The document provides an overview of GlaxoSmithKline's (GSK) strategy. It discusses GSK's goals of growing its diversified global business, delivering more valuable products, and simplifying its operating model. The document outlines GSK's strategic planning, competitive advantages, corporate social responsibility efforts, strategic positioning using SWOT and Porter's Five Forces analyses, and measures for implementing its strategy related to marketing, operations, sustainability, and technology.

1. Critical analysis of
GlaxoSmithKline’s Strategy
- Clifford Moon

2. Content
 Introduction (‘GlaxoSmithKline’)
 Organisational Goals
 Planning of the company
 Competitive Advantage
 Corporate Social Responsibility of company
 Positioning of the company
 Strategy Implementations
 Recommendations
 References

3. GlaxoSmithKline plc
• Our organisation has rich history it starts from early 18th century.
• 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, feel
better and live longer”.
Vision
“To 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”.

4. Organisational Goals
Every organisations have goals and to achieve this they need strategy. GSK
adopted various strategies to achieve growth, reduce risk and improve GSK‟s
long term financial performance.
Grow a diversified global business:
GSK is focusing mainly growth in emerging markets and also on its consumer
products 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 GSK’s 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)

5. Planning (GSK Annual Report 2010)
Grow a diversified global Deliver more products of Simplify GSK’s operating
business value model
• Drive growth in the • Focus on the best science • Evolve our commercial
pharmaceutical business • Diversify through model
in our core markets externalisation • Re-shape manufacturing
• Fulfil the potential of • Re-personalise R&D • Streamline our processes
Emerging Markets • Focus on return on • Reduce working capital
• Expand our business in investment
Japan
• Build our leadership in
dermatology
• Grow the vaccines and
Consumer Healthcare
businesses

6. GSK’S Business Model
(Annual Report, 2010)

7. Group Sales (GSK Annual Report 2010)

8. Competitive advantage
(Chandon, 2003)

9. Top Pharmaceutical Companies
3 years Ranking Trend
2008 2009 2010
7
3
7 8
5
4 2
4 2 7 6
3 4
1
1 2 3
1
(Roth, 2008, 2009, 2010)

10. Corporate social responsibility of GSK’s
• 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)

11. Positioning
Strategic positioning is mainly concerned with the impact on strategy of the
external environment, internal resources and competences, and the
expectations and influence of stakeholders.
(Johnson and Scholes, 2005)

12. Positioning of GSK
 Two and a half years ago, GSK has changed its business
strategy to provide cost effective , new and effective medicines
by restructuring and rigorous capital allocation.
 Restructuring programme has allowed to diversify its sales
base from low growth markets to key growth areas such as
emerging economies.
 During 2010 it has continued to improve its R&D
pipeline, environmental sustainability and commitment towards
neglected tropical diseases.
(GSK, 2011)

13. SWOT
Analysis of key environmental issues and the strategic capability could give the
Current 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: Weakness :
 Global presence and well  Patent infringement claims.
diversified.  Increasing generic competition.
 Industry leader in R&D.  Dependence on low growth
 Strong sales and marketing. products.
 Life cycle management strategies.
 Strong financial position.
(Alacra.com, 2010)

14. Opportunities Threats
 Growth in emerging markets.  Competitive pressures.
 Enhanced product offering.  Increasing presence of counterfeit
Drugs.
 Movement into oncology and
biologics market.  Impact of generic products on
sales made by franchises.
 Organic growth.
 Further setbacks in R&D pipeline.
(Alacra.com, 2010)

15. Bowman's strategic clock
(Faulkner & Bowman, 1995)

16. Porters Five Forces Model for Developing Countries :
New Market Entrants :
• Recognized Marketing Code
Buyers Powers :
Competitive Priority : • Consumers do not have
Barriers to Entry :
• Highly Competitive
• Government policy bargaining power.
• Low Fixed Costs & High • Price sensitivity is less.
• Brand Recognition
Working Capital • Brand identity in the hands of
• Differentiation Strategy influencer.
Power of Product and Technology
Development :
• Reforming R & D
• Entrants of New Vaccines by 2011 end.
• Restructuring for Diversity and
Strengthening.
(Porter, 2008)

17. • 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.

18. Measures (GSK Annual Report 2010)
Grow a diversified global Deliver more Simplifying the
business products of value operating model
• Performance of core • Contribution to sales of • Delivery of major
pharmaceuticals and new products restructuring
vaccines businesses • Number of reimbursable programme
• Diversification of sales product approvals and • Reduce working capital
• Contribution of filings
Emerging Markets to • Sustaining late-stage
our overall sales and pipeline
growth • Enhanced R&D
• Growth of Consumer productivity and
Healthcare business increased externalisation
• Expansion of Japanese for Drug Discovery
business
• Build biopharmaceutical
portfolio

19. 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 more
products of value.
• Operations : Simplify GSK‟s operating model
• Sustainability: Increase growth, reduce risk and improve long-term
financial performance
• Technology : Research and Development “R&D”

20. Marketing Operations
 Marketing strategy changes  Operations strategy deals with the
according to the region where the design and management of
products, processes, services and
group is providing its products. supply chains.
Pharmaceutical products are
subjected to price controls by the  GSK is removing avoidable
government institution or private processes and structures. The new
simplified operating will release
more resources for investment and
 GSK‟s marketing strategy is higher returns for share holders.
different they always innovate new
medicines as well as they enhance its  Simplifying organisation to speedup
old products with mild alterations decision making and improve
and deliver it to the consumer alignment to business priorities
accordingly
 Striving to ensure simpler and
efficient cross business process and
structures.
(Weyzig, 2004)

21. Sustainability Technology
 As part of environment, health, safety  Technology depends on a vibrant
and sustainability policy (EHSS) and and productive R&D function that
to achieve global leadership and encourages creativity and facilitates
excellence it works with various stake the accelerated discovery and
holders to reduce its carbon foot print. development of new medicines and
vaccines.
 GSK has revised its sustainability
strategy in 2010 to reduce its annual  A refocus on the best science led us
costs by £100 million by 2020. to create an entrepreneurial
environment in discovery and
 It acts beyond the operations to reduce medicine development.
carbon emissions resulting from
supply chain and sales to customers.
 GSK have strongest development
pipelines of potential new medicines
 Its vision is to reduce co2 emissions and vaccines in the industry.
by 25% in coming ten years and make
its products carbon neutral by 2050.
 GSK build collaborations and links
with other research groups
(GSK, 2011)

22. Recommendations
 In emerging markets it should adapt a strategy to
protect itself from counterfeiting of its drugs.
 Create new modelling tools to update data and
influence strategic decision making.

23. 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 15th
November 2011]
 Chandon, P. (2003) „Innovative marketing strategies after patent expiry: The case of GSK‟s antibiotic
Clamoxyl 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 [Accessed
10th 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]