a summary of the company’s strengths, weaknesses, opportunities, and threats.

The Five Forces of Porter

The diagram below outlines the various levels of influence that each of the aspects has on the company’s operations.

Customers’ Negotiating Power: Customers’ bargaining power is relatively low because drugs and healthcare are in short supply and most of them offer almost identical prices.

New entrants pose a threat since they require a large amount of finance and technology to enter the business. As a result, it is cheap since no other firm can join the marketplace and provide its services.

Within the industry, there is competitive rivalry: GSK now serves 12% of the overall market in the UK. As a result, there is a sizable market share to which it might expand and cater. However, because the number of competitors is small, the competition is moderate.

Suppliers’ Negotiating Power: Suppliers’ bargaining power is medium since there are few suppliers for the ingredients used to make the company’s products.

Equivalent goods: There is no close substitute for the company’s medications or pharmaceutical products. When it comes to alternative items, the threat is thus on the lower side.

Task 3: Appropriateness of alternative Strategies

A. Alternative Strategies

GSK is a well-known brand that has expanded into a variety of pharmaceutical and healthcare items. Future initiatives that the corporation should consider as alternatives to its existing line of business would be substantial expansion aided by inexpensive kinds of sustainable healthcare goods.

Diversification and globalisation are the next steps that the corporation should consider as an alternate approach to its current business activities. It is generally understood that the next century will focus on healthcare items, which is why the firm must progress and begin manufacturing of numerous products that give solutions for new age ailments and health conditions.

B. Diversification, globalization and sustainable energy development

The company’s future strategy will be built on three key pillars. They are as follows:

Diversification: The company is present in the majority of the common and complicated pharmaceutical and healthcare goods and has diversified significantly over the years. In the approaching years, the emphasis will turn to inventing production procedures by utilising more cost-effective items through their new setup (GlaxoSmithKline 2014).

Globalization: Up until now, the corporation has mostly operated in the United Kingdom and a few other nations. With its experience and breadth of healthcare solutions, it would now be focused on expanding and offering its solutions to other EU nations, as well as going into fresh countries.

Sustainable healthcare items:A key priority would now be to provide clients with sustainable products. It should be designed in such a way that it is affordable and lowers all sorts of pollution. This is a rising necessity for the future, and the firm must invest in such technology to help it extend its operations and appeal to a far larger audience.

Task 4: Implementation of the above strategy

A: Steps to implement the plan

The planned approach is to diversify, globalise, and provide clients with long-term solutions. Before the strategy is executed and the plan is carried out, it is critical that the roles and responsibilities for strategy execution at GSK be defined.

Responsibilities and Roles

Top management’s responsibility would be to oversee and ensure that the intended initiatives are not disrupted owing to a lack of cash or resources. For its project of developing important medications to treat certain difficult diseases and other types of health conditions, senior management must delegate and interact with partner firms in order to achieve the overall goals in the next five years.

Furthermore, in order to commercialise the use of cost efficient and highly successful solutions, management would be responsible for arranging for cash, space, and other transportation resources so that it could begin distributing across its markets as soon as possible.

R&D:GSK has its own R&D team that is always trying to develop and provide effective and efficient healthcare solutions. Aside from their involvement in pharmaceutical and health care product distribution, they would be critical in growing throughout the retail sector.

Transportation: Transport systems are critical in the delivery of its medications and other healthcare supplies. The corporation would need to invest more and build its own transportation networks for both local and international deliveries to its power producing units. When it comes to operational expenses in the electricity sector, transportation is one of the most significant components.

Resource Needs for New Strategy Implementation

GSK’s resources for executing its new business objectives would entail ongoing and collaborative efforts by the whole GSK team and its employees. The following are the basic aspects of the resources necessary and their roles:

Environmental scanning: GPs and pharmacists play a significant role, which is why GSK must incorporate them and keep them in mind when developing initiatives. Because the general tendency appears to be toward self-medication, the corporation would also need to provide universal and inexpensive options. The corporation would need to prioritise simplicity and accessibility as main aspects in its product development and continued growth of medications for cold and flu health problems.

Strategic Thinking and Management: In order to penetrate the current market, GSK’s top management and managers throughout the world would need to further develop medicines that are in the pipeline, as well as a variety of additional healthcare solutions.

Delivering: GSK would also need to incorporate each goal into its communication tools and incorporate it into its integrated marketing plans. It would also need to improve the accessibility and ease of its product for new and expanding markets.

SMART objectives to achieve the aforementioned methods

Specific

By 2018, the corporation intends to grow its market share in the United Kingdom.

It also intends to boost sales of its market-leading cold and flu treatment.

Increase collaboration with universities and other institutes of higher learning.

Increase R&D spending in the cold and flu drug business.

Customers in the new product markets should be targeted.

In London, vending machines will be introduced.

Increase their CSR and societal contributions.

Measurable

By expanding sales by more than 18% within the UK, the firm hopes to gain a 10% market share.

The goal is to raise cold and flu drug sales by 10% over the next three years.

It aspires to reach over 70% of universities and educational institutions in three years.

By 2018, investment in cold and flu treatments is expected to grow by 5% while production costs are expected to decrease by 3%.

Within three years, it hopes to capture 10% of the heavy users’ market share with its new offerings.

Conclusion

To summarise, GSK has the ability to harness its knowledge and infrastructure to emerge as the leading firm in the field of pharmaceutical goods. However, the firm has a long way to go before it becomes a significant participant in the market of Consumer Healthcare goods. Furthermore, its other priority areas, such as vaccine manufacturing, are a unique domain that is rarely investigated by others throughout the world. Overall, the organisation must prioritise the aforementioned tactics and ensure proper implementation and control systems are in place.

References

GlaxoSmithKline (2013), Annual Report 2013, available at http://www.gsk.com/media/325156/annual-report-2013.pdf

Adaptimmune (2014), Adaptimmune enters strategic cancer immunotherapy collaboration with GlaxoSmithKline to develop and commercialise novel cell-based therapies, Adaptimmune Limited

Pip McCrostie (2014), Global Corporate Divestment Study: strategic Divestments drive value, Transaction Advisory Services

Pierre Chandon (2003), Innovative marketing strategies after patent expiry: The case of GSK’s antibiotic Clamoxyl in France, International Journal of Medical Marketing, Vol. 4, 1 65–73