Corporate Sustainability Assessment and Strategy

This assignment delves into the world of corporate sustainability, covering topics such as corporate social responsibility (CSR), environmental management, and talent assessment. It provides an overview of various studies and research papers on these subjects, including works by authors like Welford, Schaltegger, and Ben-Hur. The assignment also touches upon the integration of sustainability into corporate strategy and the importance of communicating CSR actions. It concludes with a brief mention of a business deal between Pfizer Inc and GlaxoSmithKline plc that has no impact on India.

Corporate Strategy Assessment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Q1: EXTERNAL ANALYSIS ........................................................................................................3
Evaluation of business environment and find out opportunities and threats..........................3
Industry analysis by using porters five forces model.............................................................5
Q2: INTERNAL ANALYSIS .........................................................................................................6
Identifying strengths and weakness........................................................................................6
Evaluation of capabilities through VRIO approach...............................................................7
Q3: STRATEGY EVALUATION...................................................................................................9
Evaluation of strategy undertook by company by using SAF test.........................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategy refers to plan or activities set by individual or group of individual to attain future
goals (Rugman and Verbeke, 2017). With this, it can be said that corporate strategy refers to step
by step actions set by the management with the aim of achieving competitive advantage over
others companies by utilising resources to its maximum. For this report, joint venture of
GlaxoSmithKline plc and Pfizer Inc is taken for discussion which happens on 19th December
2018. Both the companies operates in consumer healthcare industry.
MAIN BODY
Q1: EXTERNAL ANALYSIS
Evaluation of business environment and find out opportunities and threats
Joint venture: It refers to collaborating or amalgamation between two or more than two
companies who shares their resources and machinery to achieve a common purpose in the market
(Furnham and Gunter, 2015). GlaxoSmithKline plc (GSK) is a British multinational
pharmaceutical company which deals vaccines, medicines, nutritional products etc and

headquartered in London UK. On the other hand, Pfizer is an American MNC pharmaceutical
company which is in the same industry and headquarters in Connecticut USA. Both the
companies have signed a joint venture agreements in which GSK will have 68% equity interest
and remaining is with Pfizer and this venture will be work under the name of GSK consumer
healthcare. Both have the total sales of 9.8 billion euro which makes the competitive advantage
for a shorter period of time.
It is important for any company to identify any opportunities or threats which they might
face in the future. For instance, if they failed then it will be huge blow to both the companies as
funds will not be fully utilised resulting in loss for the companies. On the other hand, if they
succeeded then competitive advantage would be achieve by them which leads to positive growth
of companies. Various opportunities and threats are explained below,
Opportunities: It means that different types of options which company has in the future which
could help them to grow in sales and profitability context. Different opportunities which joint
venture could achieve is explained below,
 It would be easier for both the companies to enter in countries where they have not been
operating in the past individually because of share technology and resources.
 Both the companies have planned to divest its JV 25% of profit share in the R&D
department so that new products and services would be made resulting in better sales and
performance in the future.
Threats: It refers to various obstacles which might be faced by company in a coming future
(Maas, Schaltegger and Crutzen, 2016). Company have to regularly assess the environment so
that they would be prepared to tackle the obstacle without affecting productivity of it. Different
threats which this joint venture could face is given below,
 GSK have recently handover its one of the highest selling products like Boost, Maltova
etc to Unilever due to which they have lost their customer base which will leads to lower
sales and profit for company. This will have negative impact on joint venture as low
amount of money would be invested by them.
 Due to high competitions in the pharmaceutical market, it would be hard for JV to
perform with their highest potential as they have to compete with companies like
Novartis, Merck, Hoffmann-La Roche etc which is hard to beat. This venture will faced
low sales and ROI in the starting.

 GSK and Pfizer have signed the agreements for five years but if any conflict has raised
due to work operations and planning of separation is done then both the companies will
face a loss which is hard to bear.

Industry analysis by using porters five forces model
There are two types of environment which should be considered by company while
operating their business as it directly affects the performance in a positive or negative way. Out
of two, external environment plays an essential role as it can not be controlled by company.
That's why proper scanning should be regularly done by the company. Porters five forces model
in the context of joint venture between GSK and Pfizer is explained below,
 Threat of New Entrant: It refers to new competitors which are planning to enter in to
the market with the aim of acquiring market and customer share (Davis and et. al., 2016).
In the pharmaceutical industry, it is hard for any new companies as it requires huge
capital in the starting without being sure about the success, R&D cost which is large in
number, various barriers have been made by the government, patents etc. For instance, in
2017, GSK have invested 3.9 billion Euro. It can be said that joint venture wont faced
any new competitions in the marketing and they have compete with the existing
companies only. So threat of new entrant is low in nature.
 Bargaining Power of Supplier: It refers to number of supplier in the market. If their is
high number of supplier then their power would be lower and if they are high in number
then power would be high (Ben-Hur, Jaworski and Gray, 2015). There are two types of
suppliers in the market i.e., scientist and pharmaceutical companies. Individual scientist
are the one who makes the formula of medicine and then hand over to the company
according to the bidding provided to them. So all the power stays with the scientist only.
On the other side, most of the companies have their own laboratories where medicine is
made so power lies in the hand of company only. It wont affect the GSK-Pfizer venture
as both have large number of scientist who are working with them regularly to find out
the vaccines and medicines of the diseases like Aids, cancer etc. So at last it can be said
that bargaining power of supplier is moderate in nature.
 Bargaining Power of Buyer: It means that how many customers is in the market. If
there is high number of buyer then power lies in customer only and vice versa. Customer
bargaining power is lower in pharmaceutical industry because customer only have few
alternative from which they can choose from. In other aspect, pharmacies or medical
shops also considered as a buyer from companies but they have to provide the drugs or
medicines according to the doctor. This factor wont affect the GSK as if any individual

has to get a medicines which is only produced by the company then customers does not
have any option but to buy it in any cost. On the other hand, if any medicine is in high
demand in the market then chemist have to buy it as then only they would earn more
profits from their business. So overall, it can be said that there is low bargaining power of
buyers.
 Threat of Substitute Product: Substitute refers to way of doing something but in a
different way so that needs and demands would be satisfied (Wetzstein and et. al., 2016).
There is a substitute for medicines that is home remedies but sometimes it is not
effective in nature as it takes time to show their result. In context of specific medicine,
there is no substitute as after the innovation, patent is been done by company so that any
company can not copy the formula. But to gain more market share in the market, GSK-
Pfizer have to launch any new problem which should use ingredients which are
scientifically proven for the betterment of health. It would assist them to gain more
market share in the market as people who believes in old remedies will also get attracted
by it. So it can be said that threat of substitute product is low.
 Rivalry Among Existing Firm: Rivalry means number of competitors in the market. In
the pharmaceutical company, there competition is on the basis of two things i.e., price of
the medicine and benefits of medicine. On the other hand, there are many big companies
like glenmark, novartis, Merck etc which will be competing against the joint venture. So
power of rivalry is high in nature.
Q2: INTERNAL ANALYSIS
Identifying strengths and weakness
Strengths: It refers to potential for any company to perform with their rivalry so that
they can attain sustainable business performance ion the future (Szőcs and et. al., 2016).
 Both the companies have established brand name in the healthcare industry due to which
their brand awareness are high in many countries in the world. It will reduce their
marketing activities expenditure and increase their sales which leads to better profitability
for them.
 GSK and Pfizer is one of the largest pharmaceutical company in the world because they
have advanced and latest technology which makes their quality and quantity of product to

its highest. It will help them to save 0.5 billion euro by 2022 which is a positive sign for
their growth in a market caputrisation way (GlaxoSmithKline plc and Pfizer Inc to form
new world-leading Consumer Healthcare Joint Venture, 2019).
 There are many famous product brands like Nicorette, TUMS, Caltrate, Bextra which are
coming under this joint venture. Brand image of this product will be leveraged in the joint
venture which will helps them to attain more sales in the future. So it is one of the
essential strengths of this venture.
Weakness: It states the negative aspect of an organisation due to they wont be able to perform
with their highest potential in the future.
 Due to selling of many products to Unilever by GSK, it will affect their brand image in
the mind of customers which will directly affect the performance level of joint venture in
a negative way as brand awareness would be reduced to a certain level resulting in low
sales for venture.
 This joint venture is only effective outside Asia market like India as products which they
are going to sell is not coming under the agreements. So it can be said that consumer
base of the both the companies will be limited due to which venture would face difficulty
to achieve their sales target.
 In many international market, Pfizer products like Becosules, Corex, Gelusil has better
market share as compare to products of GSK. But all these brands are not included in
joint venture due to which it would be hard for them in the starting to capture the market
share as it already capture by them as individual company or other competitors (Pfizer
Inc deal with GlaxoSmithKline plc will have no India impact. 2019).
Evaluation of capabilities through VRIO approach
It is essential for every company to identify their resources and capabilities as it assist
them to gain sustainable business performance for a longer period of time (VRIO Framework,
2018). For instance, if GSK and Pfizer knows that they have latest technology which other
companies does not have then it will assist them enhanced their productivity and efficiency to a
certain level. To evaluate it, VRIO framework is used by companies to identify resources and
capabilities of it. This approach is proposed by Barney in 1991. Various factors which are
considered while doing VRIO is financial resources, human resources, material resources and at

last no material resources. Aim of this tool is to find out resources as valuable, rare, imitable and
organisation which is explained below by taking functional example of this joint venture.
 Value: This is the first variable which states the how much value does a resource adds in
the final product which is consumed by final customers (Nason, R.S. and Wiklund, J.,
2018). It can add value through differentiating the product from other competitors or
lowering the price of product so that more customers would be attracted to them. For
instance, Joint venture of GSK and Pfizer has high number of human resources as due to
them they have patented many vaccines and medicines which are not copied by a
competitor for longer period of time which helps JV to attain its pre set goals. So it can
said that it is valuable in nature.
 Rareness: It refers to resources which are rare in the competitive market but acquired by
only few companies. For instance, Human resource of GSK-Pfizer are valuable in nature
but it is not rare in nature as other big companies also have innovative and knowledgable
workforce resulting in competitive equality for them. On the other hand, financial
resources are valuable and rare in nature as it is hard for other companies to match their
funds which they could invest in the market. For instance, GSk-Pfizer have power to
acquire more money as compare to other by sharing their equity to them which is not
possible for other companies.
 Imitablity: It refers to time and money incurs by other company to copy the product
other company is selling (Welford, 2016). For instance, financial resources are rare in
nature for JV but it could be easily copied by other companies through selling their
resources in exchange of money or sales of equity to the investors. So it would help the
venture for a shorter period of time which leads to temporary competitive advantage over
others. On the other hand, material resources refers to assets and advanced technology
which company directly owned. Technology is helpful for JV as it would assist them to
differentiate their product from other organisation by giving high quality of it. But it will
take some time for both the companies to organise their technology according to
requirements of industry which makes it unused competitive advantage. For instance,
GSK-Pfizer will first have to set their goals and objectives of it as without it, it wont be
possible for them to work in the competitive market. So it will take some time to analyse
and set their resources according to the external and internal environment.

 Organisation: It refers to capacity of an organisation to maintain and utilise their
resources to its fullest (Schaltegger, Burritt and Petersen, 2017). After all the above
mentioned aspects there is only one resources which could be organised by JV is
goodwill or image in the mind of customers. GSK as well as Pfizer is one of the largest
and oldest company in the pharmaceutical industry due to which they have high goodwill
in the market which helps them to sell their product with high frequency as compare to
other competitors. Goodwill is the only resources which is valuable, rare, non imitable in
nature resulting in long term competitive advantage over other competitors like glenmark
or novartis.
So it can be concluded from above that both the companies should use their goodwill while
selling the product in JV as chances of increase in sales increases to a certain level. Moreover,
joint venture will be conducted under the brand name of GSK consumer health which will
automatically enhances market awareness.
Q3: STRATEGY EVALUATION
Evaluation of strategy undertook by company by using SAF test
There are numerous number of strategies which are made by the companies in the starting
but there are only few strategies which succeeded in the real time scenario (Villagra, Cárdaba
and Ruiz San Román, 2016). So it is important for company to identify correct strategies which
would assist them to gain competitive advantage over others. Strategy which is taken for
consideration is the joint venture between GSK and Pfizer in consumer healthcare. There are
three different types of aspects on which strategy is evaluated is explained below,
 Suitability: It is one of the most important factor in which strategy suitability is check on
the basis of different factors which is mentioned below,
◦ Environment suitability means the impact of strategy on the environment conditions.
According to venture, they are planning to focus on consumer healthcare with the aim
of betterment of society. Moreover both the companies have high CSR image as they
constantly donate huge amount of funds in charities or school. So the strategy is
suitable to the environment.
◦ Expectations suitability: It means that, what's the expectations of company from the
strategy they are going to implement. Aim of this joint venture is to increase their

customer and market share in the consumer healthcare by providing unique and
effective medicine through merging the technologies and resources of it. Both the
companies can easily attain their pre set goals if they combinedly perform with their
full potential.
◦ Capability suitability refers to touchable and non touchable resources which would
assist company to perform with their highest potential (Oertwig and et. al., 2017). As
mentioned above, both the companies are capable of preforming better than their
competitions as they have resources like knowledgable workforce, brand image, latest
technology etc which would help them to attain competitive advantage by achieving
sustainable business performance.
So after discussing all the points, it can be said that Joint venture between GSK and Pfizer has all
the suitability.
 Acceptability: Whole strategy is acceptable if they have succeeded on three different
basis i.e.,
◦ if the return of interest is high as compare to money invested in the starting then it the
strategy is successful in nature (Welford, 2016). There are high chances of getting
success as they have higher goodwill in the market which is helpful for increasing
sales of the venture. Moreover, existing product which will be sell under the name of
JV has high market share. So chances of getting high return are high.
◦ There is less risk of getting failed because if they do while launching any new product
then their existing medicines will regulate the cash flows in the company.
◦ Joint venture between both the companies is implemented after the assent of the
shareholders so most of the shareholders are satisfied with the strategy.
 Feasibility: Mainly this factor is a combination of other two factors which are mentioned
above (Jankalová and Jankal, 2017). So it analyse that does the strategy planned is
feasible for the company or not. Moreover, does the company has knowledgeable
workforce or not etc. All these things are align with the strategy of Joint venture.
So at last, it can be concluded that all the three factors are favourable for joint venture strategy
and they will attain their future goals if they constantly perform with their highest productivity
and efficiency.

CONCLUSION
From the above mentioned information, it can be concluded that companies should
analyse the future of joint venture before doing it as it directly impact the balance sheets of
company in a negative or positive way. Moreover, five forces model could help them to analyse
the market as it assist them to find out factors which they should considered while implementing
any strategy. Apart from this, it is important for companies to evaluate their strengths, weakness,
opportunities, threats so that they can align their activities with their mission and vision. Besides
this company should conduct SAF test after making their corporate strategy as it helps them to
find out the impact on the company performance and profitability.

REFERENCES
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Ben-Hur, S., Jaworski, B. and Gray, D., 2015. Aligning corporate learning with strategy. MIT
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Wetzstein and et. al., 2016. A systematic assessment of supplier selection literature–state-of-the-
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Nason, R.S. and Wiklund, J., 2018. An assessment of resource-based theorizing on firm growth
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Online
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glaxosmithkline-plc-will-have-no-india-impact-118121901232_1.html>
GlaxoSmithKline plc and Pfizer Inc to form new world-leading Consumer Healthcare Joint
Venture. 2019. [Online]. Available Through: <https://www.gsk.com/en-gb/media/press-
releases/glaxosmithkline-plc-and-pfizer-inc-to-form-new-world-leading-consumer-healthcare-
joint-venture/>
VRIO Framework. 2018. [Online]. Available Through:
<https://www.strategicmanagementinsight.com/tools/vrio.html>