Global Strategy Development and Implementation for GlaxoSmithKline

This report provides a detailed analysis of GlaxoSmithKline's (GSK) global strategy, specifically focusing on its expansion into Denmark. The report begins with an introduction to GSK, its global presence, and its objectives for internationalization. It then delves into Porter's Diamond model to analyze the factors that contribute to GSK's competitive advantage and its suitability for international business. The report further examines the internationalizing strategies GSK could employ, with a recommendation for a transnational approach. A country analysis of Denmark follows, utilizing the PESL framework and Porter's Five Forces to assess the political, economic, social, and legal factors influencing GSK's market entry, as well as the competitive landscape. The report concludes by outlining potential problems and solutions related to GSK's expansion into Denmark, offering valuable insights for strategic decision-making. The report is a comprehensive study of GSK's international business strategy, providing a detailed overview of market analysis, entry strategies, and potential challenges.

Global Strategy Development and
Implementation
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Table of Contents
Introduction:....................................................................................................................................1
Porter Diamond................................................................................................................................2
The Internationalising Strategy........................................................................................................5
Country Analysis (Denmark)...........................................................................................................7
PESL framework.........................................................................................................................7
Porters 5 forces analysis..................................................................................................................9
Mode of Entry................................................................................................................................11
Problems in Denmark....................................................................................................................13
Solutions to the problems..............................................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................16
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Introduction:
GlaxoSmithKline (GSK) is a global health firm that develops, manufactures, and markets
pharmaceutical medications, vaccines, and other healthcare products. It is the sixth-largest
pharmaceutical firm in the world. It was customary in 1715, but it did not exist in its current
form until 2000, when four large pharmaceutical businesses merged. GlaxoSmithKline is a well-
known pharmaceutical company in the world. The international corporation's headquarters are in
London, United Kingdom. The corporation made 34.1 billion British pounds in 2021, virtually
precisely the same as the previous year. It has a total of 94,000 employees all around the world.
With commercial activities in more than 150 countries, 87 manufacture amenities in 36
countries, and extensive exploration and development facilities in China, the United Kingdom,
Spain, the United States, Belgium, and it has a significant global footprint (Tailor, 2022). GSK
wants to expand its business operation to Denmark. The report consists of Porter's five forces
analysis and how GSK internationalises its business using various entry strategies and solves
Denmark's diverse cultural, process, and structural barriers.
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Porter Diamond
The Diamond Model, also derived from the theory of domestic competitive benefit of
Enterprises, is a strategic tool used by firms to decide and achieve the modest benefit essential
for global sustainability and diversification.
Figure 1: Poter's Diamond of GlaxoSmithKline (GSK)
Source: (Bradley, 2016)
Factor conditions
Factor conditions are attributes that provide a competitive benefit to the sector and its businesses
(Goyal, 2021). Despite natural assets, factor conditions are frequently spawned by the
authorities. For example, GlaxoSmithKline plc possesses the following fundamental conditions:
significant genuine investments in the home nation, good equity strategy and capital leverage,
highly qualified human resources, cutting-edge technology, and world-class architecture.
Related and supporting industries
The occurrence of associate and opposing players in the business delivers constructive pressure
and inspires the mantra to business troupes to outrival and expand through modernisation and
globalisation. For GlaxoSmithKline plc, the associate and correlated firms have also been mainly
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obliging to lead the product into achieving new statures every passing year. There are associated
businesses, supportive businesses, competing businesses, and many robust universal merchants.
Strategy, structure, and rivalry
The Strategy, structure and rival have to do with the company's deliberate purpose and the
processes and quality structures and schemes. The adaptive leader and framework are crucial in
determining the corporation's global enlargement. The business structure, clear Strategy and
decisions have all played a role in GlaxoSmithKline plc's worldwide advancement. Supervisors
and managers have easy and quick access to the company's information, enabling an innovative
and dependable corporate structure that aids in the industry's development and change (Palmer,
2016).
Demand conditions
The factors that lead to a business's accomplishment in any specific domestic market are demand
conditions (Thygesen, 2019). Demand is vital for revealing a business to the difficulties of a
bigger market and lashing the company in the direction of enlargement and expansion. Due to
the growing size of native markets and domestic consumers, companies must grasp the dynamics
at play with more excellent markets strategy to plan operations properly. For example,
GlaxoSmithKline plc has been driven to use its resources to innovate by sophisticated and
demanding national sounders. In addition, they have guided the company to create other
innovative merchandise for its clients.
After analysing Porter's diamond model, a firm like GSk can draw the reason for
internationalising its business operation to overseas markets like Denmark. There is a substantial
natural resource required to produce the product of GSk. In addition, there is sound
infrastructure, technological support, and innovation, which lead the company to go for
international business. There is much supportive industry like the financial institution to meet
their production facility requirements. In conclusion, there is a supportive government to help
them do their business.
On the other hand, the local market is relatively modest. Terrorist activities also influence the
firm's an advertising & distribution exertions in specific places, based on the country's
organisational conflict with other global markets. GlaxoSmithKline plc has been capable of
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foretelling worldwide inclinations and consumer comportment arrays due to the worldwide
competition, consenting the company to achieve a modest edge worldwide. GlaxoSmithKline plc
can influence customer behaviour in one marketplace based on their acquired feedback in
another market. It is vital for the firm's strategic improvement, globalisation and advancement in
the global market.
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The Internationalising Strategy
There are several internationalised strategies that GSK takes to expand its business to Denmark.
The internationalising approaches are given below.
Figure 2: Internationalising Strategy of GlaxoSmithKline (GSK)
Source: (Thygesen, 2019)
Transitional Strategy:
A transnational strategy is a plan of activity by which a corporation intends to execute its
functions across international boundaries and engages in its existing overseas assets, linking
them to every jurisdiction in which it conducts business (Nguyen, 2017). Furthermore, this
model highlights the advantages of centralisation with a global strategy.
Multi domestic Strategy:
A multi-domestic technique is a worldwide marketing technique that focuses particular
marketing exertions on the demands of a specific domestic market rather than a more universal
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or worldwide approach (Thygesen, 2019). It means that businesses using this business strategy
will target to embrace the culture of distinct regional markets and adjust their entrance into those
marketplaces to the characteristics of those markets.
Global Strategy:
A global tactic is a method used by the corporation to grow into the world market, and the goal
of adopting a global strategy is to boost sales globally (Nguyen, 2017). The harmonisation of
international and multinational approaches is part of the worldwide Strategy. Having a
worldwide plan can assist the organisation in various ways, including expanding global brand
recognition, boosting sales in new areas, etc.
International Strategy:
The export and import markets are the emphases of a company's international Strategy. On the
other hand, the organisation remains in its home country and does not open branches. Instead, the
company makes the necessary arrangements for supplying goods to customers worldwide and
importing goods into this country. Then, based on demand and supply logistics, it ships
commodities to customers in those other countries.
GSK should use the Transnational Strategy to expand its business into Denmark among these
tactics. GSK's international Strategy assists the company in lowering production costs, increasing
sales, and achieving economies of scale. GSK has decentralised headquarters and organisational
structures in the countries where it operates. This method aims to take advantage of working in
multiple nations. Both local responsiveness and global integration are strong in transnational
Strategy. GSKs that use this Strategy frequently establish a centre and the central management
team in charge of all foreign operations. The multinational process examines all features of the
home-grown marketplaces in which they do business. The transnational approach evaluates the
requirements and wants of local customers and responds appropriately. This business model has
the advantage of being less costly than adopting a multi-domestic strategy. Resources are
integrated to the fullest extent in a global business strategy, resulting in cost diminutions.
Another benefit is that the business has a more substantial presence in local markets. The multi-
domestic approach likewise enjoys this benefit; however, international and global strategies may
have problems resonating with local consumers; as a result, GSK can pursue a global strategy.
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Country Analysis (Denmark)
PESL framework
GlaxoSmithKline is a pharmaceutical company based in the United Kingdom. The practical
implementation of GSK's marketing strategy is sensitive to a variety of external and internal
elements that determine Denmark's overall marketing ecology, according to PESL's analysis. As
a result, the GSK may quickly examine the Danish business climate with these tools.
Political Factors:
Denmark is a parliamentary republic system that is exemplary. And although the monarchy has
executive power, Denmark's monarchies have primarily ceremonial duties, as do other
constitutional monarchies. Denmark is, without a doubt, the most politically secure and stable
country on the planet. Various political parties participate in the country's political process,
including the Liberal Party, Danish Peoples Party, Liberal Alliance, and others (Myers, 2015). In
addition, several governments have pursued a course of structural adjustment to boost efficiency
and ensure that the economy is well-positioned to contend with an older population.
Economic Factors
In 2019, Denmark's GDP was $348.08 billion, and it decreased by 6.9% in the 2nd quarter of
2020. (Country Economy, 2020). In February, the inflation rate was 4.3 per cent, the highest
position category in the price index. It is unmistakably a result of the current economic upheaval
around the world. The economy of Denmark is diverse, with service industries, commerce, and
manufacturing dominating. Farming, energy, tourism, and mass transit are fantastic products.
Sweden, the United States, Norway, Germany and the United Kingdom are the primary
destinations for Denmark's principal exports, including packaged prescription meds, advanced
petroleum, beef, electrical goods, and dairy.
Social Factors:
Blunt honesty, trust, and good governance are recurrently depicted as potentials in Danish
society. Correspondingly, democratic ethnicities, a robust educational system, and a transparent
tax system speak for themselves. However, the emergence of conservative movements, a mature
populace, expensive real estate, inequality, the absorption of migrants and minority groups into
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the labour market are significant issues that society is grappling with today. Many Danes prefer
to expend their money on other activities rather than buying stuff and are unmoved by expensive
automobiles or branded goods. It is an energising aspect of Danish community interaction. The
present populace is probably 5.8 million, with Danish as the primary language and Christianity
as the main religion (BBC, 2019).
Legal Factors:
Denmark is governed by the rule of law, and foreign companies can make a fair trial from the
country's judicial system. In terms of corruption, Denmark is one of the best countries in the
world. Working time, non-discrimination, holiday entitlement, absence, employment contracts,
and part-time work are only a few regions where Danish law protects personnel and labours. The
overarching premise governing Danish contract law is contract freedom. The Danish Contracts
act and the Danish sale of goods act have very few statutory provisions governing the creation
and content of contracts in business to business relationships. As a result, the parties can bargain,
enter into an agreement, and design the arrangement virtually precisely as they like. No third-
party rights or public law, such as competition law, have been sullied to the top criminal and
civil court in Denmark, with responsibility for enforcing the law.
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Porters 5 forces analysis
Threats of new entrants:
The pharmaceutical industry has a high entry obstacle when considering variables like enormous
capital investments, patents, cost savings from increased efficiency, federal regulations, and
development costs for effective medicines and enhancements to standing ones. For example, in
2013, GSK invested £3.4 billion on core R&D, and recent comers pose a negligible threat in
Denmark (GlaxoSmithKline Plc, 2016).
Figure 3: Porter's five forces of GlaxoSmithKline Plc
Source: (Kasapi & Mihiotis, 2016)
Bargaining power of suppliers:
"The ability of suppliers to restrict a firm's independence and harm its profitability is influenced
by their bargaining strength" (Otieno, 1996). Backward integration is a threat to suppliers, and
most pharmaceutical companies own their manufacturing sites. As a result, suppliers
infrequently adjust their prices indiscriminately. As a result, suppliers in Denmark have limited
bargaining leverage.
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Bargaining power of buyers:
The NHS is the core buyer of medicines, and it has a lot of clouts whenever it emanates to setting
prices (Keynte, 2018). However, in Denmark, purchasers have a lot of bargaining power.
Threats of substitute products or services:
Within the industry, switching costs are low, and it's almost effortless to transfer from
comparable businesses and compare the price performance of items because competing firms
experience the exact manufacturing costs. Generic medications and complementary alternative
treatment are the other options. Substitute products provide a lot of benefits.
Rivalry among existing players:
Some of the primary elements leading to the severe rivalry in the market are the high sunk cost,
standards of transparency, and amount of advertising expenses (Kasapi, 2017). In addition, the
competition is strategic, with top players competing for domination and the pressure of
developing the "next big thing." As a result, industry rivalry in Denmark is fierce.
The initial research demonstrates that GSK can compete in an oligopolistic market where the top
corporations, such as itself, determine the market pricing. Suppliers and purchasers have low and
excellent bargaining power, respectively. Substitutes pose a significant threat. New entrants in
Denmark face a difficult struggle in competing with established enterprises. Denmark has a
favourable business climate for foreign enterprises.
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Mode of Entry
There is some mode of entry in the Denmark market like licensing, franchising, joint venture,
and manufacturing and acquisition. The way of entry strategies are discussed below-
Licensing:
It essentially consents an organisation in a specific market to use the property of the licensor.
Trademarks, production techniques and patents are examples of intangible property. In an
altercation for capable of using the intangible assets, the licensee pays a fee.
Franchising:
The franchising method allows a corporation to launch its business in a foreign market with less
menace by allowing another person to assume the threat on the company's behalf (Bradley,
2016). In a franchise contract, a foreign-based company pays a fee in exchange for the right to
utilise the brand name, production method, products, copyright, and other property rights.
Joint Vanture:
A long-term contract between two enterprises, often one overseas and one local, to collaborate
for collective gain, with exact ownership proportions established, and these two businesses
merged to become a joint venture (Tailor, 2022). This new firm would typically be based in the
same nation as one of the two partner companies, with the goal of creating a conjointly beneficial
activity with its own goals: promotion and distribution, production, research, and so on.
Marger and Acquisition:
When two different companies link up to build a separate, single entity, this is known as a
merger (Keynte, 2018). An acquisition, on the other hand, is the purchase of one company by
another. Mergers and acquisitions are sometimes carried out to broaden a company's influence or
obtain market share in order to increase profitability.
Among this mode entry strategy, GSK can take franchising strategy to enter into Denmark
market using the transnational approach. Franchising enables a firm to establish its business in a
foreign market with minimal risk. GSK can have high local and global responsiveness using a
transnational strategy. It helps the company to gain huge profit in the Denmark market.
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Franchises pool the elasticity of private enterprise with the resources of a large firm. To operate a
franchise, GSK does not require prior business expertise.
In most cases, franchisors provide training to their franchisees on how to run their corporate
structure in Denmark. Start-up enterprises have a lower success rate than franchises. Therefore,
the GSK company may have an easier time acquiring franchise finance. Purchasing a franchise
could be less costly than establishing a similar business from the ground up. Franchises typically
have an unshakable brand image, proven management, work methods, national marketing, and
continuing support. As a result, it is advantageous for GSK to enter the Danish market via
franchising as part of a global strategy.
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Problems in Denmark
Cultural Problem:
Power Distance: In comparison to other countries, Denmark falls on the bottom end of this
scale. The power distance perfectly reflects the sentiments of many foreigners in Denmark:
Danes do not lead, and coach and employee participation are essential (Tailor, 2022). Indeed,
when it comes to employee autonomy, Denmark is first among the EU27 countries.
Individualism: Individuals have a resilient preference for a tenuously societal framework in
which they are expected to care for themselves and their instantaneous family. Starting a
commercial affiliation with the Danes is relatively modest.
Masculinity: Denmark is classified as a Feminine society and critical in Feminine countries to
maintain a healthy work-life balance and guarantee that everyone is encompassed.
Uncertainty Avoidance: In their working lives, Danes don't require a lot of order and
predictability. Plans might change instantly, new things arise, and they are unfazed. It is a part of
their daily routine, and inquisitiveness is a natural trait that civilised from a young age.
Long Term Orientation: Danish culture is ethical, and people in normative society fear
unveiling the unqualified Truth; they think in normative ways. They reveal high esteem for
civilisations, a low propensity to advance for the future and concentration on getting things done
quickly.
Indulgence: Denmark is a permissive country, and people in cultures with high indulgence
scores are more likely to follow their inclinations and wishes when it comes to enjoying life and
having fun (Tailor, 2022). They maintain an optimistic attitude and proclivity with optimism.
Organisational Coordination problem:
Economic incentives for cooperation are poor or nonexistent in Denmark, and the use of
penalties as a regulatory tool is limited. Understanding and lobbying for current clinical trial
diverse standards from agencies and professional organisations and the community and patients
is also a significant challenge. In the GSk company, there is a problem with communication.
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Organisational structure:
After the financial crisis, there was a centralisation problem for foreign businesses, which limited
their gain. Moreover, due to Decentralisation, the country does not get much control over the
overseas trade in Denmark. Therefore, centralisation and Decentralisation in management are
vital problems in Denmark.
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Solutions to the problems
Solution no 1: There is a diversified official language and due to that, operating a business is
quite tricky. As it is multi-language, the GSK can take some training and development programs
to make their employees more effective in terms of language and develop their skills. It helps
them to cope with the current cultural diversifications. The company can help the employee to
learn the local language of Denmark. It can hire local employees in their company to manage the
cultural problem as local people know better about their culture. The manager must be efficient
enough to deal with the cultural issue in Denmark to have a better business environment.
Solution no 2: There is a collaboration problem in Denmark, and it can mitigate the problem by
taking some action like collaborating with the local government, local workers and local
companies in Denmark. The company must follow the single standard guideline to make
effective decisions in the clinical operations that the company decided to go for a clinical trial.
The company can hire professionals to deal with such problems. Finally, the company must
ensure effective communication with its workers, professionals, and management to have better
coordination.
Solution no 3: There is a problem regarding organisational structure like centralisation and
Decentralisation of the company's management in Denmark. The company can decide to
decentralise its management structure to Denmark because it can get huge advantages by
Decentralisation, including ease of expansion, better supervision and control, efficient
communication, quick decision making, and growth and diversification.
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Conclusion
GSK is a global drug manufacturing company that develops, produces, and sells medications,
vaccines, and other health supplements. GSK was the sixth-largest pharmaceutical firm in the
world. The modern pharmaceutical consumer requires more information and higher quality than
ever, pursuing corporation to expand globally. GSK has quality products to enter into a global
business in Denmark through various entry modes like licensing, franchising, merger, and
acquisition. Denmark has a better business environment to expand GSK's business quickly. On
the other hand, some challenges like diversified culture, language, and process must be
considered to operate the business in Denmark.
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