Assignment- Glaxosmithkline
Strategies for the business organisation helps them in laying the foundation of their business planning and activities that help the firm in earning higher operational efficiencies and effectiveness through which the overall goals and objectives can be achieved (Nisbet & Shucksmith, 2017). A case of GlaxoSmithKline has been taken into consideration to identify their potentiality towards improving the productivity of the establishment. Industry analysis will be examined for Glaxosmithkline which will explain the existing market environment. External environmental analysis in the form of PSTEL will be carried out, strategic competencies and capabilities and finally possible strategies within the business firm will also be explained in this study.
External environment of the company
External analysis has been referred to as the process which benefits the organisation in examining the external business environment, which describes out the opportunities and threats for the business establishment. The external business environment will help the firm in the drive down profitability and growth that increases the capabilities for the management to earn profitability and brand status (Ansoff, et al., 2018). External business analysis will also help the business firm in analysing the industry on which the firm operates, industry barriers and market condition are also being analysed with the help of external analysis. Economic trends, competitors and demographics are also being identified through the help of external business analysis.
PESTEL Analysis
Political: Examining the external environment for Glaxosmithkline it has been noticed that the firm faces challenges due to rising corporate taxes within the country. The corporate tax within the UK has surged high by 20% which has made it difficult for the firm to take control of its cost of expenditure (Gov, 2020). Furthermore, post-Brexit the government of the UK has also levied an additional 5% VAT in their trade taxes, which has also made it difficult for the pharmaceutical-based organisation to procure their resources from foreign suppliers to maintain their business operations. The rising taxation issue has increased the sustainability issue for management.
Economic: The growing GDP of the UK is creating growth opportunities for the business organisation. The GDP of the UK has increased by 1.8% annually that has made it easier for the Glaxosmithkline to establish their business within the country and earn high success and growth (Tradingeconomics, 2020). Moreover, it has also been noticed that the FDI investment within the country has also increased by 26% from the previous 4 years. During the year 2019, the country generated FDI of £ 21 billion which has opened up the door of opportunities for the pharmaceutical-based business organisation. Whereas, challenges in the form of growing inflation rate by 1.94% is also making it difficult for the business organisation to grow their business roots and earn significant result for the business establishment.
Social: The people of the UK are accepting changes and hence it has become possible for Glaxosmithkline to grow its market share and establish its business within the UK. The rising disposable income of the UK people has gone up by £ 29,400 yearly which has increased the purchasing capability for the business organisation (Tradingeconomics, 2020). The rising purchasing capability of the UK people has enabled Glaxosmithkline to introduce new innovative products that are accepted by the customers. Furthermore, from the last ten years, the migration rate within the UK culture has raised by 70% which has also increased the opportunities for the business firm in earning success by catering demands and needs of different segments.
Technological: The growing investment that the government of the UK is making towards the R&D and developing machine learning and artificial intelligence has made it easier for the business organisation in upholding new technologies that are being installed within the management so that productivity of the organisation can be developed. Furthermore, the government of UK has made an investment of £ 3 billion towards improving the technology of the UK, remote accessing of information, drone delivery and growth of IT integrated services has made it possible for Glaxosmithkline to use this advanced technology to manufacture standard products and sustain quality within them.
Environmental: Considering the growing concern over the environment the government of the UK has imposed strict laws which all the business firm needs to adhere so that sustainability can be retained for a longer period. Environmental Protection Law of 1974 has been imposed by the government of the UK under which all the business firm needs to check their carbon emission rate and take control of the same (Gov, 2020). The UK based pharmaceutical company GlaxoSmithKline also adheres by the law under which they aim towards emitting less than 20% of carbon emission within a year.
Legal: Glaxosmithkline being a multinational business firm also complies with specific legal laws that were under that Consumer Protection Act 1978 (Gov, 2020). Under this act, the business firm needs to describe the specifications, product information, and necessary instructions so that consumers get to buy the product that best suits their demands. Moreover, under legal guidelines, the UK based firm also needs to maintain the Employment Rights Act 1996 under which the firm needs to offer equal pay and wages and aims towards eliminating discrimination from the organisation.
Industry scenario faced by Glaxosmithkline within their existing market domain
GlaxoSmithKline operates in the pharmaceutical industry in the UK, accessing information in regards to it it has been noticed that the industry is expected to grow by £ 43 billion by the end of 2020. Examining information related to the pharmaceutical industry of the UK, it is predicted that the industry will grow at a CAGR rate of 8.4% annually due to factors such as robust development in the scientific industry (Abpi, 2020). The UK pharmaceutical industry is growing mainly because of innovation, the role of innovation within the pharmaceutical industry of the UK has been huge as because it has helped the industry to design and develop machinery and medicines that has improved the lifestyle of the people. The UK pharmaceutical companies working within the UK have invested £ 4.2 billion within its research and development activities to grow the chances of manufacturing drugs that treat human illness. Advancement in genetic sequencing has made it easier for professionals to group the individuals based on their shared, characteristics and behavior (Innomech, 2020). The growth of innovation culture within the pharmaceutical industry has also helped in offering the best medicines to the people, providing them free diagnostics and measuring the health status of people. Technology is also a factor that has successfully contributed towards the growth of the existing market domain of the pharmaceutical industry because it has significantly contributed towards the development of independent products and services that increases the chances of earning success. Not the pharmaceutical industry operating with the UK is seeing growth due to advancement in technology and innovation but the industry is also facing challenges, that also needs to be improved so that industry trends and growth can be sustained. The impact of Brexit in the pharmaceutical industry has wrath havoc because it has increased the cost of materials for the pharmaceutical industry as a result of which it has been harder for the industry to manufacture life-saving drugs while containing cost. Furthermore, it has also been noticed that due to the impact of Brexit the cost of product testing has increased by 10% (Theguardian, 2020). Due to the rise in capital expenditure within the pharmaceutical business organisations has made it difficult for them to offer low priced services to the customers. Moreover, shortages of the workforce are another challenge that the pharmaceutical industry faces due to the rise in Brexit within the country. Due to fallout from the EU nation, it has become difficult for the pharmaceutical industry to recruit a competent and skilled workforce to carry out their task successfully.
Alignment of mission and vision with that the demand of the marketplace
The mission statement of Glaxosmithkline comprises of helping people do more, feel better and live longer. Examining the mission statement for the UK based pharmaceutical industry successfully complies with the demand of the marketplace. The mission statement for Glaxosmithkline focuses on increasing growth, eliminating risk along with improving the long-term financial performance of the organisation. Innovation, R&D, and growth in technology are the most important demand in the marketplace of the pharmaceutical industry (Gsk, 2020). The mission statement of Glaxosmithkline culminates with the demand of the marketplace that sustains balance in the global business, the UK based business venture also foster innovation through manufacturing new life-saving drugs that help in improving the lifestyle of the people. Moreover, the mission statement of helping the people and offer them better lifestyle benefits the business organisation in complying with the demand in the pharmaceutical industry that comprises delivering values to the customers through their upgraded technology (Gsk, 2020). Operating responsibly by the business organisation helps them in ensuring values that increase their decision-making abilities and helps the firm in meeting the expectations of society.
The vision statement for Glaxosmithkline comprises the opportunity to make a difference to millions of lives every day. The vision statement for the UK based pharmaceutical company also comprises of being committed that enables the organisation in enhancing the quality of people’s lives and help the business organisation in sustaining quality within the products (Gsk, 2020). The vision statement of Glaxsmithkline benefits the organisation in complying with the demand of the marketplace that comprises offering value-focused R&D that helps the organisation in improving the drug efficiency, culminate safety along with transforming the healthcare that increases the values for the organisation. The vision for the organisation also helps them in redesigning the treatment pathways, sustaining effectiveness along with retaining cost-efficient care that aims towards protecting the drug budgets.
Hence, examining the mission and vision statement for Glaxosmithkline comprises considering the market demand to grow the competencies for the management to sustain a drug-development program that aims towards including therapies for minimising infectious diseases (Gsk, 2020). Evaluating further, it has also been noticed that the vision and mission statement for the organisation comprises of offering significant therapeutic cost-effective treatment and improve the patient experience.
Strategic competencies and capabilities
The business organisation undertakes strategic competencies and capabilities to examine their internal resources, core competencies along with driving down distinctive capabilities that inculcate long-term profitability for the organisation. Furthermore, it has also been noticed that strategic competencies and capabilities benefit the firm in earning competitive advantages over other business organisations. Resources are referred to as the capabilities of the organisation that increases the overall productivity of the organisation. Whereas, competencies increase the efficiency of the UK based business establishment. The strategic competencies and capabilities for the Glaxosmithkline are as following.
| Resources | Department | Competencies |
| Types of equipment, product portfolio of GlaxoSmithKline, manufacturing space, R&D and production facilities | Physical | Culminating innovation ensures quality and capabilities for the business organisation, fostering a low-cost model to offer medicines at affordable prices and ensure a faster decision-making process. |
| Maintaining cash flow, determining R&D budget, culminating sales force to comprehending expenditure and reducing turnover by 40% in the emerging and developing market. | Financial | Containing cost by establishing the manufacturing plants in developing countries, establishing small SBU units to carry out further business operations to save cost. |
| The pharmaceutical business firm recruits skilled employees so that the best results and outputs can be achieved. Training and workshops are also being offered to the employees to grow their competencies and maintaining the relationship with their customer base. | Human | Decision-making skills, cognitive skills, sales and marketing skills along with improving their general management skills. The skill development program helps in sustaining fast decision-making skills and retaining effectiveness. |
Figure: Strategic capabilities and competencies for Glaxosmithkline
Source: Author
Examining the strategic competencies and capabilities for the business organisation of Glaxsmithkline benefits the management in earning a competitive advantage that adds superior performance for the establishment. The competitive advantages are earned by Glaxosmithkline by maintaining tangibility within their organisation that is expended through their financial resources which mostly comprise of their cash, capital, budget, securities along managing borrowing capacity (Gsk, 2020). The tangible capabilities for the business organisation benefit the organisation in building mergers and acquisitions with similar firms and industries that increase the overall capabilities for the business organisation in earning higher performance and productivity. Whereas, the physical assets comprise of labs, land and offices, medical types of equipment and manufacturing plants (Morningstar, 2020). Not only the physical resources for the firm help the organisation in manufacturing drugs and medicines but also it helps the firm in earning competitive advantages over its competitors. The intangible resources for the UK based pharmaceutical company also increase their capabilities of the organisation to retain its brand status within the competitive business environment of the UK pharmaceutical industry. To increase the brand value of the organisation through their intangible resources the firm offers low-cost medicines and drugs to the customers which increases the brand reputation for the firm and benefits them in earning competitive advantages over their competitors (Gskpro, 2020). Patent, trademarks and good relationship with their shareholders and stakeholders also increase the intangible resources for the business organisation and sustain competitive advantages for the business organisation. Finally, the strategic capabilities and competencies for Glaxosmithkline also embrace their human resources who are skilled and qualified to perform the overall task of the organisation in an accountable and integrated manner. More than 101,133 employees work within the GlaxoSmithKline who are being allocated in different departments of the management including R&D, production and financial department of the business establishment (Gskstemeducation, 2020). The firm also has partnered with strategic group units under which the firm researches to perform their activities and manufacture medicines that improve the lifestyle of the people.
How GlaxoSmithKline captures value within the industry
Values for the business organisation benefits the firm in earning a higher reputation and profitability that increases the growth opportunities and success factor for the business establishment. The values that GlaxoSmithKline offers to its customers include offering better patient care services that increase the life expectancy rates for the patients. The UK based pharmaceutical business organisation delivers value while maintaining the highest standards along with maintaining ethical medical practices that are being underlaid by the government of the UK (Gsk, 2020). The firm maintains an effective supply chain process in terms of delivering high-quality medicines to patients at an affordable price. The values are delivered among the customers by designing new medicines and vaccines that offer real benefits to the customers. Values in the form of patient care and customer needs are also being retained by the organisation to improve the lifestyle of the people. Values in the form of ensuring patient safety are also considered as an essential factor that benefits Glaxosmithkline in capturing value within the pharmaceutical industry (Gsk, 2020). Moreover, it has also been noticed that to retain value within the pharmaceutical industry the firm offers the best in class product quality and safety to the patients through their products to establish the brand identity among the competitive business environment. Integrity is another form of value that is offered by the business organisation among its customers to gain their loyalty towards the business organisation (Gsk, 2020). The values of integrity by Glaxosmithkline are maintained in the form of complying with industry standards and regulations. Delivering to their promises and minimising the challenges is also the highest form of values that the business organisation seeks to offer to their customers, which helps the firm in capturing values within the pharmaceutical industry.
Discuss the possible strategies that the company could follow to defend its core business
GlaxoSmithKline has the core business of manufacturing pharmaceuticals and vaccines where primarily the business organisations mainly focus on developing vaccines for respiratory diseases, infectious diseases and other forms of immuno-inflammation vaccines which improve the overall health of the people (Gsk, 2020). The business organisation maintains its core business activities through the help of its 87 global network manufacturing units, the manufacturing firms of Glaxosmithkline focusses on producing active compound which is an essential compound for manufacturing drugs. Moreover, it has also been noticed that GSK has more than 44,000 of the workforce which are used by the organisations to carry out their sales activities and finally for co-promotion activities (Gsk, 2020). GSK has partnered with several pharmaceutical companies to promote their products within the diversified global business platforms.
VRIO framework
| Competitive advantages | Value | Rarity | Inimitability | Organisational support | Sustainability |
| Life-saving drugs in the different consumer market | ü | ü | ü | ü | ü |
| Growth in R&D | ü | ü | ü | ü | ü |
| Strong distribution and market network | ü | ü | ü | ü | ü |
| Brad image | ü | ü | ü | ü | ü |
| Generic drugs | ü | x | x | ü | Temporary |
| Innovation towards developing drugs | ü | ü | ü | ü | ü |
| Patents | ü | ü | x | x | Temporary |
Figure: VRIO analysis
Source: Author
Examining the VRIO analysis for GSK it has been noticed that the firm holds strong brand value along with holds accountable towards driving down innovation towards developing drugs. The value that the UK based pharmaceutical business organisation offers to their customers helps the establishment in developing their brand status along with increasing the competencies for the administration. Competitive advantages that GlaxoSmithKline earns includes of earning growth and opportunities for the business organisation to grow its roots in the different global platform (Gsk, 2020). Growth in the R&D department and the strong distribution network for the GSK also helps the firm in earning competitive advantages over their competitors, through their research center GSK manufactures life-saving drugs and vaccines that benefit the organisation in increasing their position within the market and generate opportunities to earn high revenues over the period. To defend their core business activities of manufacturing medicines and vaccines the firm has also partnered with the strategic business organisation to grow their business and sustain the tag of competitive advantages (Gsk, 2020). Moreover, the firm has also started to manufacture critical vaccines such as human immunodeficiency virus (HIV) and rare diseases such as cancer which not only increases the capabilities of the firm towards increasing their brand reputation but also it aids the pharmaceutical firm in enjoying competitive advantages over their competitors.
Porter’s generic strategies are also been used by GlaxoSmithKline to achieve competitive business advantages over other business enterprises and grow their reputation all over the world. Based on the evaluation of Glaxosmithkline management it has been recognised that the firm uses differentiation strategy in terms of differentiating their products and services from that of other pharmaceutical business organisations (Gsk, 2020). The differentiation strategy for the pharmaceutical business enterprise also manages them in expanding their business roots all over the world along with achieving competitive advantages while maintaining their core business activities.
R&D development- The UK based business organisation over the years has contributed significant amounts to the R&D department to increase drug production capabilities. As part of their strategic business units, the firm has also partnered with the Pfizer business organisation under which the firm has carried out joint operations to develop medicines and vaccines that help the patients in improving their lifestyles (Gsk, 2020). The R&D development activities for the enterprise has managed the firm in earning competitive business advantages over other business organisation.
Sales & marketing strategy- GSK has also retained competitive advantages over other business organisation comprises of maintaining strategic business relationship with Vodaphone, the partnership has made it possible for the organisation in the market their flixonase spray so that hay fever disease among the customers can be treated quickly (Gsk, 2020). Hence, the sales and marketing strategy for the business organisation has helped the firm in enjoying competitive advantages and increase their chances of earning higher profitability and success.
Outsourcing strategy- GSK has further extended its partnership with Galapagos Biotech which has made it easier for GSK to develop novel medicines such as osteoarthritis which are used by the business organisation to design and develop medicines and vaccines that improves the lifestyle of the customers. The outsourcing strategy for GSK has immensely benefited the organisation in procuring resources that can be used to earn competitive advantages and sustain its core business activities.
Expansion strategy- The firm has extended its roots in Asia-Pacific and other developing nations to grow the competencies to earn higher profits. Differentiation strategy for the business organisation also benefits the firm in upholding their core business activities while opening up new manufacturing plants within the new business locations (Gsk, 2020). Opening up new plants in a new geographic location benefit the firm in eliminating the higher cost of expenditures for the GSK organisation. Therefore, the expansion strategy for the pharmaceutical business organisation benefits the firm in defending its core business of manufacturing vaccines and medicines and offer better clinical services to the patients.
Based on the above-gathered information it can be stated that the differentiation strategy for Glaxosmithkline helps the business organisation in sustaining its core business elements of offering a high quality of medical treatment to the patients. Moreover, the differentiation strategy also manages the firm in earning competitive advantages and grow its business roots in distinctive corners of the world.
Value chain analysis
Primary activities
Inbound logistics- GSK has its own integrated logistics department through which they procure the resources that becomes crucial for them to build a relationship with the suppliers.
Operation- The operational activities for the GSK business firm includes its manufacturing units, taking control of their strategic activities and upholding sustainability operational activities. The integrated operational activities for the pharmaceutical business organisation helps the management in increasing their capabilities towards offering standardised services to their patients (Gsk, 2020).
Outbound logistics- The outbound logistics for GSK organisation comprises of delivering medicines, vaccines along with consumer health products throughout the global platform. The outbound logistics also helps in maintaining operations of the firm.
Sales and marketing- The firm has allocated more than 44,000 of the workforce within its sales and marketing team that manages the business organisation in promoting its product in different markets and make their products available (Gsk, 2020). The sales and marketing team for the establishment also increases their capabilities towards building a relationship with the customers.
Service- Glaxosmithkline offers standardised services to its customers that include taking control of their activities and monitoring the overall service provisions that increase the competencies of the organisation.
Supporting activities
Procurement- The firm has established its manufacturing plants in more than 87 locations all over the world which have helped the business organisation in procuring their resources and uphold their core business activities of developing medicines and vaccines (Bbc, 2020).
Human resource management- Glaxosmithkline has more than 101,133 employees working within the organisation which helps the firm in maintaining its core business activities and earn a higher brand reputation.
Technological development- The firm has installed integrated technologies within their organisation that helps the firm in processing information along with manufacturing best in quality medicines and vaccines that eliminates the higher cost of capital for the organisation (Ft, 2020).
Infrastructure- The firm has dedicated manufacturing plants and research centers that enable the business organisation in upholding its core activities and sustain competitive advantages over other business organisations.
Figure: Value chain analysis
Source: (Gsk, 2020)
Conclusion
The overall report was based on evaluating the strategies that the organisation undertakes to improve their business operations. A case of GlaxoSmithKline has been taken into consideration. PESTEL analysis has been taken into consideration to examine the external environment for the company. Challenges faced by the pharmaceutical industry has also been identified in this study. Vision and mission statement of GSK has been examined to identify how it aligns with the marketplace, competencies, and capabilities of GSK has also been examined briefly within the report. Finally, VRIO and Value chain analysis in respect of GSK has also been explained in this report.
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