The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets
China's healthcare reforms in the 1980s left the country's hospitals under-subsidized and its medical officials underpaid. Hospitals relied on profits generated from the provision of medical services to cover the funding gap, while doctors became kickback seekers to make up for their low rates. In traditional markets, global pharmaceutical companies ("pharm companies") are no strangers to wooing hospitals and doctors to favor prescriptions of their drugs. These questionable "marketing" practices were taken to the next level in the China market. Streams of financial flows, legal or not, from pharm companies to hospitals and doctors to win their favor in prescribing their drugs became a structurally embedded problem of the country's healthcare system. The Chinese government introduced a new round of reform in 2009. While it promises to spend millions more on healthcare, its action to wipe out bribery and other kickback-seeking behaviors of the industry left many players perplexed. The first to take the heat was GlaxoSmithKline Inc. ("GSK"), a large British pharm company active in the China market since 1984. In July 2013, the Chinese government launched an investigation on GSK's China operation regarding its activities that lure hospitals doctors and administers to buy GSK drugs. The alleged practice of bribery is an industry open secret common to pharm companies. Is this investigation an indication that the Chinese government is targeting multinationals in favor of local players? Despite high-voltage growth rates, this regulated industry in the market economy with Chinese characteristics only has a bare-boned distributions infrastructure, while it is filled with patient-trying administrative hurdles, has price restrictions on an expanded list of drugs, and offers weak institutional protection for companies' intellectual property. Will long-term investment in the country pay off? Should GSK continue its China business? Should it change its strategy in China?
Swot Analysis of "The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets" written by Zhigang Tao, W.H. Lo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pharm Gsk facing as an external strategic factors. Some of the topics covered in The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets case study are - Strategic Management Strategies, Corporate governance, Crisis management, Emerging markets, Ethics, Growth strategy, Performance measurement and Strategy & Execution.
Some of the macro environment factors that can be used to understand the The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets casestudy better are - – increasing commodity prices, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, wage bills are increasing, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing energy prices, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pharm Gsk, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pharm Gsk operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets can be done for the following purposes –
1. Strategic planning using facts provided in The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets case study
2. Improving business portfolio management of Pharm Gsk
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pharm Gsk
Strengths The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pharm Gsk in The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets Harvard Business Review case study are -
Analytics focus
– Pharm Gsk is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Zhigang Tao, W.H. Lo can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Cross disciplinary teams
– Horizontal connected teams at the Pharm Gsk are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Learning organization
- Pharm Gsk is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Pharm Gsk is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Pharm Gsk has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pharm Gsk to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Pharm Gsk is one of the leading recruiters in the industry. Managers in the The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Pharm Gsk in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Strategy & Execution industry
– The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets firm has clearly differentiated products in the market place. This has enabled Pharm Gsk to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Pharm Gsk to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Pharm Gsk has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Pharm Gsk digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pharm Gsk has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Pharm Gsk is present in almost all the verticals within the industry. This has provided firm in The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to lead change in Strategy & Execution field
– Pharm Gsk is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Pharm Gsk in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Pharm Gsk has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets are -
Slow to strategic competitive environment developments
– As The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets HBR case study mentions - Pharm Gsk takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets, in the dynamic environment Pharm Gsk has struggled to respond to the nimble upstart competition. Pharm Gsk has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets, it seems that the employees of Pharm Gsk don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, Zhigang Tao, W.H. Lo suggests that, Pharm Gsk is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, Pharm Gsk needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pharm Gsk is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Pharm Gsk has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Pharm Gsk has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Pharm Gsk even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Capital Spending Reduction
– Even during the low interest decade, Pharm Gsk has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Pharm Gsk has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets, is just above the industry average. Pharm Gsk needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pharm Gsk can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Pharm Gsk to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pharm Gsk can use these opportunities to build new business models that can help the communities that Pharm Gsk operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Pharm Gsk in the consumer business. Now Pharm Gsk can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Pharm Gsk can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pharm Gsk can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Pharm Gsk can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Pharm Gsk can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Pharm Gsk can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pharm Gsk can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pharm Gsk to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Pharm Gsk to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Pharm Gsk has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pharm Gsk to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Pharm Gsk can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Pharm Gsk can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pharm Gsk can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Pharm Gsk needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Pharm Gsk has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Pharm Gsk needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Pharm Gsk in the Strategy & Execution sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pharm Gsk can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Pharm Gsk is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Pharm Gsk.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High dependence on third party suppliers
– Pharm Gsk high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pharm Gsk with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Pharm Gsk needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Pharm Gsk needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Pharm Gsk can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Weighted SWOT Analysis of The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Pharm Gsk needs to make to build a sustainable competitive advantage.
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