Applied Corporate Strategy Assessment: GSK Strategic Analysis Report

This report presents a strategic analysis of GlaxoSmithKline (GSK), a British pharmaceutical company. The analysis begins with an introduction outlining the report's scope, which includes external and internal assessments. The main body of the report undertakes a PESTLE analysis of the pharmaceutical industry, examining political, economic, social, technological, environmental, and legal factors. Additionally, Porter's Five Forces framework is applied to assess competitive rivalry, the threat of new entrants, supplier power, buyer power, and the threat of substitutes. An internal analysis then evaluates GSK's resources (human, financial, physical, intangible, and tangible) and competencies using the VRIO framework. The report concludes with a brief strategy evaluation and references.

APPLIED CORPORATE
STRATEGY ASSESSMENT:
STRATEGIC ANALYSIS
REPORT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
1. External analysis......................................................................................................................3
2. Internal analysis.......................................................................................................................6
3. Strategy evaluation...................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Strategic analysis termed out as process of collecting research on firm and about its
operating environment to formulate plan of action (Cotterill, 2019 ). Thus, present report is based
on business activities of GlaxoSmithKline plc, it is British pharmaceutical firm headquartered in
Brentford, London. Furthermore, study will cover activities as undertake external analysis with
application of PESTLE & 5 forces on Pharma industry. Also, internal analysis will be conducted
in terms to identify resources and competencies. Lastly, evaluation will be taken with use of
SAFe test.
MAIN BODY
1. External analysis
PESTLE analysis-
PESTLE is termed out as framework of the macro environmental components that mainly
used in terms to undertake environmental scanning of strategic management. Therefore, these are
outlined as-:
Political- From the past few years, the pharmaceutical firms are facing tough political scrutiny at
global level. Additionally, there is growing political intervenes that has created pressure on
healthcare authorities. There are some of countries that has particular framework on
pharmaceutical industry. There are number of laws in regards to safety, standards, certification
and drugs utilisation (Derzon, Clarke and Thurer, 2019). Additionally, there are populist
demand of cheaper drugs for lower classes of society. Due to this, many pharma enterprises are
facing major losses and it results into further fall in price.
Economic- The crisis relates with economical traumas are over but its effects can still be felt.
There are some of the countries in which the issues in relation to economic situation has not been
recovered yet. Such situation leading towards to loss to pharma industries. Additionally,
reduction in disposal income of consumers has wide impact on countries that undertakes the use
of different models of health insurance. However, pressure of economic are seeing as increased
growth within strategic buying groups that are leading down the price.
Social- The increasing ageing population provides the wide range of opportunities and also
contribute as threats to pharmaceutical industry (Liang, Lin and Gao, 2019). In the current era,
the people of old generation is continually enhancing and number of sick people is higher than
ever. Thus, this factor presents the both opportunities and threats to pharma companies.

Additionally, public are more aware than ever before and demands and expectation also have
changed simultaneously and this led to put additional pressure on firms. Social media and varied
other channels made the public active. This led to pharma sector come under pressure over how
they get closer to consumer and maintain profitable growth rates.
Technological- The advancement in techniques aid to creates new business opportunities. This
also affects the pharmaceutical company in huge context. This has brought several opportunities.
Rise of the social networking has given rise to varied new profitable opportunities to enterprise.
In the current era, social media plays the vital role in healthcare sector (Nazri and Sani, 2019 ).
This aids to connect with customers. It also provides pharma sector an opportunity to connect
with wide range of customers and advertise the commodities direct to customers. Henceforth, the
increase of IT brought wide range of opportunities in which cost are also minimum for drug
makers.
Environmental- The environmental risk connected with pharmaceutical firms. Henceforth,
some of the Pharma companies that can pollute the environment. Manufacturing of the drugs
leaves large carbon footprint. To have long term sustainability of pharma industry, environment
laws must have followed. Thus, proper storage and disposal is crucial to prevent negative impact
on environment.
Legal- The pressure of legal authorities is one of the major concern for pharmaceutical sector.
Therefore, there are different countries that has varied laws and legislation and this puts the
negative impact on working of industry (A PESTEL/PESTLE Analysis of Pharmaceutical
Industry, 2018). Pharmaceutical Laws are created mainly to undertake creation, sale, distribution,
and use of pharmaceutical drugs. These laws inclusive of intellectual property rights to protect
drug manufacturers' research, safety standards to protect the public from harmful side effects,
restrictions on marketing drugs to the public, and rules regarding how drugs may be prescribed
and distributed.
Poter's five forces analysis- This is defined as strategic management tool that aids to analyse
the working of industry. Thus, components of this entities are outlined as below contexted
manner as are-
Competitive rivalries- The pharmaceutical sector is one the most competitive industries within
the world. In this, profit margins are high and also inclusive of the small large players that has
strict government regulation (Robinson, Brown and Bambra, 2019). It leads to make the industry

very competitive. Thus, recent trends of the merger and acquisition has observed the smaller
players within the industry. In addition to this, technical advancement in biotech and generic
have further enhanced the competition and this lead to adopt the new techniques. Due to it, there
is constant pressure to undertake the process of innovation. Additionally, some of major rivalries
are as sanofi, Merck and AstraZeneca etc. So, it can be stated that competitive rivalries within
this industry is quite high.
Threat of new entrants- There are number of new entrants and they come up in market with
undertaking innovation and new ways of doing things. Due to this, firm adopts the lower pricing
strategy, reducing the cost and also offers new value proposition to the customers. Additionally,
existing players under this industry led to developed economies of scale and also enhance the
profits. Thus, customer only prefers those brand they have already tried. In this, new entrant will
have tough time to grabbing market share. If an entity wants to launch the business activities in
pharma line they needs to undergo lengthy process of approval from regulatory authorities. So, it
can be stated that threat of new entrant in pharma sector is low.
Bargaining power of supplier- There are most of the firms in the Drug manufactures who buy
their raw material from the varied number of suppliers in market. This sector only needs raw
materials and these are produced in the house. Another need is technical advancement for
undertaking process of manufacturing and production plants. Also, the their components the
supplier needs is packaging materials. So, there are number of provider who can supply these
commodities, so, there is no need to negotiate in terms to influence the price of market price.
Hence, some of the supplier under this sector as are Wako chemicals, Nexeo solutions and BASF
corporation etc. So, this can be stated that suppliers in the pharma sector has very low bargaining
power.
Bargaining power of buyers- The consumers within this industry are demanding a lot. They
needs to buy the commodities that are avail at the best offering by paying the minimum price as
possible. Additionally, the consumers as hospitals, clinics have some bargaining power but
individual buyer has no bargaining. Thus, internet aids to buyer to do more research on drugs in
addition to prescription recommended by doctor. This gives them more bargaining power. So,
this can be stated that bargaining power of the consumers is moderate.
Threat of substitute- At the time when new product and services meet with the similar
requirements of customers in varied ways then profitability of the industry suffers. If one

particular drug is in the period of patent then there is no patent for that specific drug. At the time
when patent period expires then its generic production starts to begin. This leads to develop the
number of substitute in the market (Zheng and Peng, 2019). Additionally, homeopathic and
herbal treatments are substitute for drugs made by pharma sector. Thus, undertaking the
promotion of balanced diet, exercise and other physical activities are substitute to many drugs.
So, it can be stated that threat of substitute within this sector is low to medium.
2. Internal analysis
Internal analyses is used to determine the internal position of company, it helps in taking
right action for the welfare of organization. GSK is the leading firm that is planning to make
joint venture with Pfizer.
Resources
Company will have several resources and each resource will have its own strength and
limitations. Description of these resources are explained as below:
 Human resource: this would be strength of GSK, as employees are both companies will
work together that would help in generating more sales. New ideas will be promoted that
would bring innovation in organization. Employees are shareholder of company and by
making joint venture GSK will earn more profit and it will be beneficial for human
resource as they will get dividend from the firm. Company has loyal employees those
who like to retain in firm after this venture as well (Nandonde 2019). As they find it
better firm from the career perspective hence they put best efforts to satisfy consumers so
that organization grow well and they get more opportunity to develop in business unit.
 Financial resource: This is another resource of firm that plays significant role in success
of business unit, GSK is the leading firm and it has adequate funds to make joint venture
with Pfizer. As company is expecting to generate cost saving of 0.5 till the end of 2022
after this venture. By implementing this strategy entity will raise its profit by 20%
around. As Pfizer has strong position in market and its share position is very high in some
of the geographical locations. As per the records of 2017 GSK total profit before tax was
884 million and its operating profit was 7110 million. Hence it has adequate amount of
funds availability that make it its unique point.

 Physical resource: It has limited physical resources as, machines and other equipment of
business are limited hence it is weakness of company. It has limited land area and IT
equipment’s are also limited.
 Intangible resource: Brand image of GSK and Pfizer are good which create positive
image of firm in the mind of consumers. Patent of firm is its unique point and it has
strong good will in market This is strength of organization.
 Tangible resource: GSK has good investments in market that gives strong return over it,
it has adequate cash availability that help organization in managing operations well.
Competences
VRIO analyses is the tool that is used by companies to analyses its internal position, by
using this model firm can get to know it capabilities that may help in taking right action to gain
success with this joint venture.
Capabilities Valuable Rare Imitable Organization
Market
reputation
Yes Yes Yes yes
Leaders
working
No Yes No No
Brand
awareness
Yes Yes Yes Yes
Customer
rating high
Yes Yes Yes Yes
Better
healthcare
commodities
Yes Yes Yes Yes

One capability of GSK is high rating of customers. As consumers are very satisfied with
the products and services of GSK, they want to experience its services in near future also. This
capability of firm help it in gaining competitive advantage in market. On the other hand, the
another capability of GSK is Better healthcare commodities as the customer prefer this brand as
this provide high quality attributes to customers. Also, this offers at the lower price rates this
enhance the profitability of the industry in huge context. Thus, GSK has high brand awareness
and this has high competency rate as per the organisation. Therefore, organisational workers
undertake the effective research and development process to carter need of public and to provide
that healthcare commodities that do not have huge amount of drug substances that can affects the
health of an individuals. In addition to this, this entity has undertaken various steps that aids to
enhance market reputation. This allows the to resulting firms to be established with appropriate
capital structure in terms to undertake better future investment needs and capital allocation
prioritise. With help of providing better product to the customer with high quality services aids to
enhance and develop market reputation of GSK. However, leader working has moderate
competency rate. The leaders of the enterprise are not taking better steps to maintain the effective
supplier range and this highly impacts the operational working of enterprise.
TWOS MATRIX
This is defined as analysis that aids to undertake the internal and external analysis of the
working industry. Therefore, this is outlined as below contexted manner as-:
TWOS MATRIX Threats
 Bio-Tech expansion
will remove
pharmaceutical firm
process in the future.
Opportunities
 Enhance market-share
with product
development and
innovation.

Weakness
 This entity has pressure
to reduce price and
they also have low
machineries and
equipment.
W-T
 Adapt Bio-Tech.
 Reduce price.
W-O
 To supply product to
more areas.
 High research and
development over
products.
Strength
 This entity has high
brand awareness.
 Quality product
services offerings.
 Product diversification
 High customer rating.
 Effective marketing
reputation.
S-T
 Enhance global
suppliers.
 Technological
advancement
S- O
 Increase market share.
 Product development
and innovation.
3. Strategy evaluation
Strategic evaluation termed out as process that aids to determine the effectiveness of plan
of action in order to accomplish the organisational objectives and also allows to take the
corrective actions when its required (Erbas, 2019). In order to have joint venture of GSK with
Pfizer the entity is undertaking the marketing expansion to enhance the market share of the
enterprise. Therefore, it is very crucial to evaluate and control the business strategy that is
needed to be developed and this also assist to accomplish the goals and objectives within specific
time period. However, startegy can be evaluated with help of using the particular method that
defined in below contexted manner as-:
Suitability- This is defined as plan of action that needs to be suitable enough to assist GSK to
attain its goals and to have successful merger with Pfizer. To have the suitability, the threat and
opportunities must be considered. Therefore, one of the major threat to the this enterprise is firm
is under the pressure to reduce the price as they have few machineries and equipments. However,
threat has been found out that Bio-Tech expansion will remove pharmaceutical firm process in
the future and opportunities is as to increase market share with bringing product development.

GSK is already has strong brand image and this will be easy for them to execute the plan of
action to undertake the market development. This can assist the firm to increase their presence at
the global level.
Adaptability- This is defined as plan of action that must be accepted by each person in the
enterprise. Thus, quoted firm must take the initiatives that can aids to convince the stakeholder
that formulation of strategy is accepted. Without the acceptance of stakeholder strategies the
things cannot be implemented successfully (Kontu, Kantola and Kontu, 2019). In addition to
this, stakeholder can gives suggestion that how the things are needed to be accomplished. They
can execute the plan of action with help of communicating with suppliers, consumers etc.
However, expansion of the market is the best strategy that can be developed to have the
successful implementation. This is also a less risk tool. Thus, the one of the strength of GSK is
that this entity has effective brand awareness and great market reputation. It is factor that can
aids to attract the individuals from the different market. In addition to this, the acceptance from
the stakeholders can be gained with help of showing varied benefits to the plan of action. This
can help in expanding the profitability of the enterprise. With this kind of the strategy the market
value of the GSK can be enhanced.
Feasibility- This is the stage that allows to implement the plan of action with use of adequate
resources available. In order to implement the plan of action successfully, the firm need to hire
the skilled labour workforce who can able to undertake the better use of raw materials to produce
drugs and medicine with help of better technological equipment. Henceforth, the resources are
inclusive as financial, human, machineries, capital etc. GSK must have skilled labour workforce
and huge fund to undertake the better investment. In addition to this, it can be stated that this
plan of action will enable the organisation to enhance their customer base. Thus, enhancement in
sales will give rise in high amount of profitability and market share.
CONCLUSION
Hereby, this can be summarized that strategy analysis is crucial to undertake changes
within the enterprise. Formulation of better plan of action derives the large amount of
profitability. Thus, report has based on the working of GSK, it is pharmaceutical firm that is
looking forward to have joint venture with Pfizer.
Furthermore, external analysis has been conducted with application of PESTLE and
Porter's five force to evaluate the opportunities and threats. Also, external analysis has been

collected with use of VRIO to analyse the resources and competences of the enterprise to have
successful merger. Lastly, strategy evaluation has been conducted with use of SAFe to
implement the plan of action successfully.
REFERENCES
Books and journals
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Derzon, J.H., Clarke, N. and Thurer, R., 2019. Restrictive Transfusion Strategy and Clinical
Decision Support Practices for Reducing RBC Transfusion Overuse: A Laboratory
Medicine Best Practice Systematic Review and Meta-Analysis. American journal of
clinical pathology. 152(5). pp.544-557.
Liang, J.H., Lin, L. and Gao, Z., 2019. Non-pharmacological therapeutic strategy options for
patients with dementia based on cognitive function--A Bayesian network meta-analysis of
randomized controlled trials. Ageing research reviews, p.100965.
Nazri, N.A. and Sani, M.S.M., 2019, August. Joining Strategy Analysis of Structural Dynamic in
Top Hat Plate of Dissimilar Materials. In Journal of Physics: Conference Series (Vol.
1262, No. 1, p. 012022). IOP Publishing.
Robinson, T., Brown, H. and Bambra, C., 2019. Investigating the impact of New Labour's
English health inequalities strategy on geographical inequalities in infant mortality: a time
trend analysis. Journal of Epidemiology and Community Health.
Zheng, H. and Peng, C., 2019. Analysis of the Value of Local Culture under the Strategy of
Rural Revitalization.
Nandonde, F.A., 2019. A PESTLE analysis of international retailing in the East African
Community. Global Business and Organizational Excellence. 38(4). pp.54-61.
Erbas, D.G., 2019. IDENTIFICATION AND APPLICATION OF MOST IMPORTANT
STAGES OF STRATEGIC PLANNING ON LOCAL US BUSINESS. TURAN-SAM.
11(43). pp.462-467.
Kontu, A., Kantola, J., Vanharanta, H. and Kontu, K., 2019, February. Sustainable Competitive
Advantages in the Industrial Service Business. In International Conference on Intelligent
Human Systems Integration (pp. 600-606). Springer, Cham.
Online
A PESTEL/PESTLE Analysis of Pharmaceutical Industry. 2018. [Online]. Available through:
<https://notesmatic.com/pharmaceutical-industry-pestelpestle-analysis/>