Case Study Description of GlaxoSmithKline: Reorganizing Drug Discovery (A)
Describes the reorganization of drug discovery at GlaxoSmithKline (GSK) following the formation of GSK from the merger of Glaxo Wellcome and SmithKline Beecham. This reorganization placed nearly 2,000 research scientists into six centers of excellence in drug discovery (CEDD). Each CEDD focused on a small set of therapeutic areas and possessed decision rights over the progression of pharmaceutical compounds through the early stages of development. Describes the proposed structure for the CEDDs and their relationship to remaining centralized departments within GSK's R&D organization. Addresses issues about the benefits of focus vs. diversification in R&D, the role of decentralized vs. coordinated decision making, and the importance of alignment between the structural and infrastructural (e.g., performance incentives) aspects of an operating model. Using the empirical context of mergers in the pharmaceutical industry, the case allows students to build broader insights about the interaction between organizational form and operating performance.
Swot Analysis of "GlaxoSmithKline: Reorganizing Drug Discovery (A)" written by Robert S. Huckman, Eli Peter Strick includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cedd Discovery facing as an external strategic factors. Some of the topics covered in GlaxoSmithKline: Reorganizing Drug Discovery (A) case study are - Strategic Management Strategies, Mergers & acquisitions, Organizational structure, Productivity, Reorganization, Research & development, Risk management and Technology & Operations.
Some of the macro environment factors that can be used to understand the GlaxoSmithKline: Reorganizing Drug Discovery (A) casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings,
banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of GlaxoSmithKline: Reorganizing Drug Discovery (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in GlaxoSmithKline: Reorganizing Drug Discovery (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cedd Discovery, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cedd Discovery 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 GlaxoSmithKline: Reorganizing Drug Discovery (A) can be done for the following purposes –
1. Strategic planning using facts provided in GlaxoSmithKline: Reorganizing Drug Discovery (A) case study
2. Improving business portfolio management of Cedd Discovery
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cedd Discovery
Strengths GlaxoSmithKline: Reorganizing Drug Discovery (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cedd Discovery in GlaxoSmithKline: Reorganizing Drug Discovery (A) Harvard Business Review case study are -
Innovation driven organization
– Cedd Discovery is one of the most innovative firm in sector. Manager in GlaxoSmithKline: Reorganizing Drug Discovery (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Technology & Operations industry
– GlaxoSmithKline: Reorganizing Drug Discovery (A) firm has clearly differentiated products in the market place. This has enabled Cedd Discovery to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Cedd Discovery to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Cedd Discovery 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 GlaxoSmithKline: Reorganizing Drug Discovery (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Cedd Discovery
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cedd Discovery does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Cedd Discovery in the sector have low bargaining power. GlaxoSmithKline: Reorganizing Drug Discovery (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cedd Discovery to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the GlaxoSmithKline: Reorganizing Drug Discovery (A) 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.
High brand equity
– Cedd Discovery has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cedd Discovery to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Cedd Discovery is one of the leading recruiters in the industry. Managers in the GlaxoSmithKline: Reorganizing Drug Discovery (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Cedd Discovery has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in GlaxoSmithKline: Reorganizing Drug Discovery (A) 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.
Diverse revenue streams
– Cedd Discovery is present in almost all the verticals within the industry. This has provided firm in GlaxoSmithKline: Reorganizing Drug Discovery (A) 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.
Analytics focus
– Cedd Discovery 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 Robert S. Huckman, Eli Peter Strick 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.
Learning organization
- Cedd Discovery 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 Cedd Discovery is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in GlaxoSmithKline: Reorganizing Drug Discovery (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses GlaxoSmithKline: Reorganizing Drug Discovery (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of GlaxoSmithKline: Reorganizing Drug Discovery (A) are -
Low market penetration in new markets
– Outside its home market of Cedd Discovery, firm in the HBR case study GlaxoSmithKline: Reorganizing Drug Discovery (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Cedd Discovery products
– To increase the profitability and margins on the products, Cedd Discovery needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study GlaxoSmithKline: Reorganizing Drug Discovery (A), is just above the industry average. Cedd Discovery 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, Cedd Discovery 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 cash cycle compare to competitors
Cedd Discovery has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– Cedd Discovery 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.
Slow to strategic competitive environment developments
– As GlaxoSmithKline: Reorganizing Drug Discovery (A) HBR case study mentions - Cedd Discovery 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 GlaxoSmithKline: Reorganizing Drug Discovery (A), it seems that company is thinking about the frontier risks that can impact Technology & Operations 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Cedd Discovery 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, Cedd Discovery is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study GlaxoSmithKline: Reorganizing Drug Discovery (A) 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 existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Cedd Discovery supply chain. Even after few cautionary changes mentioned in the HBR case study - GlaxoSmithKline: Reorganizing Drug Discovery (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cedd Discovery vulnerable to further global disruptions in South East Asia.
Opportunities GlaxoSmithKline: Reorganizing Drug Discovery (A) | 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 GlaxoSmithKline: Reorganizing Drug Discovery (A) are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cedd Discovery 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 Cedd Discovery to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cedd Discovery 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, GlaxoSmithKline: Reorganizing Drug Discovery (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Cedd Discovery can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Cedd Discovery 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.
Building a culture of innovation
– managers at Cedd Discovery 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 Technology & Operations segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cedd Discovery is facing challenges because of the dominance of functional experts in the organization. GlaxoSmithKline: Reorganizing Drug Discovery (A) 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.
Better consumer reach
– The expansion of the 5G network will help Cedd Discovery to increase its market reach. Cedd Discovery 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cedd Discovery 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.
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 Cedd Discovery 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.
Developing new processes and practices
– Cedd Discovery can develop new processes and procedures in Technology & Operations 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.
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 Cedd Discovery in the consumer business. Now Cedd Discovery can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cedd Discovery can use these opportunities to build new business models that can help the communities that Cedd Discovery operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cedd Discovery in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Threats GlaxoSmithKline: Reorganizing Drug Discovery (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study GlaxoSmithKline: Reorganizing Drug Discovery (A) are -
Consumer confidence and its impact on Cedd Discovery demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Stagnating economy with rate increase
– Cedd Discovery 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cedd Discovery 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 GlaxoSmithKline: Reorganizing Drug Discovery (A) .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cedd Discovery with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Cedd Discovery is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Cedd Discovery in the Technology & Operations sector and impact the bottomline of the organization.
Increasing wage structure of Cedd Discovery
– 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 Cedd Discovery.
High dependence on third party suppliers
– Cedd Discovery 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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study GlaxoSmithKline: Reorganizing Drug Discovery (A), Cedd Discovery may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
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 Cedd Discovery.
Regulatory challenges
– Cedd Discovery 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 Technology & Operations industry regulations.
Weighted SWOT Analysis of GlaxoSmithKline: Reorganizing Drug Discovery (A) 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 GlaxoSmithKline: Reorganizing Drug Discovery (A) 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 GlaxoSmithKline: Reorganizing Drug Discovery (A) 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 GlaxoSmithKline: Reorganizing Drug Discovery (A) 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 GlaxoSmithKline: Reorganizing Drug Discovery (A) 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 Cedd Discovery needs to make to build a sustainable competitive advantage.
