GlaxoSmithKline company
Introduction
The assignment is focused on launching an already existing UK company known as GlaxoSmithKline in a new market environment. The country that has been selected is New Zealand where the company wants to expand its territories to sell their products. GlaxoSmithKline is a well-known MNC pharmaceutical company in UK. The company has a good opportunity to expand its business and reach out to more consumers throughout the world by making health care easily available for all. Moreover this would also allow them to increase their sales along with diversification. The micro environment of the location is done along with Porter’s diamond model analysis for the chosen location. A brief strategic model for entering into the New Zealand market is mentioned followed by suitable recommendations and finally ending with a conclusion.
Company Information
GlaxoSmithKline (GSK) is among the largest companies of the world, they are well known for their researched based work on pharmaceutical industries, in new discoveries, manufacturing, developments and markets. The company has its amin headquarters in UK and is present in more than 160 countries in the world at current date. The main markets of the company are USA, Germany, France, Italy, UK and Japan. The company holds the employment of approximately 103,000 people from the world. According to reports the estimated sales of the company is about $21,441 with an operating income of $6,920 and net profit worth $4,765.
As GSK is mainly a pharmaceutical company it deals with consumer health care. The most selling GSK product is Seretide for asthma. Apart from that GSK has wide variety of products which it has been planning to launch in various developing countries across the world. The company also takes their corporate social responsibilities seriously. CSK follows a comprehensive and proactive approach towards CSR. The company is highly transparent when it comes to CSR and has their own policies and Government structure to the approach.
Justification of rational Expansion of the company and introduction of chosen location
The company is planning to expand its territorial boarders globally to reach out to many more countries in the world globally. By 1999, the company has sharpened the focus mainly on the pharmaceutical and consumer health products establishing new clinical laboratories and diversified pharmaceutical services. Here it is believed that promotion is an essential component, and hence if there is demand in the international market for pharmaceutical products the company must reach out to those countries. Expansion of a company has several advantages along with better opportunities in the growth of market and diversification.
The possible strategic choices that is available to the company for international expansion is Global strategy. GSK being one of the largest pharmaceutical companies in the world has thought of formal plan of expanding its territories and operate in numerous countries of the world.
The location that has been chosen for the company to expand is New Zealand. It would be a good chance for the GSK firm to establish new territories and reach more of the consumers in countries like New Zealand and increase the sale margin of the company as well.
SWOT on GlaxoSmithKline
GSK at the recent days are looking forward of expanding their products and investing in research and development work of the same.
Strengths of GSK
Strong R&D portfolio expansion
The main strength of the company lies on the fact that it has invested a lot of time and money in developing a strong research and development team for the company. The company was able to progress in fields of respiratory, cardiovascular and HIV related researches to name a few, and launched the suitable medicines to treat these diseases. GSK has always been committed to its technologies that have given rise to innovation and competitive strength in market positioning.
Strong Global Presence
GSK products at current date is available in more than 100 countries all over the world which has reduce the risk of depending on only few options of market I pharmaceutical departments.
Strong sale and distribution network
GSK pharmaceuticals was able to establish a strong sales and distributary network not only in UK but all in all major countries of the world and now is targeting to enter the markets of New Zealand for further expansion. A strong distributary channel has always made sure that the distribution and availability of the product is maintained everywhere.
GSK-Novartis JV
Navaritis in the year 2015 has announced a healthcare and consumer joint venture in vaccines, this has not only helped the pharmaceutical giant but also helped in penetrating and introducing new products in the share markets.
Weaknesses of GSK
Healthcare fraud has affected the brand image
GSK in some of the countries are accused for having unlawful promoted prescription, false charges of pricing and failure in proving safety data. For example the charges that were made for the promotion of antidepressant in the markets of US which was not given permission by FDA.
High quality products are exposed in generic competition and are reaching maturity
Multiple products of GSK like the vaccines has now been exposed to competition and some of its block buster products are also reaching maturity, thus can affect the sales of GSK in future days.
Opportunity of GSK
Expansion through Acquisition and Collaboration
GSK has been expanding the portfolio of its products inorganically from the earlier days. For example the collaboration of ViiV of GSK (HIV specialist) with Pfizer and Shionogi in 2016 is a great example. This kind of accusation and collaboration has helped the country in expanding the product portfolio as also market share.
Increase demand and awareness in quality health care
The increase in the demand of quality health care in New Zealand and other developing nation has given a opportunity to this pharmaceutical industry to improve the bottom line as well as the top line.
Product launches Strengthen business
GSK was able to launch different products in respiratory and metabolic businesses currently. Hence this kinds of new launches help in enhancing the portfolio of the company and strengthen the business.
Threats of GSK
Drug pricing control
In most of the countries the prices of drugs are generally controlled by the law of the government. For example in New Zealand the new pricing control policy has been proposed which can lead to decrease in the price of drugs.
Generic competition
Introduction of generic product has affected the sales of the company as generic medicine sale and increase in availability.
Intense competition in the industry
GSK products are subjected to intense amount of competition in pharmaceutical consumer subjects, thus limiting the market share.
Chosen location
Pestel analysis
The pestel analysis aims to explore some of the political, economic, social, technological, environmental and legal factors affecting the market condition of New Zealand today.
Political Factors
New Zealand follows the parliamentary democracy rules. It is under the constitutional monarchy of Queen Elizabeth II, who is the queen of New Zealand as well as the head of the state. The country is represented by the governor general who is appointed by her Majesty of queens whom the prime minister of the country appoints.
New Zealand is considered to be one of the middle powers of the world. The country showcases eight thematic powers such as economic resources, military capabilities, future resources resilience, diplomatic resource, defense network, economic relationships and cultural influence that ranking the powerful 12 countries of the world.
New Zealand is known to be a small stable and peaceful country. The corruption rate of the country is comparatively low in comparison to other countries of the world. Though the terrorist attract that took place in the Muslim places of worship in the year 2019 has shaken the whole country. Moreover the research analysts have said that there is the influence of foreign elements in influencing the domestic parties in the country. After that many political discussions are made to reduce the foreign influence in the country.
Economic factors
New Zealand is a developed and wealthy nation. The country is an agriculture based country, other industries that facilitate the economy of the country are horticulture, fishing, mining, forestry and tourism. The construction, and food and beverage also retail industries are also blooming in the country. The GDP of the country in 2017 was $205.9 billion. New Zealand is reported to have done exportation of worth$39.8 billion goods all across the world. The exportation materials include dairy, drinks, fruits, meat, fish, wood and machinery etc. to countries such as Australia, USA, China and Japan. New Zealand is also active in importing its materials from countries such as Australia, the USA, China, Singapore, Germany and Malaysia. The products that are imported are sweetened milk, butter, cheese, meat, frozen beef and wine.
New Zealand is a strong advocate for free trade. The analysts have also argued that the country has mixed economy and is facilitated by free principals of the market. Unemployment rates are seemed to go up and down occasionally in recent years. Though tax is a issue in most of the developed and developing countries but New Zealand has come up with a relatively easy tax system.
Social factors
In social environment the major languages of New Zealand are English and Maori, though Christianity is as a religion is mainly followed in the country, though there is no such official religion. New Zealand is a culturally diverse country where 89% of the people of New Zealand believe that it is a good thing to have different races, religion and cultures in one country.
New Zealand is considered to be one of the best countries of the world. The performance areas of the country such as employment, air quality, social support and satisfaction among the people are seen. The population of New Zealand is into sports and represents their countries in various sports internationally.
Apart from all the good factors New Zealand at recent days has been facing few of the social challenges such as in earning and house hold income of the people, housing affordability etc.
Technological factors
New Zealand is diverse and technologically improved. As the sector has been growing rapidly there are high chances of employment. The IT engineering in New Zealand is not limited to software engineering or project management, people here opt for organic business analysis, software and various application programs hence the It sector of the country is in high demand. New Zealand has been awarded number of times in international stage for their innovation and creativity.
Environmental factor
New Zealand is known to be one of the most vastly visited tourist destination in the world. The country is comprised of mountains, beaches, lakes, bungee jumping, biking, sky driving, hiking and marine life as some of the tourist destinations. Even the climate of New Zealand is well enough for agriculture.
Legal factors
As mentioned earlier in the pestel New Zealand is one of the least corrupted countries in the world. It usually works on foreign direct investments. New Zealand has been ranked out of 190 nations in the world bank in 2018. New Zealand has strong and independent justice system which is respected all over the world.
Porter’s Diamond Model Analysis
It is important to know that when the Diamond Model proposed by Porter it presented a different access to the competitive advantage of the country. According to researcher Adam Smity the wealth of a country is determined by the over all output of production keeping the resources specific. The opportunity cost of a resource deployment and not merely the productivity enables in determining the advantage of a country in here New Zealand in comparison to other. But porter argued that the productivity is the main factor of determination in the international competitiveness and hence the standard of living of any country can be improved as the result of the factor increase. The productivity depends on the skill of the workers, technical development, reducing the cost but at the same time producing quality products.
The six variables of the diamond model of Porter are as follows-
Factor condition is the production and infrastructure factors that are required to compete in an industry. These factors include the skills of the labors and resources available in the initial days can provide an advantage. Porter distinguished both the basic and advanced factors in two categories in one where he related the factors that are natural resources and geographical locations, cheap labor availability etc whereas the second factor consists of skilled workers, research and development institutes and high tech infrastructures etc.
Demand condition
Demand conditions are the pressure that arises from the requirements of the buyers in quality, price, or service industries. This helps in preparing the GlaxoSmithKline to compete globally in the future phases.
Related and supporting industries
The network of suppliers and distributers that supports an industry in cooperating with other industries in international front. This is mostly for the cases where the supporting networks themselves have been competing internationally. It is difficult to compete if GlaxoSmithKline does not have enough access to networks that could both reduce the cost by efficient supply chain management, high quality components and raw materials.
Firm Strategy and rivalry suggests the rigorousness of the domestic competing industries. The competitiveness of an industry for example GlaxoSmithKline is highly influenced by the increase in productivity that are required to compete internationally.
The Role of Chance
The role of chance are the external factors like war or natural calamities that can effect or benefit the country that is New Zealand in this case and industry that is GlaxoSmithKline.
The Role of Government
All the policies and regulations that are made by the policy makers in every level of government can effect GlaxoSmithKline or the country that has been chosen for the company launch New Zealand can be beneficial or adversely effective. When a paternalistic government protects the local organization from the foreign organization this leads to the increase in organization’s productivity and quality.
Problems of subsidiary operating in new environment and recommendations
Dealing with construction permit and trouble in getting entry in mature market
Competition is expected to be intense
Governmental interference and lack of maturity in local partners.
The market of New Zealand is mature and sometimes can be tricky as well. The country has maintained a world class profile and GlaxoSmithKline need to make sure that they match the high profile requirement of the country. New Zealand is a small busy country so competition is harsh and massive in the country so the introduction of new brand may take long, and costly advertisement required even the location and delivery cost would be high so GlaxoSmithKline is need to invest.
Conclusion
It can be concluded from the assignment that according to micro environment analysis, porter’s diamond model analysis, SWOT analysis there are good chance of GlaxoSmithKline to launch their business in the New Zealand company, though there are certain problematic situations but that can be avoided by following the recommendation and strategies of entry provided. As it is known from the assignment the company has opportunities of expansion to grow and reach new markets.