Understanding the Business Environment

This document provides an overview of the business environment and its impact on organizations. It discusses the competitive structure of the market and defines competitive forces. It also explores stakeholder theory and conducts stakeholder analysis. Additionally, it identifies external environment factors that affect organizations in the international market.

UNDERSTAND THE
BUSINESS ENVIRONMENT
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................3
Assess the competitive structure of the market in which organisation operates and define
competitive forces. ......................................................................................................................3
TASK 2............................................................................................................................................4
The stakeholder theory.................................................................................................................4
Stakeholder analysis ....................................................................................................................5
TASK 3............................................................................................................................................6
A. Company.................................................................................................................................6
B. Define external environment factors that affect organisation in international market............8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10
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INTRODUCTION
Business environment termed out as total of external forces that mainly affect the
organisation and business operations (Gaganis, Pasiouras and Voulgari 2019). Therefore,
managers and employees of the enterprise must understand that how environment is continually
changing and impact on those change on business needs to be identified.
The present report will lay focus on business activities GSK plc, it is British
pharmaceutical company that headquartered in London UK.
Furthermore, study will be based on t assess the competitive structure of the market.
Also, report will outline the stakeholders of the enterprise with use of appropriate model and
theory. Lastly, Pestle analysis will be conducted to identify the factor the factor that impact the
organisation in international market.
TASK 1
Assess the competitive structure of the market in which organisation operates and define
competitive forces.
GSK is entity that is committed to operate the highest standards of corporate
governances. This is governance structure that underpins the ability that delivers the group plan
of action to create long term value and its benefits the shareholders and stakeholders (Reçica,
Hashi and Krasniqi, 2019). Therefore, the chosen enterprise is undertaking initiatives to bring
improvement in sales, earnings and cash flow generation. In addition to this, this can be stated
that cross-functional mix of employees, inclusive marketing and sales, research and
development, quality and supply chain teams. However, competitive forces to chosen enterprise
are outlined in following context as-:
Porters five forces-:
It is pharmaceutical entity that deals with different vaccines, medicines and consumer
health care commodities. Henceforth, porter five forces analysis needs to be conducted to
analysis the future of company. These as are-:
Competitive rivalry- It is high due to high number of international giants that relays over
research and development. However, Chinese pharma company is emerged and this is fast
growing industry in the world. Therefore, this entity has capability of handling such massive
operations. Hence, pharmaceutical entity has wide range of local manufactures that intensify the
competition (Popescu and Popescu, 2019).
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Bargaining power of buyers- The bargaining power of the buyer is high. In this, buyer has wide
range of options to select and to have knowledge of the buyers in regard to products. It is
situation that favourable at time it comes to number of option to purchase medicine and health
products for the buyers. Therefore, the users are totally dependents on the prescription of medical
authorized person rather than own knowledge.
Bargaining power of suppliers- This entity has large number of the customer base. On the
o5ther hand, there are some raw materials that used to made medicines and vaccinations. Thus,
some of the firm are at the dominant positions. It is situation that keeps balance for bargaining
power and overall bargaining power for supplier for global pharmaceutical is moderate.
Threat of new entrants- The resources such as machinery, expertise and cost to invest in R&D
needs huge amount of capital and this works as one of major hurdle for chosen entity
( Kiseľáková, Šofranková and Onuferová, 2019). In addition to this, the legal requirements and
licensing in the industry is second hurdle that can affect the working of enterprise. Therefore, the
threat of new entry is low to GSK plc.
Threat of substitutes- The threat of substitute in GSK plc is quite low. In the present era, there
is presence of herbal treatment and homeopathic product but the present is not hurting the growth
of quoted enterprise. In addition to this, it can be stated that medicine and health care products
are the basic necessities. However, all of these elements has showed that substitute for GSK plc
is low.
TASK 2
The stakeholder theory
The stakeholder theory is theory of managements of an organization along with business
ethics which have the accountability of the multiple level of constituencies which the impacted
on their business entities. This have the clear inclusion of their employee, suppliers, local
communities along with creditors which have there addressing of respective models and values
needed as important aspects corporate social responsibility, market economy and social contract
theory (Li, Ng and Skitmore, 2018). This have been developed by the Dr.Freeman to have the
description of healthy company which never been off slightness with having clear involvement
of success. This theory stated that’s if the company fails to treat its employee well, this will lead
to have clear for fall of firm.
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There are many of stakeholders in the pharmaceutical industry which have the huge level
of impact within the industry. This have their creation of corporate ecosystems with reaction of
all related groups which is need to be considered in more efficient term all g there keeping them
statuaries. So theta the company reasons to be more healthy and classful for the longer term
perspective. The primary level of Glaxo Smith Kline (GSK) are such as
 Employees
 Shareholders
 Patients
 Creditors
 Suppliers’
 Health insurance providers
Stakeholder analysis
Each of the stakeholders listed have the varsity of different jobs as well as the influence of the
different operation of GSK. The pharma company in healthcare have the merle following of the
economic level of incentives which is been created. There is the need for the recessive care
which is considered to be poorly features (van Niekerk and Getz, 2019). There will be the clear
discussion of the major stakeholders that’s will be such as-
Employees
There are many employees in GSK that’s have been specialize in the different fields which
have inclusion of doctors, scientists for research, production tea, and the corporate management.
This have the clear influences employee in provide efficient services to GSK. For examples there
is continues level of research and development by the research scientist and doctors for the
improvement of managerial task development. So, the employee has high power and high
interest in the GSK stakeholders.
Patients
These are the end user of the pharma company product and services which have their clear
inclusion of the general public health related institutional and government. It has been analysed
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that’s the actual business to the firm have there comes from the patients. In condition to which
more have the medical practitioners, retailers are prescriber and decision makers and responsible
for business. in order to have there maintains their better relation with customer companies are
investing high amount to the satisfaction to tire restive shareholders. So the customer or patient
or end user have less power and higher influence over the company.
Suppliers
The suppliers or the distributors paly an important roles purchase prescription medicines
and other medical products directly from pharmaceutical manufacturers for storage in
warehouses and distribution centres across the country (Andriof and et.al.,2017). The
stakeholders are considered to be state and federally licensees’ pharmacies which have their
process of deliver the goods and services. This is helpful in retailing the medicines and other
equipment’s to their distinctive place asper there need and have endurances over their products to
be safely and secretly been delivered ultimate level of destination.
Health insurance providers
The health insurance providers are the major insurance which have the proper covering of
the emergencies, major, rare and the urgent level of crises which is part and uncertainty of health
care services. This is the options as their providers have the major influence on the patients in the
way of financing something which is consist to more costly as compare to imaginable option. It
not only involves a lot of administration, but it also very much distorts the relationship between
provider and patient. So, the Health insurance providers have the low level of power and interest
in the pharma company. But it has the higher level of interest in providing better level of
insurance to the one to gains more level of reasons and insurance management.
TASK 3
A. Company
GSK (GlaxoSmithKline Plc) is the health care company which have the clear level of
engagements in the research and development aspect of mediacies and cure (Bosse. and
et.al.,2019). The firm is manufacturing of the Pharmaceutical medicines, vaccines and customer
health care products. The company is being operating in: Pharmaceuticals, Vaccines, Consumer
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Healthcare, and Corporate Executive Team (CET). The Pharmaceuticals segment focuses on
developing medicines in respiratory and infectious diseases, oncology, and inflammation.
Corporate history
The firm has been established is a British multinational pharmaceutical company headquartered
in Brentford, London in 2000, by a merger of Glaxo Welcome and SmithKline Beecham, GSK
was the world's sixth largest pharmaceutical company according to Forbes as of 2019, after
Pfizer, Novartis, Roche, Sanofi, and Merck & Co.
Vision
The vision of GSK (GlaxoSmithKline Plc) is to became one of their leader
Pharmaceutical industry not only in term if size but also by achieving its in more effective
manner.
Mission
To help the customer to more, feel better and liver longer lives. In addition to that’s firm
is majorly focusses around having proper level of delivery of three important strategic proprieties
which have the aim to increase growth, reduced the level of risk and the improving longer term
financial performance.
Objectives
 To improve the quality of life of human being.
 To have increase in level of business s growth.
 To decrease the level of risk associated in competed market envenoming.
 To have the increase in financial performance by achieving mission and vision.
Purposes
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The company customer health care segments have developed the efficient market brands
in term of oral health, pain relief, respiratory, nutrition and gastro intestinal, and skin health
categories (Jones, Harrison and Felps, 2018). This is the main purpose of the firm to have be the
leader Pharmaceutical industry not only in term if size but also by achieving its in more effective
manner.
B. Define external environment factors that affect organisation in international market.
PESTLE provides details about the prevalence of macro environment other than
competitive forces. However, it is outlined in following context as are-:
Political- It is factor that plays crucial role in determining long term profitability of the
enterprise. Henceforth, British based GSK is drawing up contingency plans that assist to secure
its supply chains after UK leaves EU. In china, GSK is facing accusations by the head of
communist part of china ( Kiseľáková, Šofranková and Onuferová, 2019.). On the other hand, in
United Stated the involvement of legal authorities over medical prices have forced entities of
pharmaceutical to offer big discounts.
Economic- Uncertainties surrounding the Brexit are causing political issues for GSK. In United
Kingdom, the pound in weakened led to group sales that surging 23% in years 2017. At time
when profits are up, decision of Brexit led an raise in rate of exchange. Also, this has been found
out that westerns markets are economically unstable and profits in market of India is constantly
grow with 30% of GSK profits.
Socio-cultural- In the year 2016, the entity made decision that they will no longer file drug
patents in the lowest income regions of the world. Also, this can be stated that shared beliefs and
attitude of populations plays vital role in how chosen entity understand consumer of given
market. Also, GSK is taking steps to understand the social need for new forms of treatment and
also investing highly to meet out market demand. In the 2015, this entity also supported WHO to
deal with global epidemic of Ebola virus. It helps to maintain positive image of enterprise.
Technological- This entity has ranked lowest in terms of investment into R&D against their
competitors in 2016. In order to meet out the demand of investors, GSK took steps to restructure
their R&D sector in 2017. Thus, chosen entity makes the use of AI to predict that how drug will
behave to save time and money on unnecessary traditional tests ( Kiseľáková, Šofranková and
Onuferová, 2019.). By undertaking software investment, GSK cut request time of manufacturing
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from three weeks to four days. It has allowed GSK to resupply entities faster and provide
financial saving in production times.
Environmental- In the year 2015, the chosen entity switched production to continual
manufacturing that allows for medicine to be made cheaper, faster and also have small impact on
business environment.
Legal- The chosen entity is highly regulated and enforced industry. Within the countries GSK
operating its activities needs to follow the wide range of law, regulations and compliances before
selling the commodities. In order to meet out the standards, GSK spend upwards of £100m in
terms to legal charges and this also ensures the firm to operate its business function within
guideline parameters.
CONCLUSION
Hereby it can be summarized that business environment is inclusive of components such
as clients, suppliers, market, social and economic trends, laws and government. Business
environment is inclusive of the external and internal factor that affects the working of entity in
huge context. Thus, present study has covered the business activities of GSK plc, it is British
pharmaceutical company that headquartered in London UK. The study has outlined the
competitive structure of the market in which chosen entity operates. Furthermore, assignment has
covered stakeholders of the enterprise with use of appropriate model and theory. Lastly, Pestle
analysis has been outlined that aids to investigate factor the factors that affects organisation
working in international market.
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REFERENCES
Books and journals
Gaganis, C., Pasiouras, F. and Voulgari, F., 2019. Culture, business environment and SMEs'
profitability: Evidence from European Countries. Economic Modelling. 78. pp.275-292.
Reçica, F., Hashi, I., Jackson, I. and Krasniqi, B.A., 2019. Innovation and the export
performance of firms in transition economies: The relevance of the business environment
and the stage of transition. International Journal of Entrepreneurship and Small Business.
38(4). pp.476-506.
Popescu, C.R.G. and Popescu, G.N., 2019. An exploratory study based on a questionnaire
concerning green and sustainable finance, corporate social responsibility, and performance:
Evidence from the Romanian business environment. Journal of Risk and Financial
Management, 12(4), p.162.
Kiseľáková, D., Šofranková, B. and Onuferová, E., 2019. Competitiveness and Its Impact on
Sustainability, Business Environment, and Human Development of EU (28) Countries in
terms of Global Multi-Criteria Indices. Sustainability. 11(12). p.3365.
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