Corporate Accounting: SWOT Analysis, Financial Performance, and Business Model

Corporate Accounting
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Contents
Introduction......................................................................................................................................3
SWOT analysis of the GSK.........................................................................................................3
Business Model............................................................................................................................6
Financial performance.....................................................................................................................8
Ratio Analysis..............................................................................................................................8
Weighted Average Cost of Capital............................................................................................11
Terminal value...........................................................................................................................13
Cash Flow Statement.................................................................................................................14
Recommendations..........................................................................................................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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Introduction
Corporate accounting is one of the main branches which cover all the business accounting
transactions related to the merger and acquisition. Merger is basically done to increase the
business operation and enhance profitability aspects of both companies. In this report, merger of
GSK pharmaceutical is done by AL HAYAT pharmaceuticals. This would become one of the
biggest mergers in the UAE in pharmaceutical industry. This merger gives a competitive
advantage to the company to cover a market. Hereunder, SWOT analysis is used in order to
know the strength and weaknesses of the GSK. In this report the GSK financial position will
evaluate by using the annual report. By using acquisition technique, it could expand its
operations in the market.
SWOT analysis of the GSK
SWOT analysis is one of the tool which is used by the organization for knowing the internal and
external scanning. Here, GSK pharmaceuticals produce drugs which are related to the consumer
health goods it operates more than 100 countries and has sound operations in US, Europe and
Asia-Pacific (Blockeel, et. al., 2016).
Strengths:-
 Sound Research and development portfolio expansion: It concentrates for vast
research and development wing. Cited company has made strong presence in respiratory,
HIV and heart disease related medicines. Its management is driving to strengthen its
market position.
 Sound sales and distribution network: GSK has framed a sound sales and distribution
network in all over the world. A sound distribution network makes sure that availability
of its products all over the place and increases its ability to offer its newer and unique
products to the consumer.
 Strong worldwide presence: GSK quality products and services are accessible in over
100 countries across the world which minimizes overdependence risks on limited
markets.
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 Financial Position or status: GSK has a sound financial position with successive profits
in every year, along with accumulated revenue reserves that can be utilized to finance
capital expenditures in the future.
 Social Media: GSK has a strong and sound image on social media with more than
millions followers on Facebook and Instagram. It also has high levels of customer visit
on these media with less customer response time.
Weaknesses:-
 Healthcare fraud allegations affect Company’s goodwill: GSK Company has been
charged in some countries due to unlawful promotion of drugs, failure to report safety
data and false pricing charges.
 Research & Development: GSK Company investment in R&D is less than the fastest
growing competitors in the industry. Although GlaxoSmithKline is spending above the
industry average on R&D but it is not enough to beat the competition in the market.
 High attrition rate in work force: By doing comparison with other organization in the
same industry, the GSK has a maximum attrition rate as compared to the other
competitors. The company spends a lot in training and development program for
improvement of its workforce.
 Market Research: The Company in recent years does not conduct market research and
uses old data for making decisions. Over year to year the customer needs and wants
change and the company manufacturer’s products according to the previous demand and
not consider the recent trend.
 Negative trend in cash flow: Due to lack of financial planning the company cash flow
statement shows negative balance which indicate that the company does not have a
sufficient cash and they borrow from outside in form of loans.
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