Issues in Global Business and Consultancy - GlaxoSmithKline Company - Essay Example

? Issues in Global Business and Consultancy Executive Summary In reality, issues relating to global business and consultancy arematters of concerns to companies. GlaxoSmithKline Company is not an exception. The company strives despite the challenges in the global business, including economic disparity among different states barring affordability, diseases outbreak, increasing cost of production and transportation to achieve their mission. The company operates in more than 100 countries spread across the world, meaning that they have to obey the trade treaties and international trade organisations such as the World Trade Organisation. Notably, the UK, US, China and Belgium host the major research centres of the company. The choice for those locations is due to the technological advancement and industrial production and as part of the globalisation strategy. As a result of the globalisation and to its contribution to the worldwide healthcare needs, the company ranks among the research–oriented healthcare and pharmaceutical companies in the world. Indeed, this has made the company to play a leading role in making sure that the global population remains healthy. As well, the company benefits from its global business approach, and enjoy Comparative Advantage, Absolute Advantage Fallacy, Endogenous Advantage, and Bilateral Trade Patterns, due to the nature of its production. Table of Contents Executive Summary 1 Table of Contents 2 Introduction 3 Brief Research Methods 3 Globalisation 4 Globalisation Challenges and the Company’s Interventions 6 International Trade Theory 7 Comparative Advantage 7 Absolute Advantage Fallacy 7 Endogenous Advantage 8 Bilateral Trade Patterns 8 Recommendations 9 Conclusions 9 Bibliography 10 Appendix 11 Introduction Global business and consultancy are the major considerations for companies seeking success. There are certain issues affecting business operations, which have to be predetermined, analysed for the good of the business. In this report, the major issues to be discussed include globalisation and International Trade Theory relating to GlaxoSmithKline Company (GSK). The company was formed in the year 2000 when Glaxo Welcome Company and SmithKline Beecham merged (Weysig, 2004, p.16). Since the company is international based, operating in more than 100 countries, all the factors in the global business arena has an impact on it s operations. As any other company, GSK has internal and external challenges because they manufacture health products. Therefore, millions of people are depending on the products for their health needs, meaning that an outbreak of epidemic disease creates an impact of increase in the demand of the products. Intensifying their research is the key to the company’s development. Some of the globalisation factors affecting the company include is he demand arising from low income countries. As a leader, they have the mandate and compulsion to fulfil their mission despite all the global challenges. Brief Research Method During the study, the researcher employed a deductive approach in doing the investigation. First, the researcher formulated the topic of discussion, under which the problem to be investigated was stated. Secondly, literature review followed, in which the divergent views of different scholars and other relevant company information was incorporated. Third, the researcher proposed the theory to be used in the company analysis, and designed the research to test the theories. Finally, the researcher started the study by collecting data, analysing them, using qualitative and quantitative techniques, after which the findings were presented. Globalisation The company is based in the United Kingdom, with branches in more than 100 countries distributed across the world (Feenstra, 2003, p.44). The other important aspect of the company to note is that, the UK, US, China and Belgium host the major research centres of the company (Feenstra, 2003, p.45). Due to its contribution to the global health needs, the company is categorised among the top research based healthcare and pharmaceutical companies in the world (Melits, 2003, p.1699). Indeed, the position gives the company a lot of responsibility in making sure that the global population remains healthy. Under this responsibility, the company balances their impacts on the population and the ones the people have on their daily operations (Feenstra, 2003, p.47). The company is known to many countries as a powerhouse, where global research and development in medicine takes place and given a priority. Notably, the company is believed to be a strong and therapeutic, making use of diversity and innovation in medicine, thereby creating a global impact on the industry (Feenstra, 2003, p.49). In fact, the revenue that the company receives from the sales of Nicorret and Lucosade is huge, because the consumers recognise those brands globally (Feenstra, 2003, p.49). This has strengthened the company’s business operations in the countries where their goods are sold. The company’s strength is compounded by the networks it has established with other research oriented enterprises. The company is not left out of the globalisation trends in corporate social responsibility (CSR), in enhancing the social, economic and ecological environments in the areas they operate. Notably, they have a comprehensive and proactive approach to CSR. In addition, the company practices transparency during the articulation of the CSR policies (Weysig, 2004, p.17). GSK is a song member of the Global Public-Private Initiatives (GPPIs), which was formed to look into the health problems prevalent in poor or less developed countries (Melits, 2003, p.1701). Their active involvement in GPPIs activities is an indication of their global approach in offering solutions to the problems the people face worldwide. Some of the GPPIs community involvements include the Global Alliance for the Elimination of Lymphatic Filariasis (GAELF), and GSK African Malaria Partnership (Weysig, 2004, p.17). The research also found out that the company has close partnership with Accelerating Access Initiative (AAI), Global Alliance for Vaccines and Immunisation (GAVI), and work towards achieving the mission of improving the access to the healthcare initiatives (Weysig, 2004, p.19). Notably, the AAI and GAVI are the two frameworks for preferential pricing, particularly to the medical products. Under the AAI, each company quotes their preferential prices, particularly for their anti-retrovirals. In this respect, the company’s pricing policy for the countries in deep poverty was not-for-profit price (Weysig, 2004, 19). This was a global approach aimed at assisting the low income countries to cope with the HIV/AIDS pandemic. The GAVI initiative was a global approach to avail vaccines for various infections especially in poor countries (Weysig, 2004, p.21). GSK’s consistent R&D and participation in the initiative increased the availability of, and accessibility to the vaccines. Globalisation Challenges and the Company’s Interventions There are various challenges, which the company encounters during their business operations. For example, economic disparity among different states barring affordability, diseases outbreak, increasing cost of production and transportation (Bernhofen & Brown, 2004, p.49). Therefore, their role in assisting the developing and poor countries is significant in making sure that the deliberating diseases, some of which are preventable, do not affect and kill the people without immediate and adequate intervention. The company has upheld their responsibility through availing drugs and vaccines for encountering the problems, including rotavirus vaccine, the dengue and malaria vaccines (Weysig, 2004, p.22). In addition, their research is based on the diseases that the World Health Organisation has main concern, including HIV/AIDS, Malaria and tuberculosis (Weysig, 2004, p.24). In those diseases, which have created major world health concerns, the company has made significant progress in developing medicines for their prevention and treatment. In essence, their medicines are leading and treat other major diseases including asthma, mental health, cardiovascular conditions, diabetes, digestive problems, and other sexually transmitted infections (Weysig, 2004, p.24). Precisely, this is an imperative contribution to the global health needs. In a new, but very important innovation, the company has found new vaccine and they are developing the latest cancer treatments (Guesnerie, 2001, p.17). This is a very positive step aimed at maintaining their role in the global medicine. The research also found that the company is leading in the provision of several medicines in the market. For example, they provide medicines given over-the-counter such as Panadol, Alli and Gaviscon (Eaton & Kortum, 2002, p.1752). They also have dental products including Sensodyne and Acquafresh (Eaton & Kortum, 2002, p.1752). In addition, they have products to control smoking such as Nicorette/Niquitin (Eaton & Kortum, 2002, p.1752). Furthermore, they produce healthcare and nutritional drinks, including Lucosade, Horlicks and Ribena (Eaton & Kortum, 2002, p.1752). As well, they have a range of skin-care products sold globally (Eaton & Kortum, 2002, p.1752). International Trade Theory Since GSK is limited company, its ordinary shares trade on the London Stock Exchange (Weysig, 2004, p.26). It respects the provisions of trade unions in the countries of operation. Being a member of the World Trade Organisation, the WTO laws and regulations binds the company and affect their operation in one way or another. Therefore, some of the International Trade theories applicable to the company, according to Anderson include; Comparative Advantage, Absolute Advantage Fallacy, Endogenous Advantage, and Bilateral Trade Patterns (Anderson, 2005, p.1). Comparative Advantage The theory explains labour productivity differences and the impacts it creates in the company (Anderson, 2005, p.1). Notably, GlaxoSmithKline Company has used the theory in increasing its labour production per unit to increase the quantity of medicine produced. Since the medicines that they produce are in high demand worldwide, it is through producing them in large numbers that would make he company to enjoy comparative advantage. Therefore, when compared to other companies producing similar medicines and vaccines, the amount that GSK Company produces is high, thereby making their prices to be competitive. Absolute Advantage Fallacy This theory explicitly compares the cost of similar goods, which are sold in various environmental locations (Anderson & Wincoop, 2004, p.695). In essence, this enables a company to draw conclusions on trade directions. Since the company produces its medical products in mass, their prices abroad are relatively cheap compared to other similar products the company sells abroad. Therefore, the company enjoys the theory of absolute advantage fallacy. It helps the company to determine the household consumption to know the quantity needed to serve the customers. Endogenous Advantage The theory suggests that some goods sell because of short supply or unavailable within the local market (Anderson & Wincoop, 2004, p.697). The shortage might also arise from lack of relationship between the producer and recipient country (Anderson & Wincoop, 2004, p.697). Sometimes, the shortage might arise from economies of scale, of which GSK has an advantage (Anderson & Wincoop, 2004, p.697). Due to lack of local production of anti-retrovirals in developing and poor countries, GSK enjoys the endogenous advantage and supplies such goods to the countries. Bilateral Trade Patterns The theory explains the gains got from a particular trade pattern of one commodity between two countries (Anderson, 2005, p.1). According to Anderson, such trade patterns are non complex because the policies, which the two countries embrace in their trade, could be easily harmonised (Anderson, 2005, p.1). In this context, GlaxoSmithKline enjoys the trade between the United Kingdom and United States. For example, trade flows in the countries are free from possible interruptions. Furthermore, most of the goods the U.S and U.K’s corporations purchase from the company are re-sold to Africa and other countries of great need. Recommendations There are a set of recommendations that the company should consider in doing its business. For example, the management should make sure that the working environment is accommodative and free from any form of discrimination in employment, promotion and service delivery. Appreciating and embracing diversity would make the company underscores the values of different people, and utilise their skills in enhancing production. Besides the company’s CSR initiatives, they should treat the people equally and with dignity. Indeed, this would increase the company’s reputation among its diverse global customers, thus increase its sales. Finally, the company should use technological innovations to improve on their products and communication systems. This would ensure it increased efficiency in production and dissemination of information for the mutual gain between them and the stakeholders. Conclusions In conclusion, GlaxoSmithKline Company has made a lot of efforts in making sure that their customers are satisfied with the healthcare products. Notably, the company faces challenges during production, including economic disparity among different states barring affordability, diseases outbreak, increasing cost of production and transportation. Similarly, the company also enjoys Comparative Advantage, Absolute Advantage Fallacy, Endogenous Advantage, and Bilateral Trade Patterns; therefore the company is assured of sustainability. In addition, the company has performed beyond their competitors in the market. References List Anderson, J. E. (2005), International Trade Theory. Available at https://www2.bc.edu/~anderson/PalgraveTrade.pdf [Accessed 05 Dec.2011]. Anderson, J. E. & Wincoop, E. (2004), “Trade Costs”, Journal of Economic Literature. Vol. 42, 691-751. Bernhofen, D. M. & Brown, J. C. (2004), “A Direct Test of the Theory of Comparative Advantage: the Case of Japan”, Journal of Political Economy. Vol. 112, 48-67. Eaton, J. & Kortum, S. (2002), “Technology, Geography and Trade,” Econometrica, 70 (5): 1741-1779. Feenstra, R. C. (2003), Advanced International Trade: Theory and Evidence. Princeton: Princeton University Press. Guesnerie, R. (2001), “Second Best Redistributive Policies: The Case of International Trade.” Journal of Public Economic Theory, 3, 15-25. Melits, M. J. (2003), “The Impact of Trade on Intra-industry Reallocations and Aggregate Industry Productivity”, Econometrica, 71(6): 1695-1725. Weysig, F. (2004), GlaxoSmithKline Company Profile. Amsterdam: Centre for Research on Multinational Corporations. Appendix Brief Research Method During the study, the researcher employed a deductive approach in doing the investigation. First, the researcher formulated the topic of discussion, under which the problem to be investigated was stated. Secondly, literature review followed, in which the divergent views of different scholars and other relevant company information was incorporated. Third, the researcher proposed the theory to be used in the company analysis, and designed the research to test the theories. Finally, the researcher started the study by collecting data, analysing them, using qualitative and quantitative techniques, after which the findings were presented. Read More