Applied Corporate Strategy Report

This report analyzes the corporate strategy of GlaxoSmithKline plc and Pfizer Inc, focusing on their joint venture to introduce data preprocessing and analytics in the pharmaceutical industry. It examines the external and internal environments of the companies, including PESTLE analysis, Porter's Five Forces, VRIO model, and SWOT analysis. The report also evaluates the strategy using Blue Ocean and SAFe models, highlighting the potential benefits and challenges of this disruptive innovation.

Applied Corporate Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
EXTERNAL ANALYSIS................................................................................................................3
INTERNAL ANALYSIS.................................................................................................................7
EVALUATION STRATEGY........................................................................................................11
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business organisations are established to achieve various objectives and to
achieve these objectives strategies that are planned by companies. Corporate strategy
takes a portfolio approach to strategic decision making by looking across all the
businesses to determine how outputs can be maximised. This strategy is builds on top
of business strategy which is concerned with the decision making for an individual
business. It encompasses a firm's corporate actions with the aim to achieve long term
objective of business organisation. This strategy is also used for introducing a new
innovation that organisation tries hard to be successful.
In this report GlaxoSmithKline plc and Pfizer Inc both the organisation are taken
to define corporate strategy (Balsmeier, Bermig and Dilger, 2013). GlaxoSmithKline plc
is established in the year 2000 by a merger of Glaxo Wellcom and Smithkline Beecham.
It is worlds sixth largest pharmaceutical company whose headquarters are situated in
UK. Pfizer Inc is an American pharmaceutical corporation situated in New York, United
States and founded in the year 1849 by Charles Pfizer and Charles F. Erhart. A
disruptive innovation of data preprocessing is introduced by a joint venture in both the
organisation. Based on this external and internal analysis will be done and strategy
evaluation will take place.
EXTERNAL ANALYSIS
External analysis is considered as a analysing the environment of industry of firm
that includes factors like competitive position, competitive structure and so on. It also
consider the PESTLE and Porters five forces model analysis. The main objective of this
is to ascertain the opportunities and threats in industry which drive growth, volatility and
profit. PESTLE analysis is a strategic management tool which is considered significant
for pharmaceutical industry as with the help of it whole industries tries to maker effective
decisions to identify the opportunities and face the threats (Barros, Boubaker and
Hamrouni, 2013).
GlaxoSmithKline generally operates in dynamic environment where it is
influenced through the technological changes, enhancing environmental policy between
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customers, decisions of government, aggregate social trends and so on. All factors are
mentioned below:
Political factors:
The change caused in international trade which can affect the innovation of
product or services created by whole pharmaceutical company. As it include factors like
foreign trade policy, tax policy government policy and so on that either act as
opportunity or threat for GlaxoSmithKline.
Opportunities: With the innovation like data preprocessing, GSK produce more
numbers of drugs suggested through government policies (Bender, 2013).
Threats: As GlaxoSmithKline is dealing with approx all countries. Therefore, they
can face problems such as political instability, various rules and regulations of different
countries.
Economical factors:
The manufacturing is affected through uncertainty of dynamic market situation
within European.This can lead to low production of various industries like
pharmaceutical as include factors like interest rate, disposable income etc. that directly
affect the performance of company.
Opportunities: GlaxoSmithKline can manufacture the drugs for enhancing the
country's economic growth rate. Enhancing trade policy of liberalisation assist
respective firm to invest more into those regions that are as yet off-limits to the
company.
Threats: customers disposable income have remain stabilized but the leading
inequality in society will negatively affects the sentiment of customers and therefore,
impact the clients expenditure behaviour (Clacher and Hagendorff, 2012).
Social factors:
Production of GSK is effected by the variation in social factors that involve people
life style and attitude towards product. Thus, strategy must be build on the basis of
SAFe framework which helps to decide availability of resource, ability of workforce and
aptitude to implement the strategy on the basis of acceptance of geographical area to
achieve the organisational success.
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Opportunities: As individuals are shifting to healthy lifestyle, so the product sale
can increase due to this profitability of company are maximising.
Threat: Different societal norms and hierarchy can be threat as it is difficult for
them to understand various attitudes as well as norms of society.
Technological factors:
In pharmaceutical industry, these factor include breakthrough. Issues related with
patenting as well as licensing technology of drug production and development level of
industry technology.
Opportunities: Through advance technology GlaxoSmithKline can manufacture
drugs more quickly or speed up the manufacturing method (Eccles and Youmans,
2016).
Threats: Transfer and licensing of technology is threats for GlaxoSmithKline as
in health care industry technology transfer culture is not so strong also firm are unwilling
to transfer technologies for the fear of forming competitors out of collaborators.
Legal factors:
Legal factors include employment law, patent law, discrimination law, health and
safety law that affect the production of pharmaceutical company. Thus, management of
GlaxoSmithKline have to view few factors before innovating new products or services
like data protection laws, copyrights laws and so on (Eckbo and Thorburn, 2013).
Opportunities: With the help of various rules and regulations pharmaceutical
industry herein, GlaxoSmithKline can protect their intellectual property, patents etc.
legally.
Threats: Different legislation of national and international can effects the sales
and manufacturing of GlaxoSmithKline products.
Environmental factors:
This is related with the factors, which influences environment as well as their
impact on its ecological factors. Such as climate change, renewable technology and so
on affect the working of pharmaceutical industry.
Opportunities: Pharmaceutical industry such as GlaxoSmithKline company
should consider various environmental norms as it change the product innovation
priorities. are formed according to environmental expectations as well as standards
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instead of doing business according to traditional value proposition (Hickman and Silva,
2018).
Threats: For GSK, global warming can be threats that they have to face as it
outcomes in modifying strategy of marketing to innovate new drugs.
Porters five forces model
GlaxoSmithKline can use this model in order to build a sustainable competitive
advantage, develop their strategic position and enhance opportunities of profitability in
healthcare industry. All five forces are mentioned below:
Threats of new entrants: The pharmaceutical is generally characterised with
high new entrants barriers at the time it view some factors such as patent, government
rules, large capital included as well as research and development cost related to
development of existing drugs and new products. For example; it spend approx £ 3.5
billion on its research and development. So, threats of new entrants is low (Lamberti
and Noci, 2012).
Threats of substitutes: In industry, cost of switching is low as well as there is
about smooth ease to substitutes from same company. The another substitutes are
generic drugs and additive alternate medicine. Therefore, the threats of substitutes is
high (Matsa and Miller, 2013).
Bargaining power of buyers: Buyers are generally more demanding. They only
want to purchase best at low price. It put pressure upon GlaxoSmithKline profit in long
term.
Bargaining power of suppliers: This will influence its capability in order to
restrict the company;s freedom and effects their profit. GlaxoSmithKline poses the
threats of backward combination towards suppliers. Most pharmaceutical firms own its
production plant. It implies that suppliers rarely modify prices without any reason. So,
there is low bargaining power of supplier (Pantano, 2014).
Industry Rivalry: Industry Rivalry is high due to high sunk cost, transparency
degree as well as level of advert expenditure are few factors which contribute towards
fierce competition within industry. The rivalry is aggressive with more players contend
for supremacy in increasing pressure of upcoming top drugs.
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From the above analysis it is understood that GlaxoSmithKline, bargaining power
of suppliers are low and buyers are high. Threats of substitutes are also high and new
entrants are low.
INTERNAL ANALYSIS
Analysis of unique capabilities of GlaxoSmithKline plc using VRIO model:
VRIO analysis is an analytical technique that is highly preferred for the evaluation
of company’s resources and thus the competitive advantage. Adopting VRIO model in
disruptive innovation of data preprocessing will helps in evaluating market and
identification of required resources on the basis of their preference (VRIO Model, 2019).
GlaxoSmithKline plc can analyse its internal environment for availability of various
resources inside the organisation. There are various resources available with the
business entity that will give competitive advantage to company. Description of the
VRIO model in relation to GlaxoSmithKline plc is as follows-
Resources Value Rare Imitability Organized
Financial
resource
Financial
resource
- - -
Machines Machines Machines - -
Software Software Software Software -
Human
resource
Human
resource
Human
resource
Human
resource
Human resource
Value: Resources of organisation which gives competitive advantage or
advancement to GlaxoSmithKline plc will be considered valuable for company.
Presence of valuable resources in the organisation will make organisation well prepared
to grab opportunities and avoid business threats. There are various resources that are
considered valuable and helps organisation to achieve its objectives. Various valuable
resources available with company are Finances, Machines, Software and Human
resource (Park, 2014).
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 Financial resources will be considered valuable for the organisation as all the
activities and new ideas and strategies that are going to be implementation in
future based on availability of funds.
 Machines will be valuable for GlaxoSmithKline plc as production of different kind
of medicines required specific machines and enhances consumers satisfaction
with appropriate products.
 Software is valuable for GlaxoSmithKline plc as it will help in managing and
storing business information in effective manner.
 Human resource is one of the valuable resource to the organisation as goals and
strategies of the organisation are achieved through them (Purce, 2014).
Rare: Resources that can be acquired by one or very few companies are
considered as rare. Availability of valuable and rare resources gives competitive
advantage to GlaxoSmithKline plc. These resources will make business entity unique
and different from other competitive companies. There are several resources available
with the organisation that are termed as rare and gives competitive advancement.
Together with this rare resources will help in bringing disruptive innovation of data
preprocessing. Goals and objectives with this innovation will be achieved in effective
manner. Resources like finances are not rare for GlaxoSmithKline plc. Some of rare
resources of the organisation are as follows-
 Machines that are specialised and designed for manufacturing of specific
medicines then availability of these will be rare with each organisation working in
the same industry and gives competitive advantage to GlaxoSmithKline plc (Rao
and Tilt, 2016).
 Software that is used in an organisation is rare because it is developed on the
basis of specific requirement in GlaxoSmithKline plc.
 Skills and knowledge of employees working with the organisation is unique and
rare and helps in gaining competitive advantage and introduction of new
innovation in productive manner.
Imitability: Resources that can be developed and adopted by other organisation
of the industry are termed as imitated resources. Business organisation can imitate
resources by making a duplicate of it that is termed as direct imitating. When resources
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of other organisation can become substitute of available resources then it is termed as
indirect imitating. These resources give competitive advantage for a limited duration of
time. Resources like machines can be imitated by any competitor in long duration of
time. Software's and human resource can be imitated by nay other organisation
(Rugman and Verbeke, 2017).
 Needs and requirements of two organisations possess variation and it will not be
appropriate to imitate software's to gain competitive advantage.
 Employees working in GlaxoSmithKline plc have different experience and skills
cannot be imitated by other organisation to gain competitive advantage.
Organised: Resources give competitive advantages to GlaxoSmithKline plc.,
when they are organised in a specified manner. Business entities need to organise its
valuable resources so that full potential can be realised of various resources. Having
organised resources enhances productivity and helps in introducing various strategies
that leads to innovation. Resources such as software cannot be organised in long
duration of time as modification needs to be done as per future requirements. On the
other hand when human resources will be organised in effective manner then most
productive results can be gained and leads to competitive advantage.
 Organised human resource will be more productive and used in the most efficient
manner will increase their experience and knowledge that will provide benefits to
company in long run (Spitzeck and Chapman, 2012).
SWOT ANALYSIS OF GLAXOSMITHKLINE PLC
SWOT analysis is a technique which helps an organization to understand it's
strengths and weaknesses, identifying available opportunities and threats that they are
going to face. It provides a framework of where the organisation is today and where it
want to go. GlaxoSmithKline Plc is a pharmaceutical organization having its
headquarters in London, United Kingdom. SWOT analysis of GlaxoSmithKline Plc is as
follows:
Strength
 Pharmaceutical industry such as GlaxoSmithKline Plc usually has a very strong
sales and distribution channels.
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 GlaxoSmithKline Plc which operates in pharmaceutical sector plans its strategies
in such a way that they are able to capture maximum share of market.
Weaknesses
 Fraud claims affects the brand image of GlaxoSmithKline Plc within
pharmaceutical industry.
 Various researches and development strategies have leads to producing such
vaccines which are not up to mark.
Opportunities
 Agreements and collaborations with other pharmaceutical organizations helps in
boosting GlaxoSmithKline Plc research work.
 Launching products with various promotional means leads to increasing
awareness regarding GlaxoSmithKline Plc.
Threats
 High risk that product or vaccine goes unsuccessful of GlaxoSmithKline Plc.
 Intense competition with the rival firms is a big threat of GlaxoSmithKline Plc.
7S STRATEGY IN GLAXOSMITHKLINE PLC:
7S strategy model propounded by business consultants named as Robert H.
Waterman, Jr. and Tom Peters in 1980s. The 7s model defines various tools and
techniques to identify how an organization aligns the strategies and achieves its
objectives. GlaxoSmithKline plc and Pfizer Inc uses such model which helps in
accessing and monitoring various situations in the internal environment. The 7s tools
are defined as:
Strategy
Strategy is a plan which helps an organization to achieve its long term goals.
GlaxoSmithKline plc plans its strategies in such a manner which helps in achieving and
building competitive advantage in the dynamic market.
Structure
Structure defines the hierarchy chart of an organization. It explains the ways an
information flows between the levels of an organization. GlaxoSmithKline Plc clearly
illustrates the rules, roles, responsibility and accountability in its organization.
System
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System is defined as the procedures including daily activities as well as decision
making in an organization. GlaxoSmithKline Plc applies it for formulating formal
procedures for allocation of resources and measurement of rewards.
Skills
Skills are the abilities, competencies and capabilities within an individual to
perform various tasks. GlaxoSmithKline Plc hire those employees which have required
skills to perform certain task.
Staff
Staff refers to the type and number of people who are engaged in performing
operations of an organization. GlaxoSmithKline Plc recruits and hire the required
employees as well as time to time motivate them by giving rewards.
Style
Style defines the ways managers manages and leads towards the operations of
any organization. GlaxoSmithKline Plc adopts various management and leadership
styles to manage its operations.
Shared values
Shared values are the core values which defines the reason of existence of an
organization. GlaxoSmithKline Plc provides a guiding concept to manage its external
work and internal culture to enhance productivity.
EVALUATION STRATEGY
As far as recent and current strategy of GlaxoSmithKline plc is concerned by
having a joint venture with Pfizer Inc is to introduce data processing and analytics
application which can integrate different types of biological and healthcare data using
machine learning. Implementing this strategy helps in research and development to in
the areas which are touched earlier. This strategy will reduce cost that is incurred on
research and development of various medicines and also use of past collected data can
be made. Benefit of this joint venture and new innovation is to consumers as treatments
of various disease will be possible. Together with this treatment of various diseases
become cost effective for general public and growth of society keeps on going. To
understand effectiveness of this particular disruptive innovation an analysis by adopting
blue ocean strategy and SAFe test model will be done (Staub, Kaynak and Gok, 2016.).
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Blue Ocean strategy:-
Blue Ocean strategy is a method of creating business strategy of an enterprise
that is described in a book written by W. Chan Kim and Renee Mauborgan in the year
2004. this strategy is based on the idea that every enterprise can achieve higher profit
by creating new demand in non-competitive market. It is about creating and capturing
uncontested market space, thereby making competition irrelevant. This strategy is
based on the belief that market boundaries and industry structure are not given and can
be reconstructed by the actions and beliefs of industry players. When GlaxoSmithKline
plc and Pfizer Inc move into a joint venture and bring distributive innovation of data
preprocessing will make the competition irrelevant for both the organisation by
establishing a new market structure.
It includes data cleaning, data integration, data transformation and data reduction
(Tang, Hull and Rothenberg, 2012). Data preprocessing prepares raw data for further
processing. This techniques is introduced in joint venture of GlaxoSmithKline plc and
Pfizer Inc to enhance capability expedites the deployment of artificial intelligence in
precision medicine, drug discovery and health data application. For this innovation a
machine called SymetryML will be introduced to joint venture project which is capable of
processing and analysing various raw data's. A unique digital code to each compound
research will be given that gives a research a specific coding.
When a research to innovate a particular medicine or process of treatment of
various diseases is conducted (Urde, 2013). At that point of time various samples are
collected from all over the world. This data preprocessing machine will keep record of all
the information of the research conducted and helps in future research and
development. By introducing Blue Ocean strategy both the organisation in their joint
venture project will be able to create a new market demand and will be able to keep
business out of competition to create new competitive market space.
SAFe model strategy:-
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When a Pharmaceutical industry formulate most suitable strategies for its business it
often become difficult for it to choose most appropriate strategy among various strategies. So,
the criteria of SAFe helps the firm to choose most suitable alternative for the company that can
help the firm to attain its objective successfully. Moreover, it includes suitability, acceptability
and feasibility to choose favourable as well as valuable strategy for company.
This is an analytical and planning method; Situation Analysis Framework is
adopted from the Logicak Framework Approach and Objective Oriented Project
Planning. It describes about aim of the project to achieve by addressing the
development problem. Additionally, this strategy gives clear view to GlaxoSmithKline plc
and Pfizer Inc regarding their joint venture and objects is beneficial for both of them as
one unit. This can be analysed in three stages such as suitability, Acceptability and
Feasibility (Valentine, 2012).
Suitability: Suitability is most of the most essential factors of SAFe as it help the
firm to decision upon the strategy. For instance, whether the specific strategy will work
in favour or against the company. This is analysed by both the organisation if strategy is
appropriate and provides new opportunities to business in future or not. If this
innovation leads to any constraints then it will not be considered suitable for the
organisation as a whole. Evaluation of suitability of new innovation for both the
organisations will be on basis of business environment, project expectation and
capacity. Together with this both the organisation possess capacity to adopt is so, it will
be termed as highly suitable.
Acceptability: Acceptability is considered by the firm as it help to measure the
risk associated while choosing up a strategy. Additionally, it helps to calculate the risk
and identify the reaction of stakeholders for particular strategy. It will be seen that
adoption of innovative idea will be able to meet shareholders expectation in future in
most efficient manner or not. Both the organisations needs to be well aware regarding
level of risk involved in the new idea and its expected return. When shareholders will
know regarding the distributive innovation and its benefits then they will accept it with
both the organisation and strategy will be appreciated.
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Feasibility: In SAFe strategy model it is very important to analyse that innovation
which organisation wants to bring into the real world is possible or not. In this stem
management team of the company will identify various resources, aptitude and ability to
implement the innovative idea. Availability of multi-pal resources required in the
innovation will make the project feasible (Zona, Minoja and Coda, 2013).
By using SAFe strategy model both the organisations are able to identify and
develop the new innovation strategy. As it is beneficial to bring a revolution in the
industry by choosing up the most appropriate strategy that can flourish the industry and
help it to gain long term sustainable advantage over its competitors in same industry.
CONCLUSION
From the above project report it has been concluded that organisation needs to
bring various strategies to introduce something new in the industry and maintain
competition. Implementation of various business innovations may sounds profitable but
may result in loss. To reduce chances of default in new business strategy internal and
external business environment needs to be analysed in most effective manner. All these
strategies will be linked with organisations that are doing a joint venture for making a
distributive innovation. As introducing a new business innovation requires more
research that will enhance chances of success for business and its new innovative
ideas. Both these strategies are applied to businesses who are introducing a product
in the market which is different from the current market. This creates demand for the
product but to create this new market a plan that defines various circumstances and
steps that can be taken to resolve that will be mentioned.
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