Porter’s generic strategies for GlaxoSmithKline

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 Table of Contents

Porter’s Generic Strategy..................................................................................................3

Resources of GlaxoSmithKline (GSK)...............................................................................4

Capabilities........................................................................................................................5

References.........................................................................................................................6

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Porter’s Generic Strategy

According to Michael Porter there are four business strategies which are generic in

nature. Following figure represents these four strategies

[Source: Tutor2u.net]

The cost leadership and differentiation strategies are adopted when the firm is operating

in a broad range of market, but cost focus and differentiation focus strategies are

adopted when the firm is operating in a narrow industry or market (Tutor2u, n.d.). These

strategies are adopted on the basis of the resources and capabilities that the

organization has.

Generally any organization’s main resources refer to its human resources, financial

resources, time, infrastructure, knowledge, information technology etc. On the other

hand organisation’s capabilities refer to its ability to retain talent, ability to innovate new

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product, ability of learning from past experiences, ability to improve efficiency, ability to

identify target customers etc.

Resources of GlaxoSmithKline (GSK)

Pharmaceutical giant GlaxoSmithKline (GSK) started its operation in 1715. Today it is

one of largest and oldest companies in the world. GSK’s headquarter is located in UK

and its operation is based in US. As far as company’s human resources is concerned

there are 99,000 people in more than 100 countries working in GSK (GlaxoSmithKline,

n.d.). GSK is a financially sound organization. Last year company’s total turnover was

24 billion euro. Company’s strong financial condition can be further justified by the fact

that every hour GSK spend around US$562,000 in finding new medicines. As far as

infrastructure is concerned GSK has more than 100 sites in 68 countries.

Being the second largest pharmaceutical company GSK has been successfully aligned

all its resources to its business strategies. Currently company is focusing on three major

strategies that it has adopted. These three strategies are, growing a diversified global

business, delivering more products of value and simplifying the operational model.

Company is utilizing its vast pool of human resources in order to build a diversified

global business. Apart from human resources GSK is one of the largest users of IT

which helps the company in order to achieve its objectives. According to the company

IT plays important strategic roles as it facilitates access to global information. IT also

facilitates global communication which is crucial in case of mergers and acquisitions.

According to GSK, IT enables the extension and transformation of major business

activities. IT supports major operational processes at all level of operation starting from

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local to global (GlaxoSmithKline, n.d.). As a result it is quite clear that IT helps GSK in

the process of simplifying its business model. GSK give huge importance to its research

and development process in order to produce more products of value. Moreover

company has vast experience in its industry and this would help in achieving its

objectives.

Capabilities

GSK is operating successfully for a period of more than a century. GSK’s capabilities

are unquestionable. Every year GSK produce 6 billion Panadol tablets, 9 billion Tums

tablets and 600 million toothpaste tubes. According to GSK, every second it distributes

over 35 doses of vaccine. GSK is master of innovating new medicines and most

importantly the company produces them in a very cost effective and efficient way so that

its business purposes get fulfilled. Company achieve differentiation and cost leadership

strategies by innovating new products in various cost effective ways. GSK has a long

history and the company is continuously learning from its past experiences. GSK is

currently employing almost 99,000 people and this proves its capability of retaining high

talent, because with this huge number of employees company is delivering value to the

customers. Almost 15,000 GSK employees are involved in R&D. GSK’s capabilities

regarding creating new products, retaining talent and operating efficiently have helped it

in successful achievement of its objectives and this has happened by aligning these

capabilities with it’s business strategies.

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References

GlaxoSmithKline, No Date, GSK at a glance, About Us, [online] available at:

http://www.gsk.com/about/ataglance.htm [Accessed on November 24, 2009]

GlaxoSmithKline, No Date, Information Technology, Annual Report, [online] available at:

http://www.gsk.com/financial/reports/ar/report/descrip_of_bus/info_tech/info_tech.html

[Accessed on November 24, 2009]

Tutor2u, No Date, Competitive Strategies, strategy - competitive advantage, [online]

available at: http://tutor2u.net/business/strategy/competitive_advantage.htm [Accessed

on November 24, 2009]