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 - – technology disruption, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, there is backlash against globalization, wage bills are increasing, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, 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 -
Successful track record of launching new products
– Pharm Gsk has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pharm Gsk has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Pharm Gsk in the sector have low bargaining power. The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pharm Gsk to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Pharm Gsk is one of the most innovative firm in sector. Manager in The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Effective Research and Development (R&D)
– Pharm Gsk has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Operational resilience
– The operational resilience strategy in the The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Highly skilled collaborators
– Pharm Gsk has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
Lack of clear differentiation of Pharm Gsk products
– To increase the profitability and margins on the products, Pharm Gsk needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Pharm Gsk has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets should strive to include more intangible value offerings along with its core products and services.
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.
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.
Need for greater diversity
– Pharm Gsk has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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 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.
No frontier risks strategy
– After analyzing the HBR case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Pharm Gsk 's lucrative customers.
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 -
Loyalty marketing
– Pharm Gsk has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pharm Gsk is facing challenges because of the dominance of functional experts in the organization. The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pharm Gsk in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Developing new processes and practices
– Pharm Gsk can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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.
Learning at scale
– Online learning technologies has now opened space for Pharm Gsk to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
Building a culture of innovation
– managers at Pharm Gsk can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Pharm Gsk to increase its market reach. Pharm Gsk will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
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 -
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.
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.
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.
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 .
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.
Increasing wage structure of Pharm Gsk
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Pharm Gsk.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The GSK Scandal: When Questionable Global Practices Met Imperfect Institutions in Emerging Markets, Pharm Gsk may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pharm Gsk in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
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.
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.
Stagnating economy with rate increase
– Pharm Gsk can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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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