GlaxoSmithKline Strategy Analysis - Case Study Example

Name Tutor Course Date GlaxoSmithKline Strategy Analysis Introduction GlaxoSmithKline is among the leading health care and pharmaceuticals research based organizations whose mission is to improve human life’s quality through facilitating individuals to do more, while they feel better hence live longer. The company’s focus lies within three various strategic sectors like reducing risk, delivering growth that is sustainable, and improving financial performance in the long-term. Even thought there have been limitation’s to GSK’s success, there are various areas that this organization can pride with. With regards to the GlaxoSmithKline Company, this paper will provide it strategic analysis and offer some recommendations. Mission and Objectives Organizations need to have objectives, mission and goals that are clearly articulated so as to channel individuals’ efforts throughout the company toward mutual ends. Objectives and mission also offer a way of effective allocation of resources. An organization’s strategic objectives and mission constitute a goals’ hierarchy that vary from wide statements of intent and foundations for competitive advantages to strategic objectives that are specific and measurable. The GlaxoSmithKline (GSK) Company’s current mission is to assist individuals do more while feeling better, and live longer. The business is centered on 3 strategic priorities’ delivery that aim to raise growth, decrease risk and enhance the company’s long-term monetary performance (GlaxoSmithKline, 2014). The priorities are: develop a diversified international business, distribute more products of worth, and simplify the working model. Responsible operation and making sure that company’s values are entrenched in the decision-making and culture assists the firm to better accomplish the society’s expectations. The GlaxoSmithKline’s mission is both challenging and inspiring. This mission offers the company the reason to develop modern products and medicines and make them accessible to a great number of people who require them as possible (Addison & Lawson, 2012). This is underpinned by the company’s values which are: people, strategic priorities, and insights. Audits With regards to ethical/social policy which is under GSK’s cultural and social management, GSK publishes 10 Corporate Responsibility Principles that cover issues like human rights (like intellectual property, non-discrimination), labour rights (like freedom of association) (Oekom research). Others are; safety and health, access to medicines, business conduct’s code (incl. marketing), consumers and products, engagement of stakeholders, and involvement of the community. Additionally, the firm implemented separate codes and policies on safety and health, suppliers, community investment, business conduct, and human rights. GSK argues that the firm encourages freedom of association as well as the right of employees to plan and negotiate collectively in proportion to the obligations of local and international laws and the Conventions of the International Labour Organization (Oekom research). Moreover, workers have the freedom to join unions of trade anywhere in GSK all over the globe, apart from where this is not allowed by state law. The firm runs facilities in Egypt and China where no existence of independent labour unions. In reference to staff relations, GSK reports there is no international policy on options of flexible working. However, local countries and business units might have them (Oekom research). For instance, both the United States (US) and United Kingdom (UK) (nearly 48,000 workers, that represent nearly 48% of entire labour force) have comprehensive policies of flexible working which gives every employee the chance to ask for flexible working. GSK also affirms to have workers working a range of flexible working plans from job share and part-time through to tele-working and home-working. It was noted that GSK has had major layoffs (dismissals provoked for basis not connected to the individual employees concerned) in the course of the past 3 years. In 2003, GSK announced to cut almost 3,400 jobs in relation to global program of cost-cutting. External examination showed that restructuring and closures of various facilities resulted in not less than 500 job cuts in France and in the UK (Montrose, Bristol) during the past two years (Oekom research). In accordance with safety and health, the greater part of the firm’s workers are situated in nations with high minimum principles concerning conditions of health and safety, which are laid down by law or via labour agreements (Oekom research). A number of operations, though, are in nations that have poor standards. According to GSK, it voluntarily surpasses the standards within those nations. GSK demands every operation to abide by legal requirements as well as Global Environment, Health and Safety (EHS) values. The 64 Global EHS Standards’ set establishes particular requirements for the organization globally. The standards institute an approach of management system to legal compliance, ongoing improvement as well as the management of major EHS-associated business risks (Oekom research). The standards are consistent with globally acknowledged standards of management system, like OHSAS 18001 and ISO 14001. On the other hand, there is no comprehensive information about the 64 standards obtainable. Organization Strategies GSK has wide-level responsibility for activities of Access to Medicine (ATM) and has come up with a sustainable method of delivering initiatives of access in Index Countries (ICs) (Access to Medicine Index, 2012). The firm invests in Research and Development (R & D) targeting Index Diseases (IDs). It also supports molecules in its channel with extensive scope of ID. The global ATM strategy for GSK is governed through a well-defined system of management. The Emerging Markets’ president leads the organization’s ATM activities, and the Developing Countries and Market Access Unit (DCMA) is led by the Senior Vice-President (SVP), which was instituted in 2010 (Access to Medicine Index, 2012). With regards to incentives and performance management, GSK obligates to prizing senior management for the successful initiatives’ delivery that enhance medicines’ access in ICs via a well-planned structure of internal incentive. For instance, GSK has established bonus schemes within its Developing Countries Market Access Unit (DCMA) to incentivize managers directly that raise medicine’s access (Access to Medicine Index, 2012). In units of DCMA, the schemes incentive volume growth instead of rewarding profit delivery. GSK argues that this fresh structure of incentive is promoting initiatives for improvement of ATM in ICs through encouraging workers to work toward overcoming hurdles and expanding access. For instance, GSK has instituted its primary initial distribution route of medicine in Somalia. GSK has civic position statements on major issues of ATM including: intellectual property, clinical trials within the developing world, marketing practices, counterfeiting, product donations and compulsory licenses. GSK affirms its position that a qualification for guaranteeing access is the primary development of products, hence necessitating a reasonable position between maximizing access and incentivizing innovation (Access to Medicine Index, 2012). In terms of ethical marketing, GSK obligates to implementing a code of conduct concerning practices of ethical marketing that is in agreement with its own domestic principles, for every sales agent, contractors, and local 3rd party distributors (Access to Medicine Index, 2012). GSK has an international code of practice for customer interactions and promotion, which deals with areas like provision of information and fees for payments of service to healthcare professionals, grants, hospitality, donations, and samples. GSK revealed that 1,828 workers were disciplined for violations of policy in 2011, encompassing 66 cases of workers breaching marketing and sales codes. Additionally, GSK has provided information on violations to external codes of marketing that were not traced and accounted for by GSK before 2009. This indicates that GSK has reinforced its practices on policy and marketing, and is leading in actively reporting breaches in ICs (Access to Medicine Index, 2012). GSK also obligates to proactively engage in corruption fighting via its internal anti-corruption and anti-bribery codes of conduct, and also takes part in initiatives of external anti-corruption (Access to Medicine Index, 2012). Additionally, it has internal auditing that checks observance with its code particularly connected to ethical practices. It has been noted that GSK voluntarily discloses information concerning its violation of internationally and internal acknowledged codes of corruption and/or anti-bribery in ICs. GSK’s performance and participation in this sector are beyond average in comparison with Index peers. In the last 5 years, there were no implications of GSK in cases of bribery and corruption in the ICs, with regards to litigation or fines records (Access to Medicine Index, 2012). According to innovative research and development for index illnesses, GSK has a considerable portfolio of innovative R&D that demonstrates dedication to projects intended to enhance medicine’s access within developing nations, including ICs (Access to Medicine Index, 2012). Some illnesses of specific significance to developing nations are targeted including: chagas, dengue, malaria, bacterial meningitis, tuberculosis, pneumococcal disease, and HIV/AIDS. According to adaptive index diseases’ R&D, GSK’s commitment is evidenced through broad pipeline products that target IDs. 16.3% of GSK’s research pipeline is committed to IDs. The pipeline entails 3 vaccines that target meningitis, pertusis, and measles. It also entails 6 products of pharmaceutical within the pipeline for diabetes mellitus, asthma, cerebrovascular disease, ischaemic heart disease, osteoarthritis, and chronic obstructive pulmonary disorder (Access to Medicine Index, 2012). With respect to sharing intellectual property (IP), GSK openly discloses the details of licensing relating to its collaborations of research linked to a couple of IDs (in terms of access provisions, IP rights) (Access to Medicine Index, 2012). GSK has offered proof of such 5 examples of sharing its IP with institutions of research and neglected discovery initiatives of disease drug. For instance, in 2010, GSK issued research outcomes that could assist identify possible new malaria’s treatment. The study was the outcome of a year-long process of screening that discovered 13,533 compounds that confirmed greatest action (Access to Medicine Index, 2012). Not less than 80 percent of these particles were GSK’s proprietary. In terms of accountability for pricing practices of sales agents, the firm implements policies that control the practices of pricing of its domestic sales agents with the intention of improving accessibility and affordability of products. GSK affirms that the ultimate sales agents’ accountability is with the nation’s general manager (Access to Medicine Index, 2012). On the other hand, GSK has introduced a centralized process of approval to make sure that strategies of local pricing remain in proportion to the GSK international tiered strategy of pricing. GSK’s policy of flexible pricing is regarded innovative. From 2009, the firm has limited prices in LDCs for every product that is GSK patented (individual formulations and product lines) where it prides as the sole supplier within that market. Limitation of prices are not more than 25 percent of their price within the UK; provided the price covers costs of manufacturing so that there is sustainability of the offer (Access to Medicine Index, 2012). Strategy Formulation This section will discuss how positioning of brand has been useful to GSK. Brand positioning is the way the product is seen in the customers’ minds on the subject of competitors brand within the market. Because GSK is reasonably large organizations and is established in various nations, the information is focused from their headquarters which is based in London UK. Sir Andrew Witty, GSK’s Chief Executive Officer states that the industry of pharmaceutical is very dynamic and complex in nature (Addison & Lawson, 2012). There exists a constant raise of pressure from patent expires, regulatory issues, and healthcare providers. These have contributed to a situation that has been put through high risk factors and lower growth. GSK has focused their business on 3 basic priorities i.e., increasing diversified international business, distributing more products of worth, and operation model’s simplification. The firm uses these priorities to deliver growth that is sustainable, improve lasting financial performance and decrease risks and hence stick to the mission of enhancing human life’s quality that allows people to work more, feel better as well as live longer (Addison & Lawson, 2012). With regards to SWOT analysis which denotes strength, weakness, opportunities, and threats; GSK’s strategy can be analyzed through this tool. Strengths include: GSK has powerful sales; good infrastructure of marketing; their financial statements and balance sheet is good and detailed; it has power in industry leading team of R&D (Addison & Lawson, 2012). Additionally, it has a successful implementation as well as execution of business fundamentals, life cycle strategies of management, and strategic priorities. GSK has the capacity to cut on expenses. Some of GSK’s weaknesses include and not limited to: has no understandable, widely mutual goals for the system; lack of sustainable management and training skills; it experiences hardships with stability of care (resulting in frequent patients lost cases in system); increasing cost sharing- this indicates inability to deal with increases of cost; the inter-sectorial connections between social care, public health, and health care is poor; the Co-marketing agreements’ possibility restricting global presence of GSK; it has a revenue base that is unsustainable; and the firm is physically and diversely situated (Addison & Lawson, 2012). The opportunities that GSK has is that is has a powerful assets and cash position. It is GSK’s opportunity to entry into biologics and antibodies sector of market. The firm has the capacity to deliver powerful growth through R&D team. It has the capacity to enlarge business in upcoming markets. The generic products sales’ effect on sales of the organization is another opportunity (Addison & Lawson, 2012). Some of the threats include the threat of ageing and demographic change. Counterfeit drugs that are sold in rivalry with legitimate products is another threat. Another threat for GSK is people’s higher expectations to the system of health. The raising expenses of trials of drug and higher standards inflicted by state drug approvals bodies, is also a threat. A raise in the safety issues’ number surrounding GSK’s products has taken advantage of its strengths and existing opportunities during the past years and has effectively reduced weaknesses and eradicated threats (Addison & Lawson, 2012). Strategy Implementation There are some areas where GSK can separate its products from the rivalry products. That is via: services, product, image and personnel. Looking at GSK’s product differentiation, it is constructed on attributes like reliability, durability, consistency, and innovation (Addison & Lawson, 2012). With differentiation of personnel, GSK targets to train and educate staffs so as to secure staffs that are highly skilled. Finally, differentiation of image demanded that GSK had to run to ascertain images, which differentiate them from rivals. Adverts, logos and sponsorships as well are the key aids for developing a powerful and diverse image in the public or customer’s mind. This is not easy task to achieve, yet so far GSK has been successful incidentally (Addison & Lawson, 2012). Recommendations GSK needs to decrease threats and risks through widening its range, enlarging in to fresh product parts with prospective and seizing chances across other boundaries of geography. GSK needs to explore the segment of biopharmaceuticals, consumer healthcare and vaccines that has specific potential and hence raise its growth of sales. It should center on the geographical capacity of its business within upcoming economies and markets. It should also concentrate on its team of R&D- its development and training and latest scientific discoveries to guarantee constant delivery of present products and latest products in future. The international restructuring plan and the slight business model’s change that can open conduits of diversification and growth of business may possibly be anticipated to be more beneficial in the long-term. GSK should also concentrate on investment’s return and decreasing its functional capital to keep up with its present position and come out as a market head in future (Addison & Lawson, 2012). Conclusion This paper has discussed various issues in relation to GSK’s strategy analysis. It is evident that GSK is among the world’s leading pharmaceutical organization that is research based that discover, develop, manufacture as well as market products of human health. Regardless of the pharmaceutical markets’ dominance in the globe, GSK has sustained the strategy of development global based on manufacture to raise their global sales as development of research. Even though it is recognized that GSK’s inconvenient through sales decrease, the organization has taken a step forward following its decision to products of generics. Work Cited GlaxoSmithKline. Our mission and strategy. 2014. Retrieved from http://www.gsk.com/about-us/our-mission-and-strategy.html Addison, Adelaide & Lawson, Virginie. GlaxoSmithKline: the shifting from Patented to Generic Drugs, 2012. Oekom research. GlaxoSmithKline. Corporate Responsibility Rating. Access to Medicine Index. Company Profile. 2012. Read More