Strategic Management- - Case Study Example

Running head: GlaxoSmithKline Company Introduction Strategic management refers to the process which represents a logical, objective and systematic approach which determines the future direction of an organization. Strategic management is different from the managerial process which involves formulation, evaluation, implementation and controlling the relationship which exists between the strategies, the environment and the objectives of an organization. To ensure that organizations are responsible and accountable, there are different laws which govern them and one of such laws is the Sarbanes-Oxley act which was enacted in the year 2002 in United States by the federal government.

This act was established because of the cases which were raising involving accounting and corporate scandals which affected big corporations like the Enron Company, world.com, Adelphia among other companies in the countries. The collapse of these companies had led to losses to the investors which had in turn declined the publics’ confidence especially in the security markets of the United States (AICPA.org, n. d). GlaxoSmithKline’s case on retaliation against cross border drug sales and the strategic management approaches employed in this case study In the above mentioned case of GlaxoSmithKline commonly referred to as GSK, this pharmaceutical firm sought to limit cross border sales of its drugs.

The GSK Company is the second largest pharmaceutical company in the world and a major distributor of drugs to the United States. It is located in London, England and supplies drugs and other health supplements to most parts of the world including Canada. In the above mentioned case, Canada was importing drugs from the GSK which they were in turn selling to the seniors of the United States at a lower cost than the cost which the original company that is the GSK was selling in this region. After three years of internet selling of drugs by Canada to United States citizens, GlaxoSmithKline the manufactures of this drugs sought to cub this trade citing the security of the United States citizens.

However, this led to the tarnishing the public image of the GSK Company since this move was seen as a move to cub competition and to regain united states sales which were slowly dwindling. Under the Sarbanes-Oxley Act of the United States, it is wrong for any corporation to mislead stakeholders in order to increase sales and such violations calls for strict penalties for all the companies whether local or foreign. Since the main motive of the company was not to ensure safety of citizens of the United States but financial based, the company should have being heavily fined.

This is meant to ensure that the confidence of the investors and other stakeholders is not reduced in United States. The Sarbanes-Oxley Act is vital today and even in the future since it has helped in reducing unfair business practices which may lead to defrauding of the investors thus reducing their confidence in most corporations which may affect the financial market of the United States. This act is also vital today and in the future since under the provisions of this act, different companies deemed to be carrying out unfair practices can be evaluated by the government to ensure that the investors do not suffer (AICPA.org, n. d).

For any organization to run smoothly especially in this era of globalization and rising competition, it is important to employ strategic management process. Strategic management models are today being widely used to ensure continued growth and profitability of organizations and they are evident in the above case study of GSK. The first elements of a strategic management model are an analysis of the environment. This entails both the internal and external environment which poses threats and/ or opportunities.

The company then devises means to ensure the threats are minimized and the opportunities exploited. In the case of GSK, internet sale of drugs at a reduced price to the Americans by the Canadians was a major threat to the long term growth of the company prompting the company to act fast before the competitors could take over the market (Barnat, n. d). Strategy formulation is the next element of a management model which involves coming up with strategic ways of dealing with the threats and opportunities posed by the environment.

In the GSK case mentioned above, the best alternative that the company derived is to reduce their drug supplies to Canada so as to ensure that the cross border trade was reduced or even eliminated thus giving the company a stronghold in the United States. Strategy formulation is followed by strategy implementation whereby the formulated strategies are implemented. After the company decided to reduce their drug supply to Canada, a notice was issued to the affected areas and time given with an aim of forcing Canada to stop the trade.

However, when Canada refused to stop their online drug trading with the Americans, GSK implemented the drug reduction strategy and immediate reactions were obtained (Barnat, n. d). The last stage is the evaluation and controlling the implemented strategy. As mentioned above, implementation of the drug reduction strategy sparked different reactions in the region as this was seen as a move by GSK to increase their profitability bearing in mind that the exorbitant prices of the drugs which the company was selling directly to the United States.

The public image of the company was adversely affected. To control this outcome of the strategy implemented, the company came up with the discount strategy to help increase their sales in the United States as well as to restore public confidence. Discounts were in turn used to lobby the government of the United States to enact regulations in favor of the company (12manage, 2009). Reference: Barnat, R. (n. d): Stages of Strategic Management. Retrieved on 16th May 2009 from, http://www.introduction-to-management.24xls.com/en221.

12manage (2009): Competitive Advantage (Porter). Retrieved on 16th May 2009 from, http://www.12manage.com/methods_porter_competitive_advantage.html. AICPA.org (n. d): Sarbanes-Oxley Act. Retrieved on 16th May 2009 from, http://thecaq.aicpa.org/Resources/Sarbanes+Oxley/.