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Critical analysis of

GlaxoSmithKlines Strategy- Clifford Moon


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Content

Introduction (GlaxoSmithKline)

Organisational Goals

Planning of the company

Competitive Advantage

Corporate Social Responsibility of company

Positioning of the company

Strategy Implementations Recommendations

References


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GlaxoSmithKline plc

Our organisation has rich history it starts from early 18thcentury.

GlaxoSmithKline was formed in 2000 after merging of Glaxo Wellcome plc

and SmithKline Beecham plc.

It is one of the worlds largest pharmaceutical company in terms of revenues.

It has delivered 1.4 billion doses of drugs in 179 countries in 2010.

Mission

To improve the quality of human life by enabling people to do more, feelbetter and live longer.

VisionTo become the indisputable leader in the Pharmaceutical industry not only in

terms of size but also by to achieve their mission and improve the quality of

human life.


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Organisational Goals

Every organisations have goals and to achieve this they need strategy. GSKadopted various strategies to achieve growth, reduce risk and improve GSKs

long term financial performance.

Grow a diversified global business:

GSK is focusing mainly growth in emerging markets and also on its consumerproducts operation then developed economies.

Deliver more products of value:

To be leader in the market companies need three elements like classic brands,

vaccines and innovative products.

Simplify GSKs operating model:

Business continues to change shape, it is essential to transform the operating

model to reduce complexities, improve efficiencies and reduce cost.

(GSK, 2011)


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Planning (GSK Annual Report 2010)

Grow a diversified global

business

Deliver more products of

valueSimplify GSKs operating

model

Drive growth in the

pharmaceutical businessin our core markets

Fulfil the potential of

Emerging Markets

Expand our business in

Japan

Build our leadership indermatology

Grow the vaccines and

Consumer Healthcare

businesses

Focus on the best science

Diversify throughexternalisation

Re-personalise R&D

Focus on return on

investment

Evolve our commercial

model Re-shape manufacturing

Streamline our processes

Reduce working capital


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GSKS Business Model

(Annual Report, 2010)


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Group Sales(GSK Annual Report 2010)


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Competitive advantage

(Chandon, 2003)


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1

2 34

7 6

13

4 2

7 8

1

45

2

7

3

3 years Ranking Trend

2008 2009 2010

Top Pharmaceutical Companies

(Roth, 2008, 2009, 2010)


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Corporate social responsibility of GSKs

Reduce the price of the medicine in the under-developed countries to 25% of

developed world prices.

Flexible pricing structure for middle-income countries.

Reinvest 20% of its profits from sales of medicines in developing countries

to support the strengthening of healthcare infrastructure.

Example

13,500 compound from GSKs library that have shown activity against the

malaria parasite have been made freely available online, a first for the

pharmaceutical industry.

(Barham, 2010)


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Positioning

Strategic positioning is mainly concerned with the impact on strategy of theexternal environment, internal resources and competences, and theexpectations and influence of stakeholders.

(Johnson and Scholes, 2005)


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Positioning of GSK

Two and a half years ago, GSK has changed its businessstrategy to provide cost effective , new and effective medicines

by restructuring and rigorous capital allocation.

Restructuring programme has allowed to diversify its salesbase from low growth markets to key growth areas such asemerging economies.

During 2010 it has continued to improve its R&D pipeline,environmental sustainability and commitment towardsneglected tropical diseases.

(GSK, 2011)


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SWOTAnalysis of key environmental issues and the strategic capability could give theCurrent strategic position of GSK. SWOT involves analysis of company's

internal environment in terms of its strengths, weaknesses and external

environment in terms of opportunities and threats.

Strengths:

Global presence and well

diversified.

Industry leader in R&D. Strong sales and marketing.

Life cycle management strategies.

Strong financial position.

Weakness :

Patent infringement claims.

Increasing generic competition.

Dependence on low growth

products.

(Alacra.com, 2010)


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Opportunities

Growth in emerging markets.

Enhanced product offering.

Movement into oncology and

biologics market.

Organic growth.

Threats

Competitive pressures.

Increasing presence of counterfeit

Drugs.

Impact of generic products on

sales made by franchises.

Further setbacks in R&D pipeline.

(Alacra.com, 2010)


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Bowman's strategic clock

(Faulkner & Bowman, 1995)


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New Market Entrants : Recognized Marketing Code

Barriers to Entry :

Government policy

Brand Recognition

Competitive Priority :

Highly Competitive

Low Fixed Costs & High

Working Capital

Differentiation Strategy

Buyers Powers : Consumers do not have

bargaining power.

Price sensitivity is less.

Brand identity in the hands of

influencer.

Power of Product and Technology

Development :

Reforming R & D

Entrants of New Vaccines by 2011 end.

Restructuring for Diversity and

Strengthening.

Porters Five Forces Model for Developing Countries :

(Porter, 2008)


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Strategy can be weighed not only based on the positioning and

planning phases, but carry great weight when it is actually

being carried out Implementation.

Implementation should consider the time scale of the operation,

resources and available funds.

It also must monitor and control the operations.


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Measures (GSK Annual Report 2010)

Grow a diversified globalbusiness

Deliver moreproducts of value

Simplifying theoperating model

Performance of core

pharmaceuticals and

vaccines businesses

Diversification of sales Contribution of

Emerging Markets to

our overall sales and

growth

Growth of Consumer

Healthcare business

Expansion of Japanese

business

Build biopharmaceutical

portfolio

Contribution to sales of

new products

Number of reimbursable

product approvals andfilings

Sustaining late-stage

pipeline

Enhanced R&D

productivity and

increased externalisation

for Drug Discovery

Delivery of major

restructuring

programme

Reduce working capital


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Implementation of Strategy in GSK

As there are different aspects to be considered in order to evaluate the GSK

strategy implementation, based on the time constraint I would like to discuss 4 of

the aspects:

Marketing : Grow a diversified global business and deliver moreproducts of value.

Operations : Simplify GSKs operating model

Sustainability: Increase growth, reduce risk and improve long-term

financial performance

Technology : Research and Development R&D


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Marketing Operations

Marketing strategy changesaccording to the region where the

group is providing its products.

Pharmaceutical products are

subjected to price controls by the

government institution or private

GSKs marketing strategy is

different they always innovate new

medicines as well as they enhance its

old products with mild alterations

and deliver it to the consumer

accordingly

Operations strategy deals with thedesign and management of products,

processes, services and supplychains.

GSK is removing avoidable

processes and structures. The newsimplified operating will releasemore resources for investment andhigher returns for share holders.

Simplifying organisation to speedupdecision making and improve

alignment to business priorities

Striving to ensure simpler andefficient cross business process andstructures.

(Weyzig, 2004)


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Recommendations

In emerging markets it should adapt a strategy toprotect itself from counterfeiting of its drugs.

Create new modelling tools to update data andinfluence strategic decision making.


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References

Alacra.com (2010) GlaxoSmithKline plc (GSK) - Financial and Strategic Analysis Review [Online]http://www.alacra.com/acm/2087_sample.pdf [Accessed 17th November 2011]

Barham, L. (2010) GSK's approach to corporate social responsibility [Online]http://social.eyeforpharma.com/marketing/gsks-approach-corporate-social-responsibility [Accessed 15thNovember 2011]

Chandon, P. (2003) Innovative marketing strategies after patent expiry: The case of GSKs antibioticClamoxyl in France,.International Journal of Medical Marketing, Vol. 4 No. 1, pp. 65-73

Faulkner, D. & Bowman, C. (1995) The Essence of Competitive Strategy, 1st edition, Prentice Hall PTR

GlaxoSmithKline plc. (2011) Our Strategy [Online] http://www.gsk.com/about/our-strategy.htm [Accessed10th November 2011]

GlaxoSmithKline plc. (2010) GlaxoSmithKline Annual Report 2010 [Online]http://www.gsk.com/investors/reps10/GSK-Annual-Report-2010.pdf [Accessed 11th November 2011]

Johnson, G. and Scholes, K. (2005) Exploring corporate strategy: text and cases, 7th edition, Harlow:Financial Times Prentice Hall

Porter, M.E. (2008) On Competition, Upd Exp edition, Harvard Business School Press

Roth, G.Y. (2008)(2009)(2010) Top 20 Pharmaceutical Companies Report [Online]http://www.contractpharma.com/issues/2009-07/view_features/2009-top-20-pharmaceutical-companies-report/ [Accessed 17th November 2011]

Weyzig, F. (2004) GlaxoSmithKline company profile [Online]http://www.docstoc.com/docs/15102099/GlaxoSmithKline-company-profile [Accessed 19th November,2011]

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