Corporate Strategy Project: GSK's External and Internal Analysis

This project provides a comprehensive analysis of GlaxoSmithKline (GSK)'s corporate strategy. It begins with an external analysis, identifying opportunities and threats within the pharmaceutical industry and assessing industry attractiveness. The project then delves into an internal analysis, evaluating GSK's resources, core competencies, and using SWOT and VRIO frameworks. The analysis includes a discussion of a recent strategic initiative, specifically the joint venture with Pfizer, and evaluates its implications. The report covers political, economic, social, technological, environmental, and legal factors (PESTLE) impacting GSK and offers insights into the company's strengths, weaknesses, opportunities, and threats. Overall, the project provides a detailed overview of GSK's strategic positioning and potential for future growth.

Corporate strategy project.
GSK case.

Table of Contents
INTRODUCTION...........................................................................................................................1
1. External Analysis to identify a set of opportunities and threats and also explaining industry
attractiveness...............................................................................................................................1
2. Analysing the resources and key competences of the organisation and identify core
competences................................................................................................................................4
3. One strategy that the company implemented recently and its evaluation...............................5
CONCLUSION ..............................................................................................................................8
REFERENCES ...............................................................................................................................9

INTRODUCTION
Corporate strategy is the long term statistical way that helps company in order to identify
the goals of the organisation. Project management takes one of the goals and manages costs,
schedules and resources to give the desired result. Enterprise adopts different strategies and also
in order to achieve profit in more effective and advanced manner. In the following report, GSK
has been taken into consideration.This report also leads in evaluating the strategy to form a joint
venture with Pfizer. The main purpose of this venture is to create a premier global consumer
healthcare company with robust iconic brands. Both the company is well established brand to
take care the consumer healthcare businesses.
In the following report, external factors have been analysed that may help in setting the
opportunities has been discussed. Further, this report also helps in determining resources and key
competences of the organisation.
1. External Analysis to identify a set of opportunities and threats and also explaining industry
attractiveness.
Glaxo Smith Kline Plc is the leading Pharmaceutical company which is situated in
Brentford London (Brewster, 2017). GSK founded in 2000 by a merger of Glaxo Wellcome and
SmithKline Beecham. This is ranked at the sixth largest Pharmaceutical company as of 2015. It
is one of the famous or leading drug company across the world. In terms of business, GSK
leading with three major part which includes Vaccines of Polio, Thyroid and treating hepatitis.
On the same side, Pfizer is the worlds second pharmaceutical company. On December 19, 2018
they announced the big merger with GSK. This makes the long term goals and objectives and
effective learning goals. Under the terms of the transaction, Pfizer will receive a 32% equity
stake in the joint venture, entitling Pfizer to its pro rota share of the joint venture earning and
dividends.
Industrial analysis.
 Bargaining power of supplier- This force helps in analysing the power of supplier in
terms of control that it has over potential to raise its prices, which in turn would lower
down the profitability of a business. The bargaining power of suppliers is low because
GSK poses the threat of backward integration to suppliers.
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 Bargaining power of buyer- The bargaining power is high. NHS is termed as the major
buyer,. This is the force that leads in examining the power of customer or buyer and also
their effect on quality and price. The buying power is low when customers purchase
products in literally small amount and sells it in different way from that if competitors.
 Competitive rivalry- Industrial rivalry is very much high .The main driver is the number
and also the capability of competitors in the market. There are many competitors who are
offering with undifferentiated products and services that will lead in reducing market
attractiveness.
 Threat of substitution- The threat of substitute is high for GSK. This is because the cost
of switching is low. Thus, the other substitute is generic drugs and complementary
alternative medicine.
 Threat of new entry- Pharmaceutical is characterised with high entry barrier when factors
like involvement of huge capital, patents, cost advantage is been considered. Thus, GSK
spent 3.4 billion euros on research and development in 2013. therefore, the threat of new
entry is relatively low.
Therefore, this is the long term external factors that affect the new managing market
opportunity and growth (Droppert and Bennett, 2015). In order to analyse external macro factors,
company needs to conduct PESTLE analysis to determine the more opportunity and threats.
Pestle is the model to analyse the business environment factors that can have direct impact on the
business goals. In this model helps to explains in detail about operating challenges Glaxo Smith
Kline Plc.
Political Factor
Political factor is significantly affect the overall business or industry functional activities.
Political changes might also affect the company profitability growth. In other words, GSK is the
drug manufacturer and sell products in more than dozen countries and expose itself to different
types of political environment and political system risk. GSK is being affected with the country's
political instability which influences marketing strategy directly and also changes that is
basically caused due to international trade that could also has its affect on the formulation and
also selling of the product that us developed by the cited organisation. Thus, joint venture is the
one that helps in growing business faster and also in increasing productivity and also generate
greater profits.
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In order to invest in some other country or some other projects. GSK needs to be
consider some specific areas such as Political stability and importance of Drug Manufacturer,
GSK also need to be considered the risk factors related to military invasion. Company also need
to be considered the level of corruption especially levels of regulations in healthcare sector
(Galpin, 2018).
Economic Factors
Economic facto is the another major macro factor which affect the company functional
activity. Economic factor influenced by inflation rate, saving rate, interest rate and foreign
exchange rate (GlaxoSmithKline plc PESTEL & Environment Analysis,. 2019). Economic factor
is based on the country economic growth channel in terms of making high professional growth
challenge. Type of economic growth system in countries of operation what type of economic
system is and how stable it is. Infrastructure quality in Drug manufacturer is the another major
city development areas (Hickman and Silva, 2018). Education level in the economy will make
more enlarging managing growth for the high level of advanced results. Further in economic
factor some other factor can also influenced company profitability growth such as discretionary
income, unemployment rate, inflation rate. Etc. In order to get opportunity from economic factor,
company needs to incest high economic development growth. This development areas will help
company to get their opportunity by applying all economic factors and policies imposed by the
government.
Although pharmaceutical is effected by recession but big pharma are diversifying to BIO
tech pipelines where oil has direct impact. Profitability is basically threatened here by rise in
prices and frozen legislation.
Social factor
Social factor might be the threat or the opportunity for the company. It depends on the
overall system growth that helps people to get some new higher opportunity and growth. Social
factor get influenced by social beliefs and attitudes of the population play a great role in how
marketers at GSK understand the consumer demand and how they get the customer attraction.
This process can help company to get the customer interest and make attractive marketing
opportunity to make company opportunity and growth. This overall, target people will make
things more effective and influencing (Ibrahim and Naem, 2019). Social factor is the most
significant factor for which company needs to take care in terms of understanding the need of
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clients. The other perspectives includes trends, lifestyle and taste preferences of people. If there
is change in prefernces of an individual than they will also have to change their product. This is
the major thgreat for jopint venture as it will lead in huge wastage of raw materials. Other factors
like proportion of well educated people can also result in an increase in sales of GSK in that
particular region. Thus, if that certain organisation is not very tolerant towards foreign country's
product than it might result in decrease in GSK sales. Awareness is somehow compelled to
question or may ask the reason of any type of product consumption.
Technological Factors that impact GSK
Technology is the fast disrupting various industries across the world. Technology is the
big positive feature for the company that company can adopt as in opportunity. Pharmaceutical
has been grow very fast and come up with new inventions in drugs. The main supportive
elements behind the success is advanced technology (GlaxoSmithKline plc PESTEL &
Environment Analysis, 2019). Digital technological factor is the big opportunity for the drug
industry to make some effective medicines. This will help to recontinue the long term challenge
and making policies more effective. Further, with advancement in technology and maximum
amount of research done, it is in the interest of GSK in order to improve their products constantly
and expand their business in overseas market and this will be the opportunity for joint ventures
as this technology will help in attracting huge customers towards the brand.
Environmental factor
It becomes exigent for the company in medicines to follow those procedures that are
involved in research and development in order to comply with the environment protection laws.
This will help them in saving their environment and also in building good brand image for their
company that eventually results in increase in sales. This is the major opportunity for joint
venture of Pfizer and Gsk.
Legal factors
GSK has to ensure that they abide by the copyright and also selling laws of that particular
country. Thus, if certain kind of drug is banned in that country than they will have to come up
with some another alternative so that they can save their sales. In order to make any business
plan or strategy company should have to aware about the legal laws and regulations about the
legal implications. Such as company should need to aware about the law related discrimination
law, copyright patents, intellectual property law, employment law, health and safety law, data
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protection act etc (Kim, 2015). this is the great opportunity for joint ventures to attract
employees and motivate them to work in effective and efficient manner.
2. Analysing the resources and key competences of the organisation and identify core
competences.
SWOT Analysis
Strengths
 Developing competitive advantage through innovation that is consumer centric based.
 Global sales and marketing infrastructure
 Strong financial performance
 Highly skilled workforce
 Balance sheet is good and comprehensive.
Weakness
 GSK's Brand image is being affected by the settlements of healthcare in the US and
bribery charges.
 Lack of sustainable training and management skills
 The ratio of different competences is unfavourable
 It also has an unsustainable revenue base.
Opportunities
 Favourable demographic and economic trends.
 Opportunity of growth in the HIV and infectious disease business.
 Opportunities in the emerging markets that is driven by increasing awareness about
requirements of healthcare.
Threats
Intense competition from the drugs that are generic.
 Challenges with emerging markets.
VRIO FRAMEWORK
 Value- In this, resources of an organisation is being determined. Thus, those resources are
also termed as the valuable one if they help firms in growing perceived customer value.
This is therefore achieved with the help of increasing differentiation and also decreasing
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the price of a particular medicine. There are some critical resources that arte valuable tyo
the firm that includes financial resources, human resources, marketing expertise and also
operations management.
 Rarity- thus, to get a rare resource is quite difficult for a firm but it will be extremely
valuable when it gets one. Therefore, the cited organisation GSK must have resources
quite unique from that of competitors which will lead them in achieving huge level of
competitive advantage. This resources that are available and valued are rare so new
entrants cannot easily access to them and also enter the competitive market.
 Imitiability- Firms with rare resources and capabilities that are hard in order to imitate by
other firms may gain a competitive advantage in the market place. The core
differentiation of GSK is difficult to imitiate.
 Organisation- Thus, if there are firms with rare, valuable and expensive resources may
enjoy competitive disadvantage without correct way of organisation. The firm must
therefore try to arrange the policies, process and organisational structure. The
exploitation level analysis for Gsk's products can be done from two perspectives. Is the
firm able to fully exploit the potential of the resource, or it still has lots of upside.
3. One strategy that the company implemented recently and its evaluation
GSK adopted the strategy to form a joint venture with Pfizer regarding the formation of
new consumer healthcare. The company formed joint venture with Pfizer as it is a well known
Pharmaceutical company. Thus, when the two trusted consumer healthcare companies will
combine then it will benefit both the companies such as it will help in boosting their sales,
improve its cash flow position and would also contribute in its investment in research and
development department. The basic motive behind adopting this strategy was to grow in long
term by improving its competitive performance, reducing the cost and improving the profits of
the company. This joint venture will be the category leader in pain relief, respiratory and much
more.
The strategy is evaluated on the basis of SAFe criteria and this is as follows:
 S – Suitability
It is the most important element of SAFe criteria as it helps in determining whether the strategy
would contribute towards the achievement of the objective of the company behind the
implementation of strategy. When it comes to the evaluation of strategy adopted by GSK to form
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a joint venture with Pfizer, it was found that the strategy was quite suitable for the growth of
both the companies and the purpose behind formulation of the strategy; to create a new consumer
healthcare could be achieved effectively and efficiently.
Suitability of the strategy was measured in terms of various aspects such as in terms of
Environmental suitability – it was found that the strategy adopted by GSK is environmental
friendly and will only contribute towards the better health of the consumers. The strategy is in
the favour of the public and would not encourage any objections or restrictions from government
as well as political parties.
Expectation suitability – the strategy was able to satisfy this aspect of the suitability as well
because company maintained its brand reputation. Even the company is coming up with a joint
venture with another pharmaceutical company that is Pfizer which is again a very reputed
company. Hence, when both the reputed companies will come together they would contribute
only towards fulfilling and growing the expectations of the people.
Capability suitability – when it comes to capability, company is capable enough to adopt the
strategy and implement its strategy because both the joint venture companies GSK and Pfizer
have a good financial condition, high reputation in the market as well as loyal customers.
Apart from this, various other factors also help or contribute in determining whether the
company is suitable to adopt the strategy or not and these factors are that by using this strategy
company would be able to add up its strengths, reduce its problems and so on(Vo and et.al.,
2018).
Hence, when it comes to suitability of strategy, it could be said that the companies' strategy is
quite suitable towards the achievement of their objective.
 A – Acceptability
Another element of these criteria is acceptability. This element takes into consideration the
degree of return, risk and the stakeholders' reaction arising due to implementation of the strategy
because these are the main aspects which help in smooth running of the business.
Return – return will be measured in terms of the expectations of the stakeholders of GSK and
Pfizer by adopting this strategy. The return could be expected in both the forms that is financial
as well as non financial depending upon the needs of the stakeholders. Financial return such as
dividend and non financial return such as bonus share. For measuring returns, there are numerous
methods such as cost – benefit method, profitability analysis, stakeholders value analysis.
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Depending upon the situation, best method for calculating return would be used. GSK is known
for giving high returns to its stakeholders and for calculating profits company uses cost benefit
method.
Risk – this is determined on the basis of financial losses or probability of the failure of the
strategy. It was found that the strategy adopted by the GSK involves low degree of risk because
both the companies are reputed and have positive perspective in the mind of customers. This
suggests that with low risk, acceptability of the strategy would be high. GSK measures risk on
the basis of impact of liquidity.
Stakeholders reaction – stakeholders reaction was very positive regarding coming up with a
joint venture as when both the companies of high brand image will come together, their assets
will combine and the probability of the growth of the company would increase and this would in
turn lead to greater benefits to stakeholders of both the reputed companies(Rugman and Verbeke,
2017).
Thus, it is quite evident that the company is not facing any difficulty in terms of acceptability of
the strategy of coming up with a joint venture.
 F – Feasibility
This is the crucial portion of every strategy as it decides the make or break of every strategy.
Under this mainly financial feasibility is carried out such as whether the company has adequate
resources to carry out new strategy or it lacks in this respect. Financial feasibility is carried out
by various aspects such as through break even analysis, financial test, etc.
It was found that the GSK has a goof financial position as well as its joint venture company also
has a good financial position, which makes it in a to carry out the strategy effectively and
efficiently.
CONCLUSION
From the above study, it has been summarised that the long term external factors such as
political, legal, economical, social and technological had a huge impact on the opportunities and
growth of the company. Apart from that, in order to analyse the resources and key competencies
of the organisation, company adopted competency matrix to assess the advantages and record the
existing level of each competent. Financial ability of the company and high reputation of the
company were the important factors that helped the company in attaining the competitive
advantage over the other rivalry firms. Furthermore, the study highlighted that the company has
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recently came up with a strategy to form a joint venture with the another reputed company of the
same industry and this has helped the company to maintain and grow in the long term.
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REFERENCES
Books & Journals
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Galpin, T. J., 2018. Making Corporate Strategy Work-Focused Corporate Parenting as a Core
Competence. Journal of Business Strategy.
Hickman, C. R. and Silva, M. A., 2018. Creating excellence: Managing corporate culture,
strategy, and change in the new age. Routledge.
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INFORMATION SYSTEM AND STRATEGIC DESIGN ON ORGANIZATION’S
COMPETITIVENESS: A FIELD STUDY. Academy of Strategic Management
Journal.18(1).
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Auerbach Publications.
Kim, L. S., 2015. Convergence of information technology and corporate strategy. Journal of the
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AHP-TOPSIS Methodology: A Case Study in a Pharmaceutical Company. Global
Business Review. 17(5). pp.1250-1265.
Puranam, P. and Vanneste, B., 2016. Corporate strategy: Tools for analysis and decision-
making. Cambridge University Press.
Roy, N. C. and Basava, R. B., 2017. Investment Risk Identification and Its Assessment: A Study
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Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Vo, A. Q. and et.al., 2018. Application of FT-NIR Analysis for In-line and Real-Time
Monitoring of Pharmaceutical Hot Melt Extrusion: a Technical Note. Aaps
Pharmscitech. 19(8). pp.3425-3429.
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