Report on Business Environment Analysis of GlaxoSmithKline (GSK)

This report provides a comprehensive analysis of GlaxoSmithKline's (GSK) business environment, encompassing both internal and external factors that influence its growth and productivity. The internal analysis employs a SWOT framework, evaluating GSK's strengths in research and development, efficient sales and distribution, global presence, and customer relationships, while also addressing weaknesses such as healthcare fraud allegations and poor product demand forecasting. The external analysis examines political, economic, social, technological, environmental, and legal factors impacting GSK's operations. Furthermore, the report identifies key business risks, including economic, compliance, and financial risks, and proposes risk management strategies such as acceptance, avoidance, and transference. This detailed assessment aims to provide insights into GSK's current position and potential strategies for navigating the complexities of its business environment. Desklib offers similar solved assignments and resources for students.

Business environment

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Internal environment analysis..........................................................................................................1
External environment analysis.........................................................................................................3
Business risks...................................................................................................................................5
CONCLUSION................................................................................................................................6
References:.......................................................................................................................................6

INTRODUCTION
The sum or the collection of all external and internal factors that influence business growth
and productivity are considered together as a business environment. This includes various factors
such as employees, needs, consumer demands and expectations, supply chain, management,
owners, customers, government activities, market trends, social trends, economic changes,
technology innovations, and others. These factors can have a direct or indirect influence on the
organization’s functioning, all of which together influence the situation and the business
environment of the company (Bretos, I and et.al., 2020). The business environment helps to
identify the business opportunities by taking proper use of useful resources, and aids in planning
and overall improvement of the company's growth performance and profitability. For the report,
GlaxoSmithKline or GSK is being taken from project 1. The company is the UK’s leading
pharmaceutical and healthcare brand. This company was established in 2000. The report covers
the internal and external analysis of an organization. Further the business risk is identified and
action plan is prepared for managing risk.
MAIN BODY
Internal environment analysis
The internal environment analysis defines the internal strengths and weaknesses of an
organization in terms of its competencies, resources and competitive advantages. In the internal
environment of the organisation the internal analysis is a systematic analysis of all factors which
helps management in identifying strength and weaknesses in order to take necessary measures.
This involves the analysis of SWOT analysis-
 Strength
o Strong research and development- The strong efforts are made by GSK in
research and development which they have made progress in respiratory, HIV,
and cardiovascular medicines. Because of its technology-driven practices, there is
an advancement in the role of the organization which helps in strengthening its
market position (Cusimano, S. and Sterner, B., 2020).
o Efficient sales and distribution- Around the world its distribution network is
improved which makes the products availability everywhere. This helps in
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increase of its brand recognition with sales. With the improved network of
distribution, the improved products can be offered.
o Global presence- In the different countries the GSK operates which reduces the
risk of over-dependence on limited markets and increase market share.
GlaxoSmithKline is a world-renowned company.
o Customer relationships- GlaxoSmithKline maintains a customer relationship
management system with high level of customer loyalty can be achieved with
existing and potential customers. The brand image and brand loyalty is increased
by maintaining good relationships with customers (Fouskas, K and et.al., 2018).
 Weakness
o Healthcare Fraud and Allegations- GSK has been charged with illegal practices
such as advertising prescription drugs, misrepresenting prices, misleading sales
charges and failing to disclose safety information in certain countries. For
example, fees in the US for the approval of antidepressants that have not been
approved by the FDA. Due to such cases, the brand image can be compromised.
o Poor forecast of product demand: GSK is poor at predicting product demand.
They result in a higher missed opportunity rate for their competitors. One of the
reasons the daily inventory is very high compared to its competitors.
GlaxoSmithKline keeps its inventory very high both in the house and on the
canals. They are not good at predicting their product demand.
 Opportunities-
o Growth by acquisition and collaboration- There is expansion of GSK portfolio
through acquisitions and collaborations which helps GSK in expanding of its
growth and market share.
o New product launch- In the metabolic and respiratory system it has launched
several new products is an opportunity for the organisation which strengthen and
improved its brand image (Joseph, J. and Gaba, V., 2020). For example- the
launch of Nucala in treatment for refractory eosinophilic in asthma patients.
o New technology- The GSK company practices different pricing strategies in
Newmarket with the help of new technology which enables organisation for
maintain loyal customers with greater services and new customers through other
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value oriented services. This is a pharmaceutical company that adapts and updated
technology.
 Threats
o Intense competition- It deals with the consumers and pharmaceuticals products
for creation of intense competition among other brands that limits to market share
and give rise to prices.
o Government regulations- The lot of interference of government in
Pharmaceuticals company affects the production and sales of GlaxoSmithKline
due to government regulations. In different countries different laws are practised
which requires GSK for looking laws for each country and practicing for
production.
o Price controls- In many countries, pricing is determined by the laws of their
countries. Because of this, GSK has to follow the price set by the country which is
a threat that an organisation face (Larson, H.J., 2018).
External environment analysis
The external environment analysis is a primary study and analysis of macro-environmental
forces, industry analysis, and competitive analysis with a view to growing a business. It is an
examination of industry environment of a company. On the macro scale, the external analysis
involves macroeconomic, global, political, social, demographic, and technological analysis. This
analysis helps in determining opportunities and threats of an organisation. The factors are as
follows-
 Political factor- There are several political factors that affect the way GSKs do business
in different countries such as government of the operation and its stability, importance of
drug manufacturers in the country, risk of military innovation, and bureaucracy
Government interference in drug production, level of corruption in health care regulation,
legal framework for contract enforcement etc. The stability of the political environment
contributes to smooth business operations. For example, governments around the world
have clearly heralded health care as one of the most important pillars for economic
recovery suffering from the COVID-19 effect. Many new government initiatives have
been taken in the health sector.
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 Economic factor- There are several economic factors that affect the health care sector
like GSK doing business while operating in a new country. The following factors should
be considered for GSK operations prior to expanding to a new country. The factors that
needs to be considered are economic growth rate, interest rate, inflation rate, the
government intervention in the Healthcare sector, skill level of workforce in the drug
manufacturing and Healthcare (Meiyi, C., 2019). The sales of the firm are boost with the
inelastic nature of demand as people are focused on health and hygiene which has
increased the consumer needs in the form of vaccines and needed medicines. It also puts
a major impact on the import and export tariffs, trade restrictions on medicines etc.
 Social factor- The company culture and the way it operates affects the business and
overall organization culture. Society's culture and norms influence the revenues of any
healthcare industry. Lifestyle, the class and power structure of society as well as
demographics such as gender, age, geographic location, family income and level of
education also play a major role in the changing strategies that needs to be considered by
GSK. The rising attitude between consumers for good healthcare declines the medicines
sales and, in some families’, homemade medicines are provided as a tradition. It is
important for this company to create awareness of its drugs through the right functional
strategies. In addition, the ingredients of their medicines and drugs like alcohol etc. must
be considered in all different market segments.
 Technological factor- With the newly developing innovations of technology, GSK has
kept a competitive position in the pharmaceutical and health care market as it
continuously improves with its artificial intelligence and machines. IOT has helped GSK
achieve and explore interconnectivity and patient data. The research and development
pipeline has been engineered with advanced technologies to discover and manufacture
new transformative drugs for consumers (Plas, M. and Van Winckel, L., 2020). The
company uses e-commerce platforms to sell its products. This pharmaceutical company
needs to track and trace technology to remove counterfeiting and enable data
centralization to open up new opportunities.
 Environmental Factor- In addition to business generation, GSK is also focused on
environmental issues and is working on reducing carbon footprint and pollution through
various measures in their business. 100% renewable energy supplies the electricity and
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uses electric vehicles to transport products. By using digitization, you have reduced paper
consumption and emissions. With their positive effects on the environment, they have
now taken a competitive position compared to other companies.
 Legal factor- In a local and international market, regulatory compliance is important to
maintaining the global image of GSK Consumer Healthcare. It is important that the
company strictly adheres to the rules, regulations and laws relating to health and safety,
consumer protection law, intellectual property and patents, safe work environment for
employees, etc. Many of the pharmaceutical compounds are banned in certain countries,
as suggested by the company before they start their business and develop legal alternative
products. A legally sound brand image can improve customer loyalty and brand equity,
which increases sales and revenue for GSK. can further increase.
Business risks
Business risk is the experience of a company or organization to factors that diminish from its
profits or reason it to fail. Anything that jeopardizes a company's ability to achieve its financial
goals is considered a business risk (Yang, R and et.al., 2020). The ability of identifying risk is a
key part for strategic business planning. It is a threat for the company ability for achieving its
financial goals. A risk assessment is a process of identifying potential hazards and analysing
what could happen if a hazard occurs. The GlaxoSmithKline faces several risks in the
environment which are as follow-
 Economic risk- With the fluctuations of market there is constant change in economy.
The positive change leads to boom in purchasing for GSK and the negative impact reduce
sales. To overcome with this risk, the GlaxoSmithKline can save money with huge
amount for maintaining of steady cash flow. It can also operate with lean budget with low
overhead through economic cycle (Rizhamadze, K., 2020).
 Compliance risk- Business owners face a plethora of laws and regulations that they must
comply with. Failure to comply can result in significant fines and penalties. This risk is
faced by Pharmaceuticals in context to GSK.
 Financial risk- Financial risk refers to anything that threatens a company's financial
growth and profitability of GSK. These business risks mostly come from sources outside
the company, such as customers, suppliers and legal regulations. The GlaxoSmithKline is
required to look on credit, regulatory and profitability.
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
The risk can be managed in the 5 ways-
 Acceptance- This means that risk is been identified. It is an effective strategy for
managing risk. Risk acceptance means risking it. It comes to the realization that the
risk is there and anything cannot be done for reducing it or change it. Instead, it
understands the likelihood of occurrence and accepts the consequences that may arise
in GSK. This is the best strategy when the risk is low or unlikely. It makes sense to
take risks if the costs of reducing or avoiding them are higher than simply accepting
them (Saïd, K and et.al., 2019).
 Avoidance- Avoidance is a method of reducing risk by not participating in activities
that could result in injury, illness, or death. The GSK can change the plans for
avoiding risk. If a risk from starting a project, launching a product, relocating your
business, etc. is too great to be accepted, it might be better to avoid it. In this case,
risk avoidance means that the activity that creates the risk is not carried out.
Managing risk in this way is most similar to the way people deal with personal risk.
While some people are more risk averse and others more risk averse, everyone has a
tipping point where things just get too risky and not worth trying.
 Transference- As already mentioned, risk transfer involves shifting the risk to
another third party or company. Risk transfers can be outsourced, relocated to an
insurance agency, or handed over to a new entity, as is the case with real estate rental.
Risk transfers do not always result in lower costs. Instead, risk transfer is the best
option if it can help reduce future damage. So, insurance can cost money, but in the
end, it can be cheaper than letting the risk materialize and being solely responsible for
making amends (Schulman, P.R., 2020).
 Mitigation- When assessing risks, it is better not to avoid or accept some risks. In
this case, the risk reduction is investigated. Risk mitigation refers to the processes and
methods used to control risk. Once the risk is identified and its likelihood to allocate
resources for management.
 Exploitation- Companies can assign a risk level, which is referred to as the residual
risk level. Risk mitigation is the most common strategy as there is usually a way to at
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least reduce the risk. It involves taking countermeasures to reduce the impact of the
consequences
CONCLUSION
From the above it has been concluded that the analysis of both internal and external
environments helps the company in knowing its position with its profitability. The internal
analysis focuses on the internal factors of an organisation involving its strength and weaknesses
that gives certain advantages and disadvantages for meeting its target market needs. Whereas the
external analysis looks on threats and opportunities in organisation environment which are
outside the company. In the report the risk is also identified along with the risk mitigation
strategies.
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References:
Books and Journals
Bretos, I and et.al., 2020. International expansion of social enterprises as a catalyst for scaling up
social impact across borders. Sustainability, 12(8), p.3262.
Cusimano, S. and Sterner, B., 2020. The Objectivity of Organizational Functions. Acta
biotheoretica, 68(2), pp.253-269.
Fouskas, K and et.al., 2018, July. Challenges for digital expansion to international markets. In
Global Fashion Management Conference (pp. 1-22).
Joseph, J. and Gaba, V., 2020. Organizational structure, information processing, and decision-
making: a retrospective and road map for research. Academy of Management Annals,
14(1), pp.267-302.
Larson, H.J., 2018. Politics and public trust shape vaccine risk perceptions. Nature human
behaviour, 2(5), pp.316-316.
Meiyi, C., 2019. Research of inflation rate and its determinants: An analysis of GSK corporation
in United States. Available at SSRN 3385226.
Plas, M. and Van Winckel, L., 2020. Facilitating brand integration through a matchmaking
platform international expansion strategy for a belgium based start-up an exploratory
research project.
Rizhamadze, K., 2020. Analyzing Business Model, Narrative and Numbers of GSK
(Glaxosmithkline). Eurasian Journal of Social Sciences, 8(1), pp.35-41.
Saïd, K and et.al., 2019. The challenges of addressing stakeholders’ expectations through
corporate non-market strategies in emergent countries: The GlaxoSmithKline (GSK)
case. critical perspectives on international business.
Schulman, P.R., 2020. Organizational structure and safety culture: Conceptual and practical
challenges. Safety science, 126, p.104669.
Yang, R and et.al., 2020. Everlane: a ‘radically transparent’fashion company disrupting the
industry. International
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