Porter Five Forces Opportunities and Threats Analysis

Running Head: Corporate Strategy
[Company name]
Corporate Strategy
[Document subtitle]

Corporate Strategy- 1
Contents
Introduction................................................................................................................................2
External Environmental Analysis..............................................................................................2
PESTEL of UK......................................................................................................................2
Porter Five Forces..................................................................................................................4
Opportunities and Threats Analysis.......................................................................................5
Resources and Key Competencies.............................................................................................6
Strategic Evaluation of GSK......................................................................................................9
Conclusion................................................................................................................................11
References................................................................................................................................13

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Introduction
The purpose of this paper is to enlighten the reader with the information about the company
GSK (GlaxoSmithKline) Plc. The paper evaluate details about the external and internal
environment of the company along with the evaluation of strategic direction for the
organization. The business strategy implemented by the company in the given paper involves
the use of joint venture business acquisition strategy. The press release of GSK Plc. states the
company is aiming to align their business functions with Pfizer Inc. so as to accelerate their
growth and achieve sustainable competitive advantage in the business environment (Smith,
and Jarisch 2019). The external environment analysis is conducted for the consumer health
industry of United Kingdome and internal environment analysis of the resource and
competency of the company. More details about the actions performed by the company in the
external environment are mentioned below:
External Environmental Analysis
PESTEL of UK
Political: The UK consist of England, Northern Ireland, Wales and Scotland. This nation is
one of the most powerful nation present in the worldwide environment and the government
make use of modern parliamentary democracy. The role of monarch in the nation is generally
ceremonial and the prime minister is the head of the government. The political parties work
in harmony due to which there is presence of stability in government that increases strength
of nation post Brexit.
Economic: the economy of UK was highly affected by the event of Brexit and the companies
are still dealing with it their own ways. However, the nation holds 5th largest economy in the
world according to The World Bank. The household segment faced certain challenges in the

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environment in the year 2017. Inflation rate in UK in the year 2019 was 1.7% but current
situation of COVID-19 has extremely affected the tourism, aviation and export segment of
the nation. Therefore, it is expected that the economy would fall in the subsequent months of
2020 (Simpson 2019).
Social: there is presence of a large consumer market in UK due to which people are willing to
buy and sell more products in the environment. Major population in UK is older and it is
expected that total population would reach to 74 million by the year 2039. The environment
of nation is influenced by social class but the population is still multicultural. The nation
comes under the list of top 10 countries with most educated population.
Technological: technology is one of the most attractive sectors of UK and London is the hub
for both financial and technological institutions. The companies of UK keeps of developing
with a greater pace because they have opportunities to grow by using technology present in
the environment. This segment is a major contributor in the economy of the nation (Arico-
Muendel 2016).
Environmental: the environment of the nation is depleting but still government has taken
several steps to significantly improve the environment for people. The government has
started generating awareness in the environment because they want to stop people from
performing negative actions. Also, the weather adds advantage to tourism industry but it also
faces challenging weather conditions.
Legal: lastly, the legal landscape of the nation elaborates that the articles and laws of UK
addresses the issues present in the nation in brief. The Employment Act 1996 explains the
rights reserved for the employees. Several other laws also work to protect the rights provided
to people in the environment. The Equality Act 2010 prevents people from initiate
discriminating activities in the society (Rogers, et. al., 2017).

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Porter Five Forces
Bargaining power of Buyers: most of resources of the company are spent on research so as to
provide premium quality products to the customers in the market. Resulting in which,
significance of buyer reduces in the environment due to such practices of business. Main
consumers of the organization are patients, hospitals, doctors and pharmacists. The power
vested in their hands in relatively small because the company only focuses on providing
quality through their products irrespective of the market trends or any other features (Alder,
et. al., 2016).
Bargaining power of Suppliers: main supplier for the organization are labor providers, raw
material providers, staff, distributors, clinical officers etc. These suppliers impose high
degree of threat on the position of the company as if they would reduce the quality of their
products then the quality of GSK products would also deplete subsequently. Therefore, the
company is at a position where they need to satisfy the suppliers to manage their competitive
advantage in the environment (Corley 2017).
Threat of Substitution: generic brand medication is the major substitution for the
pharmaceutical companies like GSK. There is moderate degree of threat in the environment
because the pharmaceutical companies have gained trust of customers in the marketplace.
However, Complementary Alternative Medicine is one of the products that could substitute
the products of GSK from the environment.
Threat of New Entrants: there is low degree of threat of new entrants in the pharmaceutical
industry. The capital requirement in this industry is quiet due to which many companies
hesitate entering in this segment. Apart from this, the companies require an optimum research
and development team along with professional staff to manage the functions of the company.

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Due to these complications, companies do not prefer entering in this industry that reduce the
threat for existing organizations (Sahasranamam, Rentala, and Rose 2019).
Industry Rivalry: there is cut throat competition in this industry as there are few number of
players providing products due to strict regulation of the government. However, large size of
the company GSK makes them different in the environment but the competitors are also
working vigorously to achieve the best position in the market. This industry grows rapidly
that provide several opportunities to the company to increase their profitability and achieve
long term success, thus all companies fight at their best level to achieve that position in the
environment (Ozieranski, et. al., 2019).
Opportunities and Threats Analysis
Opportunities: the company GSK gains the opportunity to align their business functions with
another organization present in same or different field and work together to attain topmost
position in the business environment. This opportunity would help the company to eliminate
high degree of competition and use resources of other organization to secure their position in
the pharmaceutical industry as well. In this way, the company would attain power in in front
of suppliers present in the industry as well. The company could also work on producing
specific antibodies specialization for several diseases like Malaria, Typhoid and probably
COVID-19 as well. The current situation itself serves an opportunity for the company to
expand their scope of business and increase revenue of the company (Kazzazi, et. al., 2017).
Threats: the biggest threat for the company is inadequate awareness of consumers for the
products of the company in the business environment. Also, the environmental regulations
have become extremely strict for the pharmaceutical companies to perform their business
functions in the market. Resulting in which, the companies pose a threat of performing one
wrong action and losing their competence in the overall market. The company could enter

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into this segment while making use of diverse practices like herbal medication with allopath
etc. (Gulland 2016).
Resources and Key Competencies
Core Competency analysis of GSK
The Core Competencies of GSK explain that that the company only produce branded
products in the market. The biggest resource for the organization is its research and
development team that helps the business in innovating their product segment for
organizational growth. The consumer healthcare segment includes OTC medicines, oral
healthcare goods and nutritional drinks for boosting metabolism. The company has its biggest
division which is divided in prescription drugs and vaccines. The company works at more
than 20 different sites and team of 15000 employees (Comanor, et. al., 2018).
The primary manufacturing division of the company is involved only in producing drugs.
GSK holds 12 production units in the worldwide environment. The secondary production site
of the company is involved in active production of finished goods. The company has
expanded its business in 15 sites in Europe, 6 in North America, 5 in Middle East and Latin
America and more than 15 in Australia and Asia (Micklus, and Muntner 2019).
Secondly, it should be noted that the culture of the company is extremely beneficial for the
organization as the employees are highly satisfied with the functions of the company. The
company keep on performing actions to satisfy the interest of employees and motivate them
at the same time. Thus, it can be said that the culture of the company is one of resources that
differentiate functionality of the company from other competitors present in the business
environment. Key factor of the business that helps the organization to attain competitive
advantage in the environment is procurement ability to attain resources in the environment
(Garza-Reyes, Betsis, and Kumar 2018).

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Further, adequate capital available with the organization helped them to bloom in the target
market. The company mainly focuses on innovation and implementing changes in the
business environment. This approach helps the company to renovating the strategies of the
business and differentiating themselves from the target market. The company also has an
extremely valuable and loyal customer base that helps them to proceed in the future prospects
of business. The company works in smaller divisions that helps them to effectively manage
resource and reduce costing as well. This strategy helps the organization to implement waste
management strategies and work efficiently (Cowan, et. al., 2016).
VRIO Analysis
Bases Valuable Rare Imitable Organized Competitive
Advantage
Market
reputation
Yes No No Yes Sustainable
competitive
advantage
Leadership
Team
Yes No Yes Yes Holds high
competence
Human
Resource
Yes No Yes Yes Temporary
advantage
Customer
Retention
Yes No Yes Yes Strong
Potential
Research
and
Development
Yes Yes No Yes Permanent

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Valuable: the resources of the company are valuable because they are used in their maximum
capacity for the business and derive optimum benefits as well. It should be noted that the
company GSK has adequately invested in procuring resources for the company. Therefore,
the resources provide high degree of value to the company. The core competency of the
organization that is its research and development team makes use of such resources and
provide effective benefits to the organization. The resources of the organization are diversely
expanded which also reduces the scope of imitation and increases the scope of value for the
company (Kumar 2019).
Rare: as mentioned above that these resources are valuable as well as rare in the environment.
The pharmaceutical products of the company are formed with a composition that no other
organization knows resulting in which, rarity of the company increases. The company has the
biggest resource in the environment that is its brand image; this is the resource that has
biggest competitive advantage in the environment. Rarity of the resources increases the
efficiency of the organization. It should be noted that this aspect increases the value of the
organization and reduces imitation capacity of the company as well.
Imitable: rare and imitation capability of VRIO analysis goes hand in hand, it should be noted
that if the resources are rare, then the competitors cannot imitate the process or products of
the company and vice versa. Thus, it should be noted that resources of the company like
research and development cannot be imitated by other competitors in the environment. While
human resource segment can be imitated because the competitors can attract them to work
with them (Yongue 2017).
Organized: lastly, organization aspects explain the capability of the company to deliver
results to the business. If the resources of the company are not organized appropriately, then

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the business could not generate leads from them. It is important that the resources should
align with the business structure of the company (GSK 2019).
Strategic Evaluation of GSK
Strategic joint venture refers to the business strategy that involves two organizations to make
the active decision to work together in the international business environment. This strategy
involves the organizations to collectively make use of each other’s resources and strategize to
achieve objectives in the business environment. This type of business strategy is usually
implemented for a specific period of time and under certain conditions.
Therefore, it can be said that the organization GSK also implemented strategic joint venture
activity with the company Pfizer for the time limit of 3 years. This strategy was implemented
by the company in order to attain major stake in the pharmaceutical industry and increase the
functioning of the company as well. Therefore, under this strategy, the company GSK held
major stake of the transaction by holding 68% of equity interest while keeping 32% of
interest for the company Pfizer (GSK 2019).
Further, it should be noted that SAFe framework is a tool that is used by the organizations in
analyzing the efficiency of the strategic direction of the companies in the environment. this
model measures the return, risk and stakeholder reaction of the company for the particular
strategies of the business. This model analyze the business strategy on the basis of three
segments that are suitability, acceptability and feasibility analysis. Suitability aspect under
this model explains whether the strategy implemented is suitable for the functioning of the
company or not.
If the strategy strengthen the functioning of the business and provide additional advantage
then it means the strategy is suitable. Acceptability aspect explains risk and return and the
reaction of the stakeholders for the implemented strategy. Thirdly, feasibility aspect details

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about aptitude and resources of the business to implement strategy to achieve its success.
This aspect mainly judge financial feasibility need of the organization implement the strategy
and achieve greater heights in the environment.
Applying this framework on the current strategy of the company GSK, below mentioned is
the application of SAF for the strategic joint venture of business:
 Suitability: considering the suitability aspect, it should be noted that it was crucial for
the organization implement such strategy because the company aspires to grow in
pharmaceutical industry in long run. The company has even specified the given time
period for implementation of this alignment for both companies. Also, this strategy
clearly aligns with the objective of the business that they want to achieve the greatest
position in the business environment. The company comes under joint venture Pfizer
because they want to serve people in a better way and this activity could be
implemented by utilizing more resources and in an efficient way. Therefore, the
company used the core competencies of Pfizer to align with their business and
achieve the best position in the environment(Gillespie, Privitera, and Gaspero 2019).
 Acceptability: analyzing acceptability of this strategy, it should be noted that there is
the company is not in a position to lose anything in the business environment. The
company Pfizer is one of the leading companies present in the pharmaceutical
industry, therefore, even if the joint venture strategy does not works as per
expectation in the environment, but still the stakeholders would not retaliate because
of growing position of both the companies. There is less scope of risk of return for
the stakeholders in the market because strategies are implemented by both market
leaders present in the industry therefore there is less scope of risk and failure of this
strategy (Rosińska-Bukowska 2016).

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Joint venture between two global leaders always seems to be profitable for the
stakeholders in the marketplace. Considering the impact of liquidity and sensitivity
analysis of GSK, it should be noted that GSK at present is at a profitable position in
the market. Also, this alliance would subsequently provide resources to the GSK that
they would use to grow in a better way. 68% of stake is held by the company GSK
which provides them utmost power to govern the functions of Pfizer in
pharmaceutical industry for 3 years (Schuhmacher, Gassmann, and Hinder 2016).
 Feasibility: feasibility of strategy works to analyze that the strategy would either
make or break the current position of the company. There is no reason to say that the
joint venture strategy would not be profitable for company. This alliance would bring
resources and capabilities to GSK that they could use to innovate their production.
This strategy would upgrade cash flow of the business and would increase sales as
well. The company aims to become global leader in the OTC product segment along
with market share of 7.3%. This strategy would reduce the level of competition in the
industry and would convert the numbers in favor of GSK. The proposed transaction
involves huge investment along with major stake in the company as well. Also, the
end of this strategy is clear and prescribed therefore, the company would not face any
pressure as with the success of the objective would lead the company to peacefully
end this strategy in the environment (Anwar 2016).
Conclusion
Thus, in the limelight of above mentioned events, the fact should be noted that the report
highlighted information about the company GSK that is present in pharmaceutical industry.
The report highlighted information about the external as well as internal environmental
analysis for the company. The pharmaceutical industry of UK has been discussed in the
paper, this analysis elaborated that UK is profitable for the company to grow and the industry

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factors also helps the organization to manage their competitive advantage in the market. The
company initiated joint venture strategy with Pfizer so as to attain growth in the future years.
Thus, with the illustration of SAF analysis, it was found that the company is currently at a
beneficial position because they hold major share in the overall industry. Application of this
strategy would increase sustainable competitive of GSK.

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