Longitudinal Strategy - Essay Example

? I.D Click here to enter text. Office use only INDICATIVE MARK All marks are to ratification at the appropriate Examining Board. First Name:Click here to enter text. Surname:Click here to enter text. Module Code:Click here to enter text. Module Name : Click here to enter text. Programme:Click here to enter text. Submission Date : Click here to enter text. Assignment Title:Click here to enter text. Part 1: Recent past since 2000 Among other leading UK and global companies listed within UK FTSE 100 is the GlaxoSmithKline Plc. It is a public limited company whose shares are traded within the London stock exchange among other agencies. It is a global company whose main responsibilities are research, manufacturing, development and marketing of pharmaceutical products. These include vaccines, over-the-counter medicines as well as other broad range of health-consumer related products. The company therefore has a profile of operating in the different segments of pharmaceutical and consumer healthcare products within the UK as well as other parts of the world. Besides operating on medical supplies and research, GSK produces other health products such as beverages, which are used worldwide. Besides the operations of the company within the UK market, the company has major markets within the US, Germany, Italy, Japan, Spain as well as in France (StockMarketsReview.com, 2013, para 1). GSK, as a trading company, has a statement of mission, which is provision and development of immunotherapeutic, as well as vaccines that are necessary for improvement of human health globally. The company has made strategic milestones in the field over years and is credited for having great and significant contributions towards the global health as it is today. The company’s profile reveals that the formation of the company as it is today has involved merger efforts by many companies and thus would have a history from the early years of 20th century. It has also made great development milestones in the past since the millennium, where the scope of this paper will be. This paper intends to evaluate the strategic development milestones that the company has undergone with a special attention to the last thirteen years (since 2000). This is because the existence of the corporate identity of GlaxoSmithKline plc is only that old from the merger of SmithKline Beecham and Glaxo Wellcome in December 1999 (Addison and Lawson 2012: 3-5). In line with the company’s strategic mission, it has special focus on some fundamental areas such as realizing sustainable growth, improving long-term financial performance as well as reducing risks. The company realizes these goals through embracing diversification in global business, delivering high-value products as well as adoption of simplified business models. The recent developments have seen the company adopt generic branded manufacturing to add to the previously existing patented strategies in order to command higher influence and relevance in the modern day market. Addison and Lawson through a recent discourse analysis study concerning the strategic development move of generic branding found out that this was necessary and very effective in lowering the associated performance risks as well as in increasing the range of products being traded on. Research studies show that the shift in production models into the incorporation of generic manufacturing has greatly revolutionized the industry through lowering the costs of production and in the process lowering the prices of the commodities on offer. Through the move, the GSK is able to manufacture cheap pharmaceutical products through lowered costs in research as well as in awareness creation. The move was strategic in that it enabled the company to focus the competitive strategies in manufacture of the trading products at higher efficiencies in order to continue in the lead over the world market amidst heightened competition (Addison and Lawson 2012: 32). In fact, it is through such a move that the company is acknowledged to diversify its performance and reach the poor developing economies through relatively cheaper medicine. Through intensified research studies and sharing of information with the other global players, GSK has been in a position to develop medical supplies strategically for the different market segments it supplies. Moreover, the company has adopted various mergers over the years which are all seen to very significant in overall performance of the company in the past years and which are projected to have a long lasting effect in the future. Basic to the mergers is the initial merger between SmithKline Beecham and Glaxo Wellcome to form the current GSK Company as it is. The merger was effective in unifying and harmonizing the operations of these two companies. In addition, another significant and strategic merger happened in 2009 with the GSK colluding with a pharmaceutical company whose line of specialization was in manufacture of ARVs, the ViiV Healthcare (GlaxoSmithKline plc 2012-2013: 1). GSK and Pfizer merged to form a joint venture in which the GSK has greater dominance of about 85% of the shares. The strategy behind the formation of mergers as adopted by the GSK company over years have been in efforts to share the research findings and the market segments. Mergers empower such a company in manners of bargaining capacity, penetration to new markets as well as in acquiring generic power for production of these medical products. The company has continuously invested in research and development especially targeting the index diseases. Besides, it has strategically strengthened its approach in patenting and as a result, the GSK was ranked first in the 2010 access to medicine index. Concerning expansion and targeting new market such as within the least developed countries, the company has a well-organized management/governance structure under which, the president of markets that are emerging is responsible over the companies’ access to markets activities. The company has also a corporate responsibility committee, which is a managerial committee responsible of evaluating and guiding the company into higher productivity and performance. GSK company has been guided by three cooperate strategies which are pursuit of flexible product pricing strategies, seeking innovative partnerships as earlier evaluated as well as research and development in order to meet the needs of developing countries (Access to Medicine Index 2012: 1-3). The year 2003 saw the company draft and embrace corporate social responsibility principles which has greatly influenced its performance ever since. The corporate social responsibilities issues that are addressed include improved employee practices, upholding universal human rights to the employees and the target population segments, ensure increased access to medicine as well as uphold high standards of leadership and advocacy. Moreover, the company decided to invest in communities through such programs as education and health, have open engagement with the stakeholders, embrace high standards of ethical behavior as well as raising standards of research and development for effectiveness and competence. Finally, among the principles adopted is the principle of environmental management under which, the company seeks to minimize use of high-energy materials and improve on waste management practices (Weyzig 2004: 19). The corporate social responsibilities as drafted and embraced by the company have had great influence in the manner of management as well as performance all through. They are strategic in line with the company’s mission and vision statements, which highly regard the well-being of people globally. Much of the activities that have characterized the global pharmaceutical industry have been collaborations between companies through mergers and acquisitions. According to a study by CBI and UKWON (2008), GlaxoSmithKline Plc has taken lead in initiating and signing into mergers and this has contributed much to the overall notable growth in the company. This has formed an important part of the company’s every day operations as indicated by the report. The growth in performance capacity has necessitated structural adjustments as experienced through building of new plants as well as increasing employment opportunities. However, research has shown an increased number of employees being research scientists as compared to general staff within the GSK plants. The management of human resource has equally changed in the years after 2000 especially due to the periodic mergers with relatively smaller companies. The GSK Company values and upholds the sovereignty of its employees as shown through the CSR policies above. The continuous search of talent as well as competition has resulted to the company adopting a high pressure as well as competitive human resource structure, which would point to strategic strengths as well as weaknesses (CBI and UKWON 2008: 3). In order to have the employees overcome such challenges as result from too much pressure, the company uses its mission and vision to encourage the pursuit of individual as well as collective success. In among other achievements notable from the development strategies adopted after the merger in 2000 has been great market performances, increased research and innovation as well as structural and capacity growth. This research reveals that the company currently embraces both generic productions as well as brand production, which are all instrumental in facilitating the companies command in the market. Besides, the collaborative efforts that has resulted with the development strategies that continue to be adopted has resulted to improved performance for the company through venturing into new market segments and embracing new technologies as have been in use by the companies. Great strides have been in research and development, which has seen the formation and discovery of new medicines, vaccines as well as other health products. Moreover, increased competition has made the company to improve on performance in order to overcome the challenges associated with competition as well as to remain relevant within the industry. Part 2: Current In this section, we intend to have the analysis of the company’s strategic macro, industrial as well as competitive environment with a special focus to the entire global industry of medicine and pharmaceuticals. In particular, we engage the SWOT analysis of the company as at 2013 from which, we shall be in a position to project future performances of the company and make appropriate recommendations (GlaxoSmithKline plc , nd: 1-2;“GlaxoSmithKline plc (GSK) - Financial and Strategic SWOT Analysis Review” 2013, para 1). In the analysis, we consider the internal as well as external factor endowments for the organization concerning the global industry at large. Strengths: GSK has well established marketing as well as sales infrastructure across the globe as shown by the worldwide distribution of its research plants as well as retail outlets. It commands a great influence in the industry due to its capacity to invest in large-scale research and development within the pharmaceutical industry. Higher production capacity of the company within the industry leads to economies of scale where the company is in a position to offer competitively low prices to target the poor segment within the developing economies while at the same time realizing a favorable margin of returns. The company’s high sales capacity strategically raises the portfolio of the company in the industry and this gives the company a competitive advantage against other small competitors. Moreover, it has in the recent past demonstrated high capacity to lower management costs through mergers as well as the adoption of generic production mechanisms. Weaknesses: The mature portfolios from marketed GSK products are increasingly exposed to the challenge of generic competition, which requires that the company devise ways to improve on mechanisms of competitive cover against such vices. The research and development pipeline often fail to deliver on the expected initial commercial gains. Such a weakness would be blamed on great losses in monetary as well as time resources that the company would suffer through mass investment into the research. Opportunities: There are postulations that with the adoption of CEDD-inspired research and development, the company has a high potential to realize high growth beyond 2013. Basing on the strong past ID presence, the company could exploit enhanced vaccine offering besides exploiting the oncology market, which shows traits of commendable high growth. The company has also a potential of investing into biologics (antibodies, segment) which is postulated to have high capacity to have high returns. It has also not fully exploited the least developed economies markets, which are thought of holding high potential for good performance of the company. Moreover, the company has the potential of increasing cost elimination through exploiting the strong cash position it enjoys. Threats: the major threat that the company is currently facing is the threat of losing market returns through key product franchises because of the generic erosion. Furthermore, research and development by the company continues to experience setbacks with the increase in competition from emergent companies. Porter’s five forces analysis Porter as well developed an analytical tool through which a company’s strategic position within an industry is analyzed (Porter 2008, para 3). There are the following forces, which are responsible in shaping industrial competition; threat of new entrants, buyers/suppliers bargaining power, substitution threats as well as rivalry within the industry from the existing competitors. The pharmaceutical industry within which the GSK operates has been shown to be very competitive. It has very high competition and new companies keep venturing into the industry. This is a strategic threat that the GSK Company faces though with a shield against the effects as a results of its large size and the economies of scale in its operations. Besides, increased efforts of formation of mergers as well as acquisitions by the company explain its capacity to overcome the increased pressure in competition within the industry. The ability of the company to invest in research and development has placed the company is a position to improve the bargaining power of its customers through provision of a large variety from which to choose from. Nevertheless, the companies increasingly face challenges of manufacture and introduction of substitute products from other companies within the industry, which would have adverse effect towards its general welfare. Moreover, the generic production of pharmaceutical products within the industry poses a threat towards GSK in that other companies have a potential of producing its original franchise at a relatively lower cost which implies that the prices if the commodity would fall and this would be detrimental to the company. At macro level, a political environment that is prevailing in the different countries from which GSK operates has the capacity to influence its performance. However, the company enjoys the global market I that market shocks from one country because of unfavorable political situation would be absorbed by a good performance within a different country. However, economically, increased and improved strategies to undertake research as shown through the SWOT analysis reveals that the company has a high potential of commanding great performance economically now and in the future. Nevertheless, global economic shocks have had a detrimental effect towards the company just as it has had on other trading companies. The performance of the company is wholly dependent on the prevailing economic condition within the trading countries. This is especially so because the company operates in a multicultural diversity across the globe where the effects from culture are felt from internal environment through the employees and from the external environment through the market structures within different cultures. However, the company has been effective in exploiting the cultural diversity for a benefit as indicated by its capacity to have a large number of employees working together from various cultures as well as increased penetration into new markets. Finally, the GSK Company has effectively adopted technology in research and development of pharmaceutical products as shown by the leading role the company y plays in the industry across the globe. Moreover, the strategic policy of environmental preservation through adoption of low emitting energy resources as well as improved waste management depends on technological advancement. Therefore, this analysis reveals a competitive edge, which the company holds within the industry and points to possible advantages that the company would exploit for future improved performances. Internal resource endowment: GlaxoSmithKline Plc being a global player within the industry of medical research and pharmaceutical manufacturing celebrates great endowment in resources from internal. Basic to the internal resource structure is the management structure, the large pool of employees as well as the wide spread infrastructure which offers research and production facilities as well as retail outlets. With the headquarters within UK, GSK has multiple branches across the globe through which leadership and management influence flows from the headquarters. Besides, it has a large capital base, which puts it at the lead as compared to their small companies, which venture into the industry. The company also enjoys strategic as well as operational human management practices, which ensures the high productivity and performance of the employees. The capacity to command influence at a global perspective in research and development as well as within production and distribution of pharmaceutical supplies equally increases the internal strength of the GSK Company. Recent mergers as well as acquisitions by the company have strategically improved on the capacity of the company to command influence within the industry. Moreover, the mergers have the advantage of lowering the operation and management costs for the company. This is therefore strategic in the wake of high competition as is currently experienced within this industry. The organizational structure adopted through formation of mergers as well as through adoption of generic production together with the brand production strategically improves the performance of the company within the industry. By adopting the generic production mechanism, the company reduces on operating expenses through research through which the company is in a position to produce cheaply for the poor market segments especially within the least developed countries. As an opportunity, GSK has also not fully exploited the least developed economies markets, which are thought of holding high potential for good performance of the company. Moreover, the company has the potential of increasing cost elimination through exploiting the strong cash position it enjoys. This therefore shows a strategic position for the company concerning internal strength endowment as compared to other players within the industry. Through overcoming the company’s weaknesses by exploiting the strengths outlined, the company has a capacity of continuously commanding great influence in the industry. Most of these strategic strengths that the company currently enjoys are a result of the recent decisions that been made especially since the year 2000. Part 3: Future The above analysis reveals that GlaxoSmithKline Plc has ever since its formation commanded great influence within the medical supplies and pharmaceutical industry. It has invested highly within research and development through which the company has been in a position to manufacture new medicines, vaccines as well as other health products. Most recent among other products that the company has been acknowledged in invention and production are beauty products such as lotions and creams. The strategic steps that the company has taken in the recent past have aided these achievements. It has intensified in research, exploration into new markets especially within the developing economies as well as formation of mergers and acquisitions. Nevertheless, the SWOT analysis above indicates that the company has not fully exploited the opportunities available to it and as such, it forms the basis of future recommendations towards the company from the analysis in this paper. The company has great potential in exploiting the opportunities at its disposal especially though extensive research and improvement in manufacture and sale of vaccines and antibodies to control chronic diseases that are extensively sweeping across the globe. Increased adoption and use of technology to share research findings while at the same time communicating with other stakeholders within the industry, would be recommendable. Advancement in technology has been seen to be an effective tool to be exploited by various trading agencies for communication and ease of marketing and sale of products. Our analysis above shows that the organization has invested highly in physical retailing of products and almost neglected such avenues as the online trading. Despite the extensive network in marketing and publicity through the print and other digital media, modern day companies are raising the standard through adoption of internet for marketing and sales. Such tools as the social media platforms as well as other websites offering advertisement opportunities such as the Google group are effective tools to be exploited for marketing of GSK products. Besides, online stores are taking over the physical store as often used by many organizations that holds on to traditional procedures of sale. Shopping experience, just as is the case with all other aspects of business, has had great evolution in the past. Great changes were specifically noted in the advent of internet and technology use for shopping and marketing. On a broad analysis, the effect of internet in people’s life has not been only in one dimension but through a wide spectrum of use, internet has been widely adopted for use in matters of shopping. Online shopping for various goods as well as services have not left consumer good s and services unattended to and according to the ‘Nielsen Global Consumer Report June 2010’ shopping for goods and services have had great evolution in the onset of online shopping (The Nielsen Company 2010: 2). Pharmaceutical products as well as research information would be highly fit for sharing and marketing through the online methods. The advent of online stores through which sellers displays their goods and services and through which consumers shop for their consumer goods characterizes today’s commerce industry. Many other industries especially that deal with consumer goods have effectively adopted the online selling and marketing strategies for ease of convenience as well as cost implications. Many debates have however shaped the discussions about the topic of shopping online as compared to the normal ‘physical store’ shopping. Supporters of the practice of physical shopping, and who are opposed to the online shopping, reasons that shopping physically is easy and entails little logistics. It only gives one opportunities to conduct a live survey where we stop by a store and have the privilege to admire and make decisions through physical representation of commodities. On the other hand, the supporters of the online shopping practices affirm that the practice is more convenient than the physical shopping in that one would have a variety of products to compare from at the comfort of one’s location. Moreover, apart from choosing from a variety, one is able to compare easily prices. The decisions to engage the online shopping may therefore stem from various reasons such as the convenience, the experience in use of internet and the general advancement of technology as is widely acknowledged in the current era. I therefore recommend that the GSK Company invest in diversification of marketing as well as sales through adopting the online strategy. The online retail stores provide a new dimension through which such a dynamic company as the GSK would easily target and reach specific groups such as the youths and the young who are currently investing much time online. The advent of technology has necessitated easy access and sharing of information through the online platforms. GSK Company has the potential of reaching a higher market segment through online platform unlike the market segment reached through physical retail. Moreover, the company has the potential of accessing and sharing information from and with other companies within the industry, which would improve the means of marketing and sales. This recommendation is supported by various assumptions, which include the potential of the company in realizing higher sales and accompanying benefits through adopting technology via internet. This paper also works under strategic assumptions, which are: That technology is penetrating into all market segments including the developing economies, which are the greatest future target of the pharmaceutical company. The influence and impact of social cultural factors concerning adoption of technology would be minimal in influencing people’s attitudes and decisions to enquire on pharmaceutical products on offer by the company. Government policies within the target countries will be assumed favorable concerning online trading so that to enhance the success of such efforts to invest in online commerce for these products. This paper also assumes that GSK Company has not invested fully in online trading avenues. In conclusion, GSK Company has received great acknowledgement on the role it plays on global perspective regarding pharmaceutical and medical innovation, research as well as manufacture. However, the company is not a sole player within the industry and as such continuously faces challenges from competition and market forces. Among notable development strategies that the company have been seen to adopt in the recent years have been together with mergers and structural expansion to target emerging economies. The company enjoys strengths in strong internal environment together with external opportunities. It commands great power in competition due to the large capital base already amassed, economies of scale as well as diversification in lines of operations. Nevertheless, it continuously faces some challenges in losing great returns through erosion of generic products by competitors and other misconduct within the industry. The company has also a great potential in exploiting online commerce mechanisms, which form the basis of the recommendations by this paper. The benefits of exploiting internet trade are numerous ranging from expanded market coverage, increased returns as well as increased sharing of information by players within the industry as well as the target market segments. Bibliography Access to Medicine Index, 2012. GlaxoSmithKline plc. Available at: < http://www.accesstomedicineindex.org/sites/www.accesstomedicineindex.org/files/company/downloads/company_profile_access_to_medicine_index_2012_03122012_final_gsk.pdf> (Accessed on 18 September 2013) Addison A. and Lawson V. 2012. GlaxoSmithKline: the shifting from Patented to Generic Drugs. Available at: < http://rudar.ruc.dk/bitstream/1800/9473/1/GlaxoSmithKline%20%26%20the%20shifting%20from%20Patented%20to%20Generic%20Drugs.pdf> (Accessed on 18 September 2013) CBI and UKWON, 2008. Employee resilience in times of change: participation and well-being during mergers and restructuring case study: GlaxoSmithKline (GSK). Available at: < http://www.ukwon.net/files/kdb/33d5aa75e82fe30d8162a52c8c61c687.pdf> (Accessed on 18 September 2013) “GlaxoSmithKline plc (GSK) - Financial and Strategic SWOT Analysis Review”, 2013. Available at: < http://www.researchandmarkets.com/reports/1291554/glaxosmithkline_plc_gsk_financial_and> (Accessed on 18 September 2013) GlaxoSmithKline plc, 2012-2013. Our history. Available at: < http://www.gsk.com/about-us/our-history.html> (Accessed on 18 September 2013) GlaxoSmithKline plc , nd. Available at: < http://yousigma.com/comparativeanalysis/glaxosmithklineplcswot.pdf> (Accessed on 18 September 2013) Porter E, M. 2008.The Five Competitive Forces That Shape Strategy. Available at: < http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/> (Accessed on 18 September 2013) StockMarketsReview.com, 2013. GlaxoSmithKline. Available at: < http://www.stockmarketsreview.com/company/glaxosmithkline/> (Accessed on 18 September 2013) The Nielsen Company. 2010. Global Trends in Online Shopping. A Nielsen Global Consumer Report June 2010. p. 2 Available at: < http://hk.nielsen.com/documents/Q12010OnlineShoppingTrendsReport.pdf> (Accessed on 18 September 2013) Weyzig F. 2004. GlaxoSmithKline company profile. Available at: < http://search.mywebsearch.com/mywebsearch/GGmain.jhtml?st=sb&ptb=7D6132DF-BF5C-4DE2-BF46-D8281F5A12D4&n=77fc7109&ind=2013032713&p2=^Z7^xdm189^YY^ke&si=jenya&searchfor=Summary++Business+description++GlaxoSmithKline+%28GSK%29+is+one+of+the+world%E2%80%99s++largest+research-based+pharmaceutical++corporations+that+discovers%2C+develops%2C++manufactures+and+markets+branded+human++health+products.++%C2%83++Headquarters%3A+UK%2C+with+additional++operational+headquarters+in+the+USA++%C2%83++Global+presence%3A+about+160+countries++%C2%83++Primary+markets%3A+USA%2C+France%2C+Germany%2C++UK%2C+Italy+and+Japan++%C2%83++Employees%3A+approximately+103%2C000+>(Accessed on 18 September 2013) (For office use only) TUTOR COMMENTS: .......................................................................................................................................................................... .......................................................................................................................................................................... .......................................................................................................................................................................... .......................................................................................................................................................................... .......................................................................................................................................................................... .......................................................................................................................................................................... .......................................................................................................................................................................... .......................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... ....................................................................................................................................................................................................................... Read More