External and Internal Analysis of GlaxoSmithKline (GSK)

This report provides an external and internal analysis of GlaxoSmithKline (GSK) using PESTLE and Porter's Five Forces models. It also includes a VRIO framework analysis, SAFe criteria evaluation, and more. The report covers GSK's strengths, weaknesses, opportunities, and threats, as well as its competitive advantage and reputation in the healthcare industry.

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Strategy Tool 1
Table of Contents
Introduction......................................................................................................................................2
External Analysis.............................................................................................................................2
PESTLE analysis..........................................................................................................................3
Porters five model............................................................................................................................4
Threats of new entrants:...............................................................................................................5
Bargaining Power of Suppliers....................................................................................................5
Bargaining Power of Buyers........................................................................................................5
Threats of Substitute Products or Services..................................................................................6
Industry rivalry.............................................................................................................................6
Internal Analysis..............................................................................................................................6
VRIO framework for GSK...........................................................................................................8
SAFe criteria....................................................................................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................11

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Introduction
GlaxoSmithKline (GSK) plc. is a well-known, famous, science-led global healthcare company,
which is having special purpose to service people through different products to feel better and
live longer. Healthcare sector is based on the innovations. GSK has three global businesses that
are manufacture, grow, and research innovative pharmaceutical medicines, such as products, and
vaccines for healthcare sector (gsk.com, 2019).
GSK has an objective is to be one of the trusted, best performing, and most innovative healthcare
companies in the whole world (Pandurangarao, 2015). GDK have some mission to create its
values in the heart of people and define its culture. Therefore, they can deliver innovative
medicines and products for its patients and consumers (Teece, 2010). GRS’s values are integrity,
patient focus, respect, and transparency and its expectations are teamwork, courage,
development, reliability, and accountability (investorschronicle, 2018).
This report will explain about the external analysis of GSK with the help of PESTLE and
PORTER 5 forces to identify GSK’s threats and opportunities as well as assess industry
attractiveness. It will also describe about the industry analysis through PORTER’s five-force
model.
In this report, key competences of the GDK will explain, which will give GSK its competitive
advantage. In internal analysis, it will explain about the strengths and weaknesses of GSK. It will
provide tangible and intangible resources of GSK and it will provide financial statement before
joint venture and after joint venture of GSK with Pfizer in 2017-2018.
Value chain internal analysis of GSK will describe in next section of this report. This report will
provide VRIO analysis for finding unique capabilities for competitive advantage to GSK. In this
report, recently implemented strategy will explain and evaluate it using SAFE criteria in the later
section.
This report will include internal and external analysis for GSK with different opportunities and
threats. It will analyze strengths and weaknesses of GSK.

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External Analysis
External analysis is use for providing different factors of a firm. PESTLE and POSTER five
force models has used for finding many factors of company (Dudovskiy, 2013).
PESTLE analysis
GSK is a well-known company in the field of healthcare area because of its research and
development of innovative medicine and vaccines for different diseases.
Political Factors  Political stability is necessary for drug manufactures, as it is a
major sector in the country’s economy (Enderwick, 2009)
 Level of corruption is affecting the healthcare sector
 Political interference and bureaucracy affects healthcare sector
 Pricing regulations are affecting mechanism of healthcare
Economic Factors  Economic system is make effect on the sales of medication in
healthcare sector
 Exchange rate is a factor that affect profit of GSK as well as
stability of host country currency
 GSK’s profit affect because of skill level of employees
 Labor costs and productivity is a huge factor in front of GSK
 Economic growth rate stability is necessary for GSK, as it is
affecting their market in future.
 GSK is highly affected from inflation rate, unemployment rate,
and interest rate
Social Factors that
Impact GSK
 Demographics of rural and urban population
 Societies class structure and hierarchy affects
 Culture of society in term of gender roles and social conventions
 Societies entrepreneurial sprits
 Leisure interest
Technological
Factors that Impact
GSK
 Technological changes provides competitive advantage to GSK
 Online marketing is impact on the product offering
 Cost structure of GSK

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 Technological changes impact on value chain structure of GSK
 Rate of technological diffusion
Environmental
Factors that Impact
GSK
 Weather is important for safety point of view of medications
 Climate change increases possibility of damaging medications
 GSK is affected because of water and air pollution, as
medications are highly sensitive (Chimngamsert, et al., 2014)
 GSK is best in waste management in healthcare sector
 GSK is created ecological products that are supporting
environment
 GSK is used renewable energy sources in production and
manufacture processes.
Legal Factors that
Impact GSK
 GSK affects from anti-trust law in industry and in the country for
healthcare industry
 Discrimination law of different countries
 GSK has patents, copyrights, and intellectual laws for their
products and services.
 GSK has strong background , still e-commerce and consumer
protection affects it
 GSK affects from laws of different countries, such as employment
law, data protection, and health and safety law.
All those factors are affecting growth of GSK in long-term. It is a best way to understand about
the strengths and weaknesses of the GSK then change required things for more benefits (GSK,
2018).
Porters five model
Porters Five Forces Analysis has used for analyze the industry to understand different factors of
the industry. It is a strategic management tool that is used for understand different ways to profit
in an industry (oxfordcollegeofmarketing.com, 2018). In drug manufactures industry, GSK is a

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well-known company. In healthcare sector, GSK has redefined the process of doing business
(Team, 2018).
These are the five forces, which has provided by Michael Porter as shown in diagram.
Source: (fernfortuniversity.com, 2018)
Threats of new entrants:
New entrants can affect the profit and growth of GSK though innovation and new process of
doing business. GSK can also affect from lower pricing strategy by different entrants in the
industry. Hence, GSK has to manage these challenges through build effective barriers to secure
its growth and profitability as well as competitive edge (360strategy.co.il, 2011).
Bargaining Power of Suppliers
Suppliers can affect the profit of GSK, as they can decreases margins for GSK. Supplier
bargaining is directly impact on the profitability of GSK. GSK can decrease this threat by
building a relationship with multiple suppliers. GSK can made different products, which can
design through different materials. Hence, company can switch their supplier for different
material (Barney, 1991).

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Bargaining Power of Buyers
Buyers are always expecting about their benefit. They want to buy many products in minimum
price as possible. It can make a pressure on GSK. GSK provides high discounts and offers for
increasing sales of the company. GSK can introduce new products in the field of healthcare.
Therefore, buyer cannot seek discount on new products, as they seeks offers and discounts in the
established products (Cacciolatti & Lee, 2016).
Threats of Substitute Products or Services
GSK is facing such types of problem in healthcare sector, as many other companies are produces
same products and services. Hence, GSK should be service oriented for their customers rather
than just product oriented. GSK can increase the switching cost for the customers to decrease
compaction (Cadogan, 2009).
Industry rivalry
GSK is a huge competitive drug manufacturer in the healthcare industry. This competition does
take toll on the profitability of GSK. GSK can reduce intense rivalry through building a
sustainable differentiation. GSK can collaborate with its competitors, which can increase the
market size of GSK (Griffith & Hoppner, 2013).
Internal Analysis
Internal analysis provides strengths and weaknesses of company to overcome the weakness and
use strengths for increasing revenue of the company (Hunt, 2015 ). VRIO is a best way to
examine internal environment of a firm. In this internal analysis, four questions has raised for
resources to determine thier competitive advantages (Grossberg, 2016).
The value of the gross assets of Pfizer’s consumer healthcare business to be contributed to the
new Joint Venture was $10,026 million at 31 December 2017. That business had sales of $3,469
million, adjusted operating profit of $600 million, Total operating profit of $471 million, and
Total profit before tax of $471 million in the financial year ended 31 December 2017 (GSK,
2018).

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Tangible Resources of GSK
Financial
 GSK has spent £6.7billion for pharmaceuticals and vaccines products
sales in 2017
 It has increases 13 % sales in 2017
 It has invested £3.9bn in research and development department.
Physical
 It has developed environmental friendly and modern plant and facilities
for production and manufacturing of different products and services.
 It has favorable manufacturing locations in different geographical
phases.
 It has latest machinery and equipment for manufacturing products
Technological
 It has many trade secrets
 It has innovative production processes for manufacturing different
products (Bharadwaj, et al., 2013)
 It has Patents, copyrights, trademarks of many products and services.
Organizational
 It has effective strategic planning process for development of products
and business.
 It has an excellent evaluation and control systems for managing
different operations
Intangible Resources
Human
 It has skilled, qualified, experienced employee with many capabilities
 It has trust on their employees
 Managerial skills
 GSK has specific practices and procedures for business
Innovation and Creativity
 It has many research and development department. It has many
employees that have technical and scientific skills.
 Innovation capacity is very high
Reputation
 It is a well-known company in the healthcare industry
 It makes reputation with customers for quality and reliability
 It has a very good reputation with suppliers for fairness, non-zero-sum
relationships

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Organizational Capabilities
 GSK has best employees to transfer their skills in a output in terms of profit of company
 GSK has capacity to association of tangible and intangible resources.
 Examples
 It has outstanding customer service for
customers as well as supplier and buyers
 Better product development capabilities
though research and development
department
 Innovativeness in the development and
manufacturing process of products and services
 GSK has an ability to hire, motivate, and retain
human capital
VRIO framework for GSK
Resources Value Rare Imitation Organization Competitive
Advantage
Raw material for
production of
medication and
vaccines
Yes Yes Can be Yes It provides
Sustainable
Competitive
Advantage
(SCA)to the GSK
Global and Local
Presence
Yes, as it
increases
revenue of
the GSK
Yes Can be Yes Providing Strong
Competitive
Advantage (CA)
to the GSK in
many terms
Project Execution
Track Record
Yes Yes No, none of
the
competitors
Yes Providing SCA
Reputation in
Comparison to the
Competitors
Yes No Can be Yes, its brands
based on
consumer
behavior
Providing Short-
term CA

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Opportunities Can be No Can be
imitated by
competitors
All the
capabilities of
GSK are not
completely
utilized yet
Has potential
Technological
change
Yes No Can be
imitated by
competitors
It has a leading
image in
healthcare
sector
Technological
change has
become critical in
the industry but it
cannot provide
SCA (Kingsnorth,
2016)
Distribution and
Logistics Costs
Competitiveness
Yes, No Can be
imitated by
competitors
Yes Long-term CA
Brand awareness Yes Yes, No Yes SCA
Customer
Network and
Loyalty
Yes, 23%
of the
customers
contribute
revenue
Yes No GSK provide
loyalty to its
customers
Provide medium
term CA
Expertize to
handle
Regulatory and
Legal Obligations
Yes No Can be
imitated by
competitors
Yes It is not a critical
factor for GSK

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SAFe criteria
GSK has many things, which makes it better in the industry. SAFe criteria is used for evaluate
the new strategies of the company. It is a way to test suitability, acceptability, and feasibility of
company. Company can decide based on the evaluation of SAFe criteria about the strategy
(Waranantakul, 2014).
Source: ( Heath, 2016)
SAFe criteria for GSK
Suitability  GSK has collaboration with competitors, such as joint venture with
Pfizer
Acceptability  Stakeholders are agree to reduce competition from different
competitors in the healthcare industry (Krstic & Becic, 2011)
 It has reduce the risk of competition ( Saif, 2015)
 It will provide better return in future
Feasibility  Collaboration with competitors will provide many benefits in present
competitive atmosphere in the healthcare industry.
 There are no financial losses in the company, as new company will
also provide benefits (Zheng, et al., 2010).
 GSK got new employees with different skills.
 Pfizer is a same industry, so it is easily merged with the GSK

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Conclusion
It has concluded from the above parts of this report that GSK has a joint venture with the Pfizer
in 2017-18. This report has explain about the external analysis of GSK with the help of PESTLE
and PORTER 5 forces to identify GSK’s threats and opportunities as well as assess industry
attractiveness. It has described about the industry analysis through PORTER’s five-force model.
In the report, key a competence of the GDK has explained, that is providing different
competitive advantage to GSK. In internal analysis, it has explained about the strengths and
weaknesses of GSK. It has provided tangible and intangible resources of GSK and it provided
financial statement before joint venture and after joint venture of GSK with Pfizer in 2017-2018.
Value chain internal analysis of GSK has described in above section of this report.
This report has explained VRIO analysis for finding unique capabilities for competitive
advantage to GSK. In this report, recently implemented strategy of GSK has described. It is also
evaluates GSK using SAFe criteria in the last section. GSK has good skilled employees to
innovate new products and services for patients in healthcare sector.
Finally, it is concluded that GSK has used better strategy for decreasing competition level in
market. Collaboration with the Pfizer will provide many benefits to the GSK in future.

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