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 - – competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, there is backlash against globalization, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices,
geopolitical disruptions, increasing energy prices, 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 -
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.
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.
High switching costs
– The high switching costs that Cedd Discovery 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.
Superior customer experience
– The customer experience strategy of Cedd Discovery in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Technology & Operations field
– Cedd Discovery 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 Cedd Discovery in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Strong track record of project management
– Cedd Discovery is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
Highly skilled collaborators
– Cedd Discovery 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 GlaxoSmithKline: Reorganizing Drug Discovery (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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 -
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.
Slow decision making process
– As mentioned earlier in the report, Cedd Discovery 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. Cedd Discovery 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.
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.
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.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Cedd Discovery 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.
Increasing silos among functional specialists
– The organizational structure of Cedd Discovery is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Cedd Discovery needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cedd Discovery to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study GlaxoSmithKline: Reorganizing Drug Discovery (A), in the dynamic environment Cedd Discovery has struggled to respond to the nimble upstart competition. Cedd Discovery has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study GlaxoSmithKline: Reorganizing Drug Discovery (A) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case GlaxoSmithKline: Reorganizing Drug Discovery (A) can leverage the sales team experience to cultivate customer relationships as Cedd Discovery is planning to shift buying processes online.
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.
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 -
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.
Buying journey improvements
– Cedd Discovery can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. GlaxoSmithKline: Reorganizing Drug Discovery (A) 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.
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.
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.
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.
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.
Using analytics as competitive advantage
– Cedd Discovery 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 GlaxoSmithKline: Reorganizing Drug Discovery (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cedd Discovery to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Cedd Discovery can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cedd Discovery 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. Cedd Discovery 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 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 -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Cedd Discovery will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
Technology acceleration in Forth Industrial Revolution
– Cedd Discovery has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Cedd Discovery needs to keep up with the evolution of technology in the Technology & Operations 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 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.
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 .
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 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) .
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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cedd Discovery in the Technology & Operations industry. The Technology & Operations 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.
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.
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.
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.