BE489 International Management Assignment Sample

BE489 International Management Assignment Sample

Introduction and company overview

International management of the organisation depends on the effective business operations that have provided in maintaining effective business regulations in managing the various kinds of transactions in enhancing the needs satisfaction of the organisation in a much more effective way. Moreover, the effective management of the goods and services of the company is quite well managed in managing the organisational management and it provides maintaining better needs and requirements in maintaining business operations more elaborately.

GlaxoSmithKline (GSK) is a well-known pharmaceutical company which is situated in the United Kingdom (UK) by making innovations in the products the company which allow the company to make effective treatments (Gsk.com 2023). Therefore, in this report, GSK tries to manage perspectives for the expansion of the company’s development in India and in managing the resources and capabilities in managing the challenges in a much better way.

Evaluating the external environment of India from the perspective of the pharmaceutical industry in which GSK operates

Table 1: PESTLE analysis of India related to the Pharmaceutical sector (Country Y) (Source: Self-created)

The political scenario of India is quite stable which has been highly effective for the organisation and the way it has provided a big help for the maintenance of the organisational development of India. The country has been highly effective in maintaining competitiveness through the economic management in pharmaceuticals enhancement by managing 100% Foreign Direct Investment (FDI) earning an export rate of 24.6 billion dollars (Investindia.gov.in 2023).

Thus, the organisational management of the company has to be looked after well in managing the business development of a company similar to GSK which benefits the company to have a good market and profits enhancement.

The economic condition of India has been highly effective in managing the organisational development and in maintaining the pharmaceutical industry within India by managing the raw materials for the development of medicines for GSK. The industry tries to manage the growth of 532 billion dollars in 2022 and may reach nearly and around 130 billion dollars by 2030 which may help in holding the market and in making effective sustenance of the products (Thehindu.com 2023).

However, the growth becomes more prevalent for the expansion of the industry becomes possible through the help of cheap and availability of raw materials for the country and also in making effective products through cheap and skilled labour in making better growth.

Figure 1: Growth of the pharmaceutical industry in India (Source: Thehindu.com 2023)

The pharmaceutical industry of India has been valued at around 50 billion dollars and the company’s development regarding the production and management of the export of drugs stood at around 24.6 billion dollars in 2022 compared to 24.44 billion dollars in 2021 (Investindia.gov.in 2023). Furthermore, the country also tries to manage the changes in the demands for medicines by different age groups and in maintaining a better understanding of income distribution and flexibility within the work.

The pharmaceutical industry should attract more medical representatives for the growth of the business of GSK in India by recommending doctors regarding the products and helping in penetrating the market of the country successfully.

Technological innovation has been highly essential in managing the growth of the organisation and it has been highly effective in maintaining the organisational development in maintaining the pharmaceutical industrial enhancement effectively. The implementation of Artificial Intelligence (AI) and Machine Learning (ML) for managing the services and managing the organisational effectiveness in maintaining industrial effectiveness and for making production fast and managing the demands and costs of the organisation quite well.

The following rules and acts and certain laws have been implemented for managing the organisational development in the pharmaceutical industry in maintaining the growth of the organisation. The Pharmacy Act, 1948, The Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954, The Narcotic Drugs and Psychotropic Substances Act, 1985 and The Drugs & Cosmetics Act, 1940 are implemented for making better cost-effectiveness and in managing the pharmaceutical industry in maintaining competitiveness within the organisation (Ipapharma.org 2023).

Therefore, the implementation of the laws regarding the growth of the organisation has allowed for managing effective business enhancement and maintaining the growth of the industry in the competitive market in a much more effective way.

Pharmaceutical companies have to be managed well in maintaining the business quite well in the competitive market and in managing growth and making effective marketing in the most established market. The global plan for managing the organisation through the management of green production helps in looking after the environmental degradation in managing the regulatory protocol in managing the business quite well (Thehindubusinessline.com 2023).

The environmental management of GSK has been analysed by looking after the policies and management measures by understanding the company’s position in a much more effective way and in attracting customers quite well.

Discussion on GSK’s resources and capabilities

The resources and capabilities possessed by GSK will be evaluated with the help of a VRIO framework to comprehend whether or not the company has all the necessary resources required to enter the Indian market.

Vrio analysis

Valuable 

One of the most valuable aspects of GSK’s business venture is the kind of financial and human resources they possess as the company is known to be extremely profitable and has a vast network of employees globally. It needs to be mentioned that the corporation has stated that 2021 was a landmark year for the corporation as its total group turnover was 29.3 billion pounds. It further goes on to indicate that the company has been successful in acquiring a substantial amount of resources (Gsk.com 2023).

They have also launched 12.7 billion pounds in sales of products within the last 5 years including lifecycle innovation. Moreover, their approach to continuously foster innovation is also quite valuable as they currently invest 1 billion pounds in that domain and the company also has more than 50,000 employees globally (Gsk.com 2023).

Rare 

One of the rare aspects regarding the business venture of GSK is that the company is predominantly involved in undertaking several philanthropic and social causes. For example, to support various local and global communities the employees of the corporation have raised 1.7 million pounds to ‘save the children and 100% of the funds will be used to support UK households with low incomes by providing the necessary items (Gsk.com 2023).

Research has mentioned that companies that are involved in undertaking various kinds of Corporate Social Responsibilities are more likely to gain competitive advantages as this given approach also allows firms to improve their performance efficiently (Kong et al., 2020). Apart from that, they also conduct several other charitable practices through which GSK is known to support various communities that are in dire need of financial resources.

Imitable 

Even though the company has certain impressively valuable aspects associated with its business venture, it might be implied that any corporation with similar kinds of resources might undertake such social causes, however, it will be challenging to replicate the innovation that GSK has brought to their operational activities. Research has also confirmed that continuous innovation is perceived to be one of the main sources of competitive advantages and corporations that are known to be involved in undertaking several innovative approaches will be more successful in improving the performance of their organisation (Lee et al., 2019).

Organisation 

The organisation is also known to foster a significantly amicable working environment in which employees are known to acquire extreme job satisfaction. Apart from that, it has also been derived that GSK has created an organisational culture in which they have hired people of different sexual orientations such as LGBTQ people, people from different cultures and more. The organisational structure is one of the main aspects of businesses that allow them to provide job satisfaction to the employees which subsequently leads them to retain their talented workforce (Shah and Asad, 2018).

Possible entry modes

It needs to be mentioned that to enter the Indian market GSK might choose several entry modes, however, the most suitable ones will be discussed below.

International joint venture 

An international joint venture is one of the most well-known market entry modes that the given company might choose while entering India. Through the means of an international joint venture, GSK will be capable of partnering with a domestic company of the host country that has been conducting its business operations there for a long time and it will help GSK to acquire a substantial amount of knowledge about the local market which will help them to understand about the consumers and their demands.

According to research, the concept of an international joint venture is one of the most important forms of strategic alliances and multinational firms are known to adopt this approach for entering different countries as that offers them a significant amount of knowledge regarding the market (Nippa and Reuer, 2019). It also needs to be mentioned that by entering into an international joint venture the company would be successful in partnering with corporations that have already created a name for themselves in the market and henceforth, it will be relatively easier for them to establish their name in the host country’s market (Minbaeva et al., 2018).

Direct exporting 

Apart from an international joint venture, the company might also adopt the approach of direct exporting which will help them to directly export their products to the Indian market. According to research, the aspect of direct exporting within international business indicates that a company will directly sell its products to the consumers and that further enables them to maintain direct contact with the end customer and improve customer relationship management (Minbaeva et al., 2018).

Figure 2: Direct exporting (Source: Minbaeva et al., 2018)

Another reason why the company might choose the approach of direct exporting for their business venture is that it will help them to acquire a significantly higher profit margin as the possibilities of any intermediaries will not be present as the business will directly deal with the customer and that is one of the most beneficial aspects for the business.

According to research, a firm initially starts its business venture in an international market through the means of exporting and following that they tend to set up selling subsidiaries therefore, exporting has been perceived as one of the most effective methods for further internationalisation (Katsikeas et al., 2020).

On the other hand, it might also be implied that exporting might be a significantly effective strategy for the company to enter the Indian market since the bilateral relationship between the UK and India is quite favourable and the UK is one of the largest trading partners of India. Research has also confirmed that a large amount of Foreign Direct Investment made by the UK came to India and the trading valuation of goods and services between both countries has accounted for 34 billion pounds in 2022 (Dhingra et al., 2018).

Possible challenges which Gsk is likely to encounter when entering India

International business is a complex process and that leads to firms facing several challenges when they enter an international market. In that context, GSK might also face certain challenges while entering the Indian market and the kinds of challenges the company might face are listed below.

Competitive rivalry 

One of the main challenges that the company might face while entering India is the kind of competition that is prevalent within the pharmaceutical market of the country as India is known to be home to several renowned pharmaceutical corporations and their investment in the domain is quite substantial.

It has been reported that India is known to be one of the leading producers of cost-effective and generic drugs that are effectively quality-controlled the country also produces 20% of the pharmaceuticals that are in demand globally and the Indian pharmaceutical sector has seen the largest growth and expected to grow by 754% between 2017-2060 (Statista.com. 2023). Henceforth, it will be quite challenging for GSK to overcome the competition that is intensely prevalent within the host country market while and after entering the market.

Regulations 

Even though India might not be quite challenging to enter due to its somewhat stable political structure, the government regulations and procedures might sometimes be difficult for foreign corporations to abide by and the failure of that would make it relatively more challenging for the company to enter. It has also been stated that robust strategic planning, consistent follow-up, due diligence, commitment and other prerequisites are also required to successfully conduct business activities within the Indian market (Trade.gov. 2023).

Price-sensitivity 

It needs to be mentioned that the Indian consumer is quite sensitive to price and might not be willing to buy extremely pricey products. Henceforth, it might be stated that deciding upon an adequate price range to successfully conduct their business activities in India might be a relevant challenging factor for GSK when it comes to entering the Indian pharma market (Lee et al., 2020).

High tariff rates

It has come to light that while doing business in India exporters are known to experience several non-transparent regulatory tariff rates and policies. Apart from that, reports have also claimed that India is perceived to have the highest tariff rates out of any G20 country and they are also known to acquire some of the highest bound tariff rates among the members of the World Trade Organisation (Trade.gov. 2023). Henceforth, it might be implied that dealing with such soaring rates of tariff might also be a challenging factor for GSK while entering India.

Power among different states

Being a federal system, the aspect of decision-making and power is decentralised in the country and that leads to the prevalence of differences in political leadership concerning the state levels, quality of the government, taxation, labour rules and more (Trade.gov. 2023). Henceforth, foreign corporations that do not have significant knowledge regarding the different power cultures and types of government rules and regulations present in different states of India, will face significant challenges to enter the given market.

Advice for the management of the company

One of the first pieces of advice that might be provided to the management of the company is that they are required to conduct thorough research regarding the Indianmarket before entering the country as that will help them in obtaining all the relevant information required to conduct successful business ventures in the country.

On the other hand, it also needs to be mentioned that the management of GSK is required to efficiently adhere to the principles of the Uppsala model of internationalisation as it highlights the step-by-step procedures for entering a new international market and research has also mentioned that it is one of the most efficient theoretical frameworks of internationalisation (Vahlne, 2020).

On the other hand, it also needs to be recommended to the management of the given corporation that they train their employees regarding the cultural and linguistic diversity that is prevalent in India before embarking on their internationalisation journey. That will make it relatively easier for the employees of GSK to perform their respective tasks in the host country and also socialise effectively with the local people and employees.

Apart from that, another recommendation that might be provided to the management of the company is that they keep a robust pricing strategy given the price-sensitive nature of the Indian consumers. In that context, it may be stated that using the cost leadership strategy might be a significantly effective approach to achieve that goal as cost leadership enables firms to mass produce products and sell them at a relatively cheaper rate which further allows the company to gain competitive advantages by selling more products in the market (Kharub et al., 2019).

Conclusion

Finally, it may be concluded that adopting the right strategy is extremely consequential for entering the international market for any given company. In this report, GSK, a well-renowned pharmaceutical corporation, has been chosen and India is the host country into which the pharmaceutical company is attempting to enter. In that context, several strategic choices regarding how the company might enter the Indian market have been discussed and along with that, the challenges that the corporation might face have also been critically explored. A recommendation has also been provided to the management of the company concerning how they might overcome the challenges.

References

Data.worldbank.org 2023. GDP (current US$) – India (no date) Data. Available at: https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=IN (Accessed: April 6, 2023).

Dhingra, S., Ottaviano, G., Rappoport, V., Sampson, T. and Thomas, C., 2018. UK trade and FDI: A post‐Brexit perspective. Papers in Regional Science, 97(1), pp.9-24.

Gsk.com 2023. Purpose, strategy and CultureGSK. Available at: https://www.gsk.com/en-gb/company/purpose-strategy-and-culture/ (Accessed: April 6, 2023).

Ibef.org. 2023. Business opportunities in India: Investment ideas, industry research, reports: IBEF (no date) India Brand Equity Foundation. Available at: https://www.ibef.org/ (Accessed: April 6, 2023).

Investindia.gov.in 2023. Pharmaceutical Industry in India: Invest in pharma sector (no date) Pharma industry in India: Invest in Indian Pharma Sector. Available at: https://www.investindia.gov.in/sector/pharmaceuticals#:~:text=100%25%20Foreign%20Direct%20Investment%20 (Accessed: April 6, 2023).

Investindia.gov.in 2023. Pharmaceutical Industry in India: Invest in pharma sector (no date) Pharma industry in India: Invest in Indian Pharma Sector. Available at: https://www.investindia.gov.in/sector/pharmaceuticals (Accessed: April 6, 2023).

Ipapharma.org 2023. Regulations and guidelines, ipapharma.org. Available at: https://ipapharma.org/portfolio/regulations-and-guidelines/ (Accessed: April 6, 2023).

Ipapharma.org. 2023. ipapharma123. (2020) Regulations and guidelines, ipapharma.org. Available at: https://ipapharma.org/portfolio/regulations-and-guidelines/ (Accessed: April 6, 2023).

Katsikeas, C., Leonidou, L. and Zeriti, A., 2020. Revisiting international marketing strategy in a digital era: Opportunities, challenges, and research directions. International Marketing Review, 37(3), pp.405-424.

Kharub, M., Mor, R.S. and Sharma, R., 2019. The relationship between cost leadership competitive strategy and firm performance: A mediating role of quality management. Journal of Manufacturing Technology Management, 30(6), pp.920-936.

Kong, Y., Antwi‐Adjei, A. and Bawuah, J., 2020. A systematic review of the business case for corporate social responsibility and firm performance. Corporate Social Responsibility and Environmental Management, 27(2), pp.444-454.

Lee, H., Lalwani, A.K. and Wang, J.J., 2020. Price no object!: The impact of power distance belief on consumers’ price sensitivity. Journal of Marketing, 84(6), pp.113-129.

Lee, R., Lee, J.H. and Garrett, T.C., 2019. Synergy effects of innovation on firm performance. Journal of Business Research, 99, pp.507-515.

Minbaeva, D., Park, C., Vertinsky, I. and Cho, Y.S., 2018. Disseminative capacity and knowledge acquisition from foreign partners in international joint ventures. Journal of World Business, 53(5), pp.712-724.

Nippa, M. and Reuer, J.J., 2019. On the future of international joint venture research. Journal of International Business Studies, 50, pp.555-597.

Shah, M. and Asad, M., 2018. Effect of motivation on employee retention: Mediating role of perceived organizational support. European Online Journal of Natural and Social Sciences, 7(2), pp.pp-511.

Statista.com. 2023. Topic: Pharmaceuticals in India, Statista. Available at: https://www.statista.com/topics/5456/pharmaceuticals-in-india/#topicOverview (Accessed: April 6, 2023).

Thehindu.com 2023. Pharma industry to grow to $130 billion by 2030: Pharmexcil, The Hindu. Available at: https://www.thehindu.com/business/pharma-industry-to-grow-to-130-billion-by-2030/article66219479.ece (Accessed: April 6, 2023).

Thehindubusinessline.com 2023. How green are Indian drug manufacturing sites?, The Hindu BusinessLine. Available at: https://www.thehindubusinessline.com/specials/pulse/how-green-are-indian-drug-manufacturing-sites/article24595829.ece (Accessed: April 6, 2023).

Trade.gov. 2023. India – market entry strategy, International Trade Administration | Trade.gov. Available at: https://www.trade.gov/country-commercial-guides/india-market-entry-strategy (Accessed: April 6, 2023).

Vahlne, J.E., 2020. Development of the Uppsala model of internationalization process: From internationalization to evolution. Global Strategy Journal, 10(2), pp.239-250.

Worldbank.org. 2023. Population, total – India (no date) Data. Available at: https://data.worldbank.org/indicator/SP.POP.TOTL?locations=IN (Accessed: April 6, 2023).

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