INSTITUTE OF BUSINESS MANAGEMENT

MAN405

Under instruction of Sir Javaid Ahmed

Report Designed By:
Ahsan Nasir (20181-24285)
Dilawar (20191-25727)
Tehreem (20191-25913)
Asfaar (20181-24287)
Marium Nabi (20181-24335)

Strategic Analysis of GlaxoSmithKline

Abstract:

This case study mainly focuses on the analysis of pharmaceutical industry and
its enticement, also furnishing strategies for GSK. The industry discovers,
manufactures, and furnishes drugs for usage as medications to be applied to
patients. The intention is to cure diseases, infections through medicine, vaccines
and provide relief. Higher capital, little or no substitutes, level of uniqueness,
high number of consumers, all these factors provide a strong contribution in the
pharmaceutical industry. With the help of industry analysis and internal audit,
it was recognized that GSK stands on differentiation strategy. GSK is involved
in making medicines for all diseases, vaccines and consumer healthcare
products. It provides a competitive edge in comparison with its competitors
Roche and Gilead. Having an established network and distribution channels,
R&D and quality of medicines reflects GSK's increased market share. GSK's
implementation of A.I can improve their manufacturing side, boost up the speed
of production and quick delivery of medicines to hospitals, wholesalers and
retailers will ensure the customer retention.

Key Words: Pharmaceutical Industry, GSK, Roche, Gilead, differentiation, healthcare,

vaccines.
The pharmaceutical industry aims in developing, producing, marketing the
branded and basic pharmaceuticals. These companies tends to be efficient in
production and manufacturing department and open to contractual development
that boost their sales and growth. They provide comprehensive services to and
from drug development and manufacturing area to one firm and other.

Industry Structure and Macro Environment Analysis:

Threat of new entrants:

Firms have spent millions of dollars on their O2research and development to
reach at a certain stage and it is very difficult for new firms to compete with
them at in their initial stage. Also, there are different complicated stages a
company must go through in order to get permission to start their operations
which too act as a barrier to entry. Thus, the threat of new entrants is low to
moderate. One of the major barriers to entry is high cost, the amount of
capital needed to lead operation in this industry is enormous. Another
reason, it is difficult for new companies to gain market share is that it is very
difficult to make consumers try a product that they have never heard of or
tried, they usually rely on brand names that have already established
themselves in the market. With that, these large firms have already
accomplished O1economies of scale which makes it problematic for new
entrants to compete in the domain of price. These smaller businesses do not
constitute a substantial threat to the pharmaceutical industry. O4Patents can
be registered to gain competitive advantage. When new drugs are in the
early stages of development, one of the most common exit options for a
startup investor is to sell out to a major Pharma company. Such Companies
are involved in O3robust networking and distributing channel which is hard
to break. T2Offering incentives to doctors and healthcare organization to use
their product can help new firms enter the market easily. T1Due to the high
profit margins the new firms entering can sell at lower price to steal market
share.
Scaling (7, 2, 0)

Low 2 High

Bargaining power of buyers:

There are two types of buyers in pharmaceutical industry: healthcare

organization and general patients.
There are multiple suppliers producing medicines or products that solve the
same problem which give those institution some power to bargain and get
competitive prices thus, Hospitals and healthcare organizations have moderate
buying power
There are O5large number of buyers who are in need of medicines hence
reducing the bargaining power of the buyers. The other buyer is general patients
which have low negotiating power as they have no option other than buying the
medicine prescribed by their doctor, O7so their demand is inelastic, a change in
price will have little influence on demand of these buyers as they have been left
with no other option. T3 Products that are easily to replicate will eventually
increase the bargaining power of buyers in the long run. O6As the customer base
increase so does the innovation of products which increase the sale of existing
products as well.

Scaling: (4,5,0)
LOW 4 HIGH

Threat of Substitutes
There are no real substitutes for medicines that can provide the same quality
performance. Because the cost in switching to a substitute is not high, the
consumers are not willing to switch and compromise on performance. The most
common substitutes that can be used are tea, coffee, and milk. O8Their energy
is less effective in treatment than medicines hence performance limitations do
exist. Hence the threat of substitutes are low. Besides how effective and instant
cure T3these medicines provide they are far more expensive if compared to
substitutes I.e. (milk, tea or coffee)
Scaling: (3, 0, 1)

Low 4 High
h

Bargain Power of Suppliers

There are a high number of potential suppliers in the industry who are unable
to dictate their prices to the firms in terms of raw material availability. It is easy
to switch between suppliers as integration and alliance is not required between
supplies and the buyer. The suppliers provide standardized products and if one
supplier provides raw materials at a higher price, companies can switch to
another supplier who can get the same raw materials at a lower price.
T4
Uncertain supply side shocks can reduce profit margin of the firm as cost of
purchases has a significant effect on manufacturing cost.
Thus the Bargaining power of suppliers is low

Scaling: (4, 2, 1)

3.5
Low high

Rivalry:
It is harder for firms to get out of business because of large capital investment
and contract commitments. The fixed costs of the business are a relatively high
portion of total costs. The customers would not incur significant costs in
switching to a competitor, thereby increasing the rivalry amongst the
competitors. The product is not unique but is differentiated on the basis of
brand which is greatly accepted by the consumers. During COVID19, T5there was
a lot of buzz in terms of the best vaccine to cure the disease, the decision on
which one was the most effective. Hence experiencing low threat from
competitors.
Scaling: (3,3,2)

Low 4 High

*Refer to Annexure 1 for templates of the Determinants of Industry Profitability.

PEST Analysis
While the pharmaceutical sector is rising significantly, the industry's future
prospects are uncertain. Despite an ageing population and rising obesity rates,
the business is being hindered by government pricing restrictions and a new
healthy trend. We'll look at the Political, Economic, Sociocultural, Technological
factors that will shape this industry's future in this PESTLE analysis.

Political:
The form of government plays a great role. If the government demands
companies to sell medicines at high prices, T6the government ultimately rules
on companies, which increase the chance that companies might lose customers
because it decreases their purchasing power and people curses the government.
There is a possibility that to acquire high quality raw materials, companies
approach good suppliers. Those suppliers charge high prices which ultimately
increase the cost of acquiring raw materials. T9Even in most cases, there are
certain taxes, duties which a country charges according to their laws where
suppliers and companies are at different locations. Ultimately, it increases the
cost. So companies pass their cost to customers by charging high prices. To open
a company, entrants have to follow legal procedure like registration of company
in registrar office, following rules and laws to make medicine etc. This long
procedure is not easy, requires heavy expenses and in most cases companies
provide bribe to get things done quickly but depends on the form of
government. They have to pay heavy tax while doing transactions of raw
materials with suppliers in other countries. So this all requires heavy investment
for entrants. People won't switch to substitutes if the government increases the
prices of medicines because disease, infection can only be treated by medicines.
People would stop buy when there are high prices, but when prices go down
people will buy. Pharma companies are usually involved in competition because
they are constantly improving their medicines in order to serve better to
customers. There can be low rivalry on price but price doesn't ensure survival. It
is the value of the product which defines their survival. Pharma's objective is to
provide the best medicine which can treat people's disease.
Economical:
In general, household healthcare spending is on the rise. That is to say, the
ordinary person spends an increasing amount of money on healthcare
including medication each year. Thus, the pharmaceutical sector will only gain
from more income.
Change in Exchange rates significantly affects the suppliers as the raw
materials are acquired from different locations. Devaluation of the currency
and declining GDP trends may increase the cost of medicines. T7Increase in
interest rate also restricts the ability of suppliers to expand their businesses
which negatively affects the pharmaceutical industry in terms of greater
influence of suppliers to control the prices of raw materials.
Pharmaceutical companies require a hefty amount of investment in order to
enter the market. Energy availability and sustained economy determines the
future prospects of a pharmaceutical company. Interest rate, wage/price
controls, currency convertibility are such elements which determines the entry
of new players in the market. If an economy is established having low interest
rate and low unemployment, new entrants might have to face restrictive
economic pressures.
The type of economy pharma companies operate in, determines the threat of
substitutes. In an underdeveloped economy, having low literacy rate, people
won’t switch to substitutes if the prices go high. They will wait for the prices to
drop in order to buy.
Pharma companies future prospects are dependent on the quality of medicines
they produce which encourages healthy competition since only price wouldn’t
ensure their survival in the industry.

Sociocultural:
High social movements have an impact on the demand for a company's products
and how it works. In general, household healthcare spending is on the rise. That
is to say, the ordinary person spends an increasing amount of money on
healthcare including medication each year. Thus, the pharmaceutical sector will
only gain from more income.
As global healthcare has improved, we are now confronted with the problem
of an ageing population. Older people have more serious health problems than
younger people. As a result of the ageing population, we now have additional
health challenges to deal with. As a result, there will be more demand for
pharmaceutical products, resulting in increased revenue for the
pharmaceutical sector. Obesity is linked to a number of secondary health
conditions, many of which require pharmacological treatment. Consequently,
O9
rising obesity rates are boosting up sales of certain medicines, boosting the
pharmaceutical industry's overall earnings. Hence, it’s an opportunity for
pharmaceutical industry to capture more of this segment.
T10
The older population, for example, may indicate a lesser and perhaps less
motivated workforce, thereby increasing the cost of labour. Furthermore,
businesses may adjust their management techniques to react to the social
trends that have resulted from this.
Considering an ageing population and rising obesity rates, there is a growing
trend toward greater health awareness, particularly in advanced nations.
Healthy living is growing fashionable among young and middle-aged folks.
T8Healthy options are really popular right now, from regular exercise to having

healthy diet and even meditation. If this pattern continues and more people
choose better lifestyles, pharmaceutical items may become less necessary in the
long run. Conclusively, rising health trend might prove to be a threat for the
pharmaceutical industry. Increased focus over health issues like rising obesity
and ageing population, topped up with growing healthcare spend, would surely
create a beneficial competition between pharma companies in order to capture
most of the still growing healthcare segment. Therefore, increased focus
towards healthy lifestyle might improve overall productivity of the
pharmaceutical companies.

Technological:
In today's world, businesses of all types have a strong incentive to market
directly to their customers. Technology allows for this; in particular, modern
advertisement systems that allow firms to communicate with users on their
favourite websites can considerably boost advertising prospects. Businesses will
be able to cut their customer acquisition expenses and win larger customer base
by advertising directly to consumers. It will assist the industry flourish as well-
intentioned marketers get new customers to buy different medications.
COVID-19 enables the use technology like zoom, Google meet to interact with
suppliers to create vaccines acquiring raw materials at stable prices because the
whole world went into lockdown. Most industries were shut down. The low or
stable prices allowed suppliers to resume their business and companies to
minimize their cost.
Entrants has to work on every perspective to be a company which includes
R&D, IT equipment to employees in headquarters, machine and spray
medicines, effective manufacturing plants which requires heavy investment.
Medicines cannot be replaced by other products because they are only used to
cure diseases and O10they got the chance to sell these medicines via online
platforms like Amazon and Daraz even at the time of strict lockdown situation
in the world.
Pharma companies have competition among them. It adds value to their
product. The research about the effectiveness of COVID-19 vaccine on the
internet, social media would have created preferences among people about
which vaccine to choose, thus companies are not charging anything, and they
are working on the welfare of the people.
EXTERNAL FACTOR EVALUATION (EFE) MATRIX
Weighted
Opportunities Weight Rating
Score
1 Achieving economies of scale which can increase profit margins O1
0.04 2
0.08
2 Investing in research and development to sell unique and innovative
products O2 0.03 2
0.06
3 Establishing a robust networking and distributing channel which is hard to
break O3 0.05 2
0.1
4 Patents can be registered to gain competitive advantage O4
0.03 2
0.06
5 Large number of buyers and smaller purchases reduces the bargaining
power of buyers. O5 0.04 1
0.04
6 Increasing customer base by introducing innovative products can increase
the sale of existing products as well. O6 0.06 2
0.12
7 The demand is inelastic which means customers are not sensitive to
changes in price O7 0.04 1
0.04
8 Comparatively, medicines are being bought on an everyday basis. Whereas
milk, tea and coffee create a time period for customers to purchase. O8 0.10 2
0.2
9 Rising obesity rates are boosting up sales of certain medicines, boosting
the pharmaceutical industry's overall earnings. O9 0.08 3
0.24
10 Medicines were sold via online platforms like Amazon and Daraz even at
the time of strict lockdown situation in the world. O10
0.06 3
0.18

Weighted
Threats Weight Rating
Score
1 High profit margins, new firms entering can sell at lower
0.04 2
price to steal market share T1 0.08
2 Offering incentives to doctors and healthcare organization
to use their product can help new firms enter the market 0.03 1
easily. T2 0.03
3 The price of medicines is very high in comparison with
0.04 2
tea, coffee, and milk. T3 0.08
4 Uncertain supply side shocks can reduce profit margin of
the firm as cost of purchases has a significant effect on 0.03 2
manufacturing cost. T4 0.06
5 Research on COVID-19 vaccines offered by various
companies created a lot of buzz among people as to which 0.09 3
vaccine is most suitable to cure the disease T5 0.27
6 The government ultimately rules on companies, which
increase the chance that companies might lose customers 0.04 2
because it decreases their purchasing power T6 0.08
7 Increase in interest rate also restricts the ability of
suppliers to expand their businesses which negatively 0.05 2
affects the pharmaceutical industry in terms of greater 0.10
 influence of suppliers to control the prices of raw
materials T7
8 Healthy options like regular exercise to having healthy
diet and even meditation continues and more people
0.08 3
choose better lifestyles, pharmaceutical items may become
less necessary in the long run. T8 0.24
9 Even in most cases, there are certain taxes, duties which a
country charges according to their laws where suppliers 0.03 2
and companies are at different locations. T9 0.06
10 The older population, for example, may indicate a lesser
and perhaps less motivated workforce, thereby increasing 0.04 1
the cost of labor. T10 0.04
Total EFE Score 1.00 2.16

Priority issues and strategies to address these issues

O9: Rising obesity rates are boosting up sales of certain medicines, boosting
the pharmaceutical industry's overall earnings.

This must be addressed as per the following strategy:

Establish potential advocates: Collect prescriber profiles using big data and
personalize messaging for specific physicians on point-of-care and endemic
networks. A multitude of internet communication methods to be used to reach
out to your prospects so they don't become tired of your constant follow-up.
Demonstrate knowledge of typical patient scenarios and prescribing practices.
Provide real-time support to physicians by answering their medical inquiries on
point-of-care channels while they are in the medical mind-set.

O8: Comparatively, medicines are being bought on an everyday basis. Whereas

milk, tea and coffee create a time period for customers to purchase.
One cannot delay the dose of a medicine unlike tea and coffee, therefore it is
important to reveal your strategic intentions and capabilities by offering to
match competitors' prices offer, everyday low pricing, or reveal your cost
advantage. Firms should compete on quality through increased product
differentiation by adding features to a product, or build awareness of existing
features and their benefits. Emphasize the performance risks in low-priced
options. Organizations should form strategic partnerships by offering
cooperative or exclusive deals with suppliers, resellers, or providers of related
services. Moreover, companies may offer bundled prices, two-part pricing,
quantity discounts, price promotions, or loyalty programs for products in terms
of complex pricing strategy. Furthermore simple price actions to be deployed by
adjusting the product's regular price in response to a competitor's price change
or another potential entry into the market.

T8: Pharmaceuticals may become less necessary in the long run due to rising
health consciousness of consumers.
Pharmaceutical companies are now moving towards biotechnology in drugs
manufacturing which helps them develop a process involving better accuracy in
production of medicines as well as improving current procedures. Moreover,
pharma companies are now opting for more natural ingredients in their drugs
to combat rising health consciousness of consumers. Therefore,
pharmaceuticals becoming less necessary in the long run isn’t expected after the
invention of biotechnology in drug manufacturing.

T5: Research on COVID-19 vaccines offered by various companies created a lot

of buzz among people as to which vaccine is most suitable to cure the disease.
Prior researches have been misleading in the way that left consumers in the
state of confusion. As we’ve experienced Covid-19, we all know that vaccines
served as the only way to protect our lives. Researchers should be genuine and
focus on how vaccines have cured humanity rather than focus on which vaccine
is the most curable. As these researches can be biased, in a way that only a
certain brand client was tested which directed towards the conclusion that a
certain brand is the most suitable. Researches on effectiveness of vaccines in
general should be encouraged to provide a greater benefit to the society. Before
the publication of the articles, it should be approved by higher medical
authorities like FDA and government to ensure the authenticity of the facts
mentioned in the article.

Industry Critical Success Factors and Competitor Analysis:

The company which has been selected for research is GSK and its two main
competitors are Roche (largest) and Gilead (fastest).
Critical Success Factors:
Employee Treatment
Fair and compatible treatment of employees in the workplace creates trust,
strengthens morale, enhances loyalty and sparks productivity. A devotion to fair
treatment at work strengthens the stature of the company and supports
recruitment of leading talent. If employees are treated with care and fairness,
companies can achieve their goals. Currently corporations provide multiple
facilities like insurance, transportation, medical allowances etc to ensure the
safety of their employees. Managers must also keep spirit high, particularly
during financial downturns, when layoffs or firings may put forth biggerous
pressures on the lasting workers. Companies must find the right mixtures of
supervision style, employee treatment and morale to assure the biggest degrees
of productivity. In certain situations, companies should authorize employees to
make their own decisions on particular programs to ensure that they are a part of
the company.

Distribution Channels
The central purpose of distribution channels is to bring in goods accessible to
final buyers in sales platforms as quickly as possible. Pharmaceutical products
only possess one or two present channels of distribution. The most conventional
is that a pharmaceutical producer circulates their product to a medicine
wholesaler, who then circulates the drug to a drugstore, who then circulates the
medicine to the final consumer. In reality, it could be a wide bunch of medicine
wholesalers, containing a nationwide wholesaler who disseminates to regional
wholesalers, who disseminates to local wholesalers, etc. The advantage is that
this makes it possible to trade bigger quantities and sell to a spectrum of
consumers. However, products have greater prices due to the commissions
given to middlemen.

Technological Advancement
Technology influences the means people convey, learn, and think. It supports
society and specifies how people talk with each other on a day-to-day basis.
Technology has a crucial position in society. It has optimistic and hostile
consequences on the world and it affects day-to-day lives. We are residing in a
period where technological improvements are widespread. Technology as a path
for enhancing pharmaceutical consequences is anything but novel. For years, it
has been the competitive advantage leveraged by huge pharma in the pursuit to
make perfect both the capacity and efficiency of the medication creation
procedure.

Global Presence
A company with international existence is understood globally for its
trustworthiness, fairness, honesty and the level of its products. Commonly used
in a favorable means. Nations with an adverse international existence may
possess non-democratic governments, unsafe and discriminatory working
atmospheres, scarcity of environmental safety, and political turmoil. Companies
go global because they want to prosper or broaden operations. The advantages
of reaching global markets include creating additional revenue, striving for new
sales, investment chances, diversifying, curtailing costs and recruiting new
skilled people.

Brand Reputation
Brand reputation is the customer's understanding of a corporation. The
understanding of a distinct brand is established by the consumer subjective
direct or indirect experience with the brand. The opinions and responses from
consumers illustrate a chunk of comprehensive data that can be utilized by the
companies to supervise additional actions or marketing agendas to make their
brands better and fulfill the consumers’ necessities. With the practice of social
networks, survey sites or online conversation forums, buyers are eligible to
share and investigate the efficacy of all categories of brands.

Market Share
Market share indicates the size of a corporation. It describes a company’s power
and competitiveness in a specific field. A corporation’s market share can impact
its systems considerably, its share performance, scalability, and prices that it can
propose for its product or services. As corporations boost their market share,
their profitability gets better.

Research and development

There are multiple reasons companies invest huge sum of their amount in
research and development, it gives these companies cost cutting advantage,
increased market participation, efficient supply chain process and basically
helps you in expanding your profit margin. While research and development
hold immense importance in every industry, but it has increased role in
pharmaceutical industry because of the nature of industry that revolves around
science and developing new formulas. R&D helps firm gain an upper hand by
introducing ideas and concepts that are difficult to replicate by your
competitors, when firms offer product or services that are not given by other
companies then the chances of your profit shooting up increases. This is the
reason large firm do not treat R&D as expense, rather they treat it as an
investment which will pay them several times more in the long run. It is also
observed that companies that promote and believe in R&D are more successful
than companies that do not agree to this.

Diverse product portfolio

Diversification is considered to be a key strategy in the pharmaceutical industry
because of patent expiries, change in government rules and policies regarding
healthcare and change in consumer needs. For example, if we look at the
pandemic situation, companies manufacturing vaccines, masks, and sanitizer
were facing increased demand but with time there has been a decrease in
demand as the intensity of the pandemic has diminished. Companies only
focusing on manufacturing these products would not be able to survive in the
long run as the demand will fade away gradually. On the other hand, companies
diversifying and having different target markets will be able to compensate for
the loss of revenue in that department.

Price competitiveness
Reducing price might not be a wise decision especially in the pharmaceutical
industry where people do not generally fight price war, the focus is more
towards increasing the quality, innovation, and betterment of product. But
sometimes, the situation demands to fight on the basis of price to penetrate new
markets or capture markets with low per capita income. Providing quality
products at less price than your competitor might help in stealing market share
in the long run, but it must be sustained on other factors in the long run as
fighting on price is not a long-term solution.

Innovation
One of the most distinguishing qualities of the pharmaceutical sector is its
constant innovation. New drugs have the potential to improve the quality of
human life and possibly extend it. There are different kinds of innovation a firm
can adopt which includes innovating the product and on the other innovating the
production facilities to help increase productivity and efficiency in the
manufacturing process. Moreover, innovation also means creating products with
lesser side effects, addressing new diseases, faster healing process and all this
will have a positive effect on mankind.

Competitor Profile Matrix:

GSK Roche Gilead

Critical Success Factors Weight Rating Score Rating Score Rating Score
Technological Advancement 0.10 2 0.20 4 0.40 2 0.20
Brand Reputation 0.10 2 0.20 3 0.30 3 0.30
Market Share 0.08 3 0.24 4 0.32 2 0.16
Well trained sales force 0.06 3 0.18 4 0.24 3 0.18
R&D 0.20 3 0.60 4 0.80 2 0.40
Employee Treatment 0.10 4 0.40 3 0.30 2 0.20
Diversified Product portfolio 0.09 4 0.36 3 0.27 2 0.18
Strong Global Presence 0.03 4 0.12 3 0.09 2 0.06
Distribution Channels 0.06 3 0.18 3 0.18 3 0.18
Innovation 0.10 3 0.30 4 0.40 3 0.30
Price Competitiveness 0.08 3 0.24 2 0.16 2 0.16
Totals 1.00 3.02 3.46 2.32

Strategies to Overcome the Factors:

Technological Advancement:
In comparison with its competitors, GSK is little involved in technological
advancement like electronic documentation and advanced laboratory tools. This
is a basic technology but not a unique one. GSK should go with smart ways to
make medicines, drugs. It has to work on its technological advancement to
provide a competitive edge in the market.
GSK can apply virtual reality and augmented reality technologies in their
manufacturing side and workplace side.

Meetings with subordinates can be facilitated with augmented reality. Firstly,

demonstrations that encompass AR-generated imagery can be administered and
sighted from anywhere. As an outcome, the gathering of people in the same area
can be prevented for sales and marketing objectives. AR enables pharmaceutical
companies to display medicines and other healthcare products to their
consumers. More impressively, the glimpse can be observed by watchers on
their own devices, thereby deterring unnecessary expenditure on costly virtual
reality devices. AR can be deployed for data visualization in drug finding.
Health experts can utilize AR to analyze difficult congenital data associated
with particular viruses. However, AR’s data visualization allows investigators to
study the factors of such atoms to find out existing components and medicine
mixtures to handle with extreme viruses. Moreover, the data compiled by AR
devices can be shared with other scientists operating from isolated areas. As an
outcome, findings in one part of the world can be forwarded in less time to other
part of the world, thereby enhancing coordination inside the international
pharmaceutical neighborhood.

Virtual reality is a crucial exercise tool for the pharma industry. The equipment
used in manufacturing can be understood and visualized utilizing VR. Operators
can attain a vital awareness about the equipment functions before coming into a
lab or factory for use. This prior understanding curtails the hazard of disasters
and errors, significantly enriching the quality of training and across-the-board
operations. Virtual reality technology can be applied for drug-target synergy
studies and can foresee the results of a medication’s effect in the body. VR
technology can be used to check the interaction of molecules and wander
around the body is very effective for enriching drug discovery and research
phases.

Brand Reputation:
GSK is known for remaining in headlines frequently for reasons that harm their
brand reputation, they have faced allegations against unethical practices, false
claims, and unsafe business practices. In 2006, GSK paid $160 million for an
addiction claim. Moving on they paid $1.14 billion to settle Paxil and pregnancy
claims and in 2016 they paid $6.2 million to settle involving 50 mothers and
children in Canada. These are one of the many claims GSK had paid, the
repercussions of that involves financial losses and with that it ruins your brand
reputation that takes many years to build. A bad reputation in the market means
consumers preferring your competitor over you and no company would like that
in the first place. To tackle that, they must hire experts that are accountable for
looking at business practices to make no such claim or practice is being carried
out in the company which can harm the reputation of the company in any way.
Moreover, they can shift towards environmentally friendly products and
practices to improve their reputation in the market and attract new customers.

The Internal Company Audit

Internal Competencies:
VALUE CHAIN MODEL
The GlaxoSmithKline (GSK) primary activities as of inbound logistics are
concerned with receiving, storing, and dispersing product inputs. Material
handling, physical product warehousing, and infrastructure to gather and store
client information for a digital media corporation are all possibilities. With
commercial operations in over 160 countries, GSK has a substantial global
footprint. GSK manufactures and distributes its goods through a single global
network. It has 87 manufacturing locations and employs over 32,000 people in
the production process. Currently, the corporation operates two types of
manufacturing facilities. The principal manufacturing facilities are involved in
the production of active chemicals that are utilised in the preparation of the
company's medications. The corporation includes 12 such manufacturing sites in
the United Kingdom, Ireland, the United States, Singapore, and Australia. At
secondary manufacturing sites, the active chemicals are also converted into final
products with over 15 of these locations in Europe alone, the company has
extended 6 in North America, 5 in Latin America, 5 in the Middle East, and over
15 in Asia and Australia. In addition, the corporation has four in China and one
in Japan. The company's sales sector employs about 44,000 individuals, making
it one of the largest in the pharmaceutical industry today. S1 GSK being a well-
known company, having its operations all around the world, decreases the risk of
becoming overly reliant on certain markets and increasing market share.

At GSK, the operational activity is carried when the raw materials are converted
into finished goods so that the product is ready to get dispatched. At GSK the
finished products i.e the medicines are sent to the Qualitative analysis (QA) lab
in order to do a detailed analysis of the medicines before it reaches out to the
customers, S5any defaulted medicines are then rejected and are sent to the
manufacturing department. Moreover, the medicines that pass the QA test are
then labelled to be recognised by their names. Then they are sent for the outbound
logistics department.
The product is now in its final form and is ready to be available in the markets
for the customers to purchase it. Certain activities that are included in outbound
logistics are material handling, warehousing, scheduling, and order processing,
transporting and delivering it to the destination. GSK tends to optimise these
activities in order to gain competitive advantage and to grow its business
objectives. S6As the outbound logistics are efficiently managed with receiving
optimal costs and on time delivery there is a minimal negative impact on the
quality. Thus it raises customer confidence and raises up the company’s position
positively. Hence the W3company must continue to keep a close eye on its
outbound logistics service as it offers perishable items which requires quick
delivery rates.

The product is ready and it is important to create awareness among the customers
so that they know which medicine has a quick formula to overcome the illness.
GSK provides its product at differentiated point to show that it offers better
products as compared to its competitors. W5Not only high quality with affordable
price and unique features creates value unless GSK promotes effective marketing
campaigns. Some of the marketing activities include advertising, promotional
activities, pricing methods, customer loyalty, and effective channel selection. It
can either select push or a pull marketing strategy as it depends on the nature of
the product, business objectives, brand image competitive edge and market place.
The company can also go for market funnel approach to retain customers at a
higher end.

Thus, strong marketing activities leads to brand equity and developing strong
bond with the brand. However, W4it is important to note that the company must
avoid making promises that cannot be fulfilled as false promises will pull away
the customers leading into bad reputation of GSK in the market.

GlaxoSmithKline’s services involve product forward and backend software

alignment, training, part supply, installation services, and post-sale maintenance.
For the product to be used successfully, GSK must provide after-sales services
and maintenance. Customer relationship management is maintained by GSK in
order to establish a high level of customer loyalty among present and potential
consumers. Maintaining positive customer connections improves brand image
and loyalty. W1 However, in some countries, GSK has been accused of engaging
in illegal tactics such as advertising prescription pharmaceuticals, charging fake
prices, deceptive sales charges, and failing to disclose safety information.

GSK's firm infrastructure standards reflect the whole value chain, however the
scope varies due to GSK's industry-wide diversification. Finance and planning,
for example, are managed at the corporate level at GSK, whereas quality control,
accounting, and legalities are handled at the business unit level. However, W2
GSK's ability to predict product demand is lacking. GSK maintains a large
inventory, both internally and through channels. As a result, their competitors are
missing out on more opportunities. To counter this, GSK has expanded its data,
digital, and analytics (DDA) implementation and usage of technology solutions
for data and document management and operations planning. This comprise of
value chain mapping for supply chain planning and cognitive supply chain
models to reduce logistics costs.

GSK has completed the divestment of a site in Pozna, Poland, as well as the
shutdown of a facility in Xochimilco, Mexico, to simplify its network and central
functions. Its commercial and supply chain teams are working together on
measures to reduce COGS, defend margins, and boost profits. Reduced active
pharmaceutical ingredient costs, capacity optimization, process improvement,
and collaboration with suppliers are all part of this approach.

Human Resources Management is critical to any organization's performance in

an atmosphere where every company strives to become a core competency. At
both the business unit and corporate levels, HRM support operations include
Recruitment, Performance Assessments, Training & Development, Skill
development, Career Growth, and Compensation. HRM has an impact on
competitive advantage in any company, but it is especially important in certain
industries. GSK invests heavily in employee training and development. It
necessitates the use of highly skilled personnel. S2The Company invests a
substantial amount of money in training and professional development,
culminating in a source of value creation. Employees with high levels of expertise
will continually try to achieve more and increase revenues for the organisation.
Because GSK's safety performance is so important to its business, it has taken
extra steps to reduce the likelihood of serious events and develop its safety
culture. These include implementing Life Saving Principles to help all employees
better comprehend and apply basic safety rules to their job, initiating an
operational safety leadership programme, and enhancing the company's safety
monitoring systems.

Technology advancement has become a competitive edge in the pharmaceutical

industry. Component design, field testing, feature design, technology selection,
and process optimization are some of the tasks that GSK engages in for
technology development. GSK has enhanced performance of the supply chain by
investing in technologies such as Resilience, an AI-based tool that identifies
developing supply chain risks, and deploying digital twins to improve planning
and operational capacity. They can now detect patterns in data on a much greater
scale and much faster owing to AI and machine learning. This has resulted in the
'digitization of biology,' allowing researchers to gain a better understanding of the
underlying causes of several diseases. In the fields of respiratory, HIV, and
cardiovascular medicine, they have achieved significant advances. S3The
Company’s role has advanced as a result of its technology-driven, AI
mechanisms. It contributes to the firming up of their market position. GSK's
supply chain is becoming more efficient due to investments in automation and
AI/ML. Despite the COVID-19 disruption, supply reliability has increased from
a median performance of 95% on-time, in-fill in 2018 to 97% in 2021.

GSK's procurement activities cover actions such as purchasing inputs utilised

by the company's value chain. Procurement requires technology for operations,
supplier relationships, information management, supply chain partner
qualification requirements, and continual performance assessment. GSK has
upgraded its quality management system and reinforced its internal and external
quality monitoring models, making it easier to work. Its variances have
improved, and its pharmaceutical supply chain has remained in the top bracket
of the industry for FDA recalls per £1 billion in sales. Pharmaceuticals
establishments passed all 70 regulatory inspections with satisfaction. S4
Maintaining a high-quality and consistent supply of products for patients and
customers is critical to GSK's success. It continues to boost efficiency and
simplify its supply network while lowering total costs in the supply chain. The
gross profit margin has increased by 1.2 % owing to cost savings and sales
growth.

Historical Ratios
Particular 12/31/2021 12/31/2020
Current Ratio 0.8 0.9
Quick Ratio 0.5 0.6
Debt-to-Total-Assets Ratio 0.73 0.74
Debt-to-Equity Ratio 3.84 4.09
Times-Interest-Earned Ratio 8 9
Inventory Turnover 2.01 1.95
Fixed Assets Turnover 3.43 3.35
Total Assets Turnover 0.43 0.42
Accounts Receivable Turnover 4 5
Average Collection Period 84.10 74.42
Gross Profit Margin % 66% 66%
Operating Profit Margin % 18% 23%
ROA % 6% 8%
ROE % 34% 44%

GSK’s Value Chain Model

Internal Factor Evaluation matrix (IFE)

Weighted
Strengths Weight Rating
Score
1 GSK being a well-known company, having its operations all around the
world, decreases the risk of becoming overly reliant on certain markets and 0.04 3
increasing market share. 0.12
2 The Company invests a substantial amount of money in training and
professional development, culminating in a source of value creation.
0.05 3
Employees with high levels of expertise will continually try to achieve more
and increase revenues for the organization. 0.15
3 The Company’s role has advanced as a result of its technology-driven, AI
0.20 4
mechanisms. It contributes to the firming up of their market position. 0.80
4 Maintaining a high-quality and consistent supply of products for patients
0.05 3
and customers is critical to GSK's success 0.15
5 Any defaulted medicines are then rejected and are sent to the
0.20 4
manufacturing department for further analysis. 0.80
6 As the outbound logistics are efficiently managed with receiving optimal
costs and on time delivery there is a minimal negative impact on the quality.
0.02 3
Thus it raises customer confidence and raises up the company’s position
positively 0.06

Weighted
Weaknesses Weight Rating
Score
1 In some countries, GSK has been accused of engaging in illegal tactics such 0.10
as advertising prescription pharmaceuticals, charging fake prices, deceptive 0.05 2
sales charges, and failing to disclose safety information.
2 GSK's ability to predict product demand is lacking. 0.07 2 0.14
3 The company must continue to keep a close eye on its outbound logistics
0.20 1
service as it offers perishable items which requires quick delivery rates. 0.20
4 It is important to note that the company must avoid making promises that
cannot be fulfilled as false promises will pull away the customers leading 0.09 1
into bad reputation of GSK in the market. 0.09
5 Not only high quality with affordable price and unique features creates
value unless GSK promotes effective marketing campaigns. 0.03 1
0.03
Total IFE Score 1.00 2.64

Priority Issue and Strategies:

Almost all value chain activities in today's rapidly changing time rely on
technology support. GSK must recognize the relevance of technology
development because of the technological integration in production, distribution,
marketing, and human resource activities. It can be separated into two categories:
product and process technical advancement. Automation software, technology-
assisted customer service, product design research, and data analytics are just a
few examples. GSK's research and development department falls within this
group. GSK can establish a differentiation basis by:
• Rapid development of new products
• Product design that incorporates innovation
• Patented technology and innovative product features
GSK offer products that are 100% authentic and have no default. Even if during
the lab test of the medicines any change in formula occurs, the medicine are not
proceeded further. They are sent back to the operations team which shows that
they are providing medicines in absolute term. This process can even become
more efficient if the time loss of sending the medicines again to the operations
team is minimized. That can be done by improvising the operations team who
pays off the attention while making the formula and any minor problems cannot
be overseen.

GSK needs an integrated solution capable of managing and regulating both

projections and actual data regarding to volumes, revenues, promotions, and trade
spending to evolve its Customer Business Plan (CBP). GSK has now opted a CBP
solution as a strategic tool used by the Field and Headquarters to generate,
administer, and demonstrate customer business plans in the format of entire
annual budgets using the Board platform.

The time lag between placing the order and actually getting them delivered must
be minimized as this result in heavy cost charges. Some medicines do not have
long hours of survival power so they get effected by delayed delivery. GSK must
improve their distributional channels by reducing the distance and contacting
retailers that are as close as possible.

Positioning GSK vs Roche vs Gilead on Generic Strategy Map:

On the generic strategy map, the competitors of GSK, Roche and Gilead should
be positioned following strategy:
Roche:
Roche has produced 30 medicines which includes antibiotics, anti-malarial and
chemotherapy drugs. Moreover, Roche is one of those pharmaceuticals who is
involved in making medication for vitro diagnostics, cancer diagnostics and
diabetes. This separates Roche from other competitors because this company
makes medicines for other problems. Overall, they are targeting to a specific
market as the diseases mentioned above, selective people have those problems
and they can be of any age. Roche has one unique quality which separates itself
from its competitors which is technological advancement. Roche has excellent
IT technology which helps them to deal with large amounts of data as part of
their business strategy. In their manufacturing, there is a Zeiss machine which
enhances the speed of making potential drugs and takes less time to enter in
market. Moreover, Roche has launched Direct Data Connective, which helps to
remove fake manual data and enables easy and free access to clinical trial
information. This shows that Roche is following Focus Differentiation
Strategy. The company has high revenues. They are spending a good amount on
technology, R&D and making multiple medicines in comparison with GSK and
Gilead.
Gilead:
Gilead has produced those medicines which is related to diseases including
HIV/AIDS, hepatitis C, hepatitis B and influenza. Gilead is targeting specific
people as the diseases mentioned above, selective people have those diseases
and people can be of any age. Gilead has low revenue. The company spends
more on making medicines only for the diseases mentioned above and R&D and
the company is not much technologically advanced in comparison with GSK
and Roche. Gilead has managed to have low costs in comparison with GSK and
Roche but then Gilead needs to spend on technology as the competition is
getting touch and Gilead needs to come up with more innovative medicines and
technology. This shows that Gilead is currently following Focus Differentiation
Strategy.
GSK:
After studying GSK and its different competitors, it is inferred that GSK should
be on the differentiation strategy which they are already doing. The reason
being that the nature of pharmaceutical industry is such that the company will
not derive much benefit fighting on price. Yes, sometimes it is necessary to use
price as a factor to penetrate new market or try to steal customers share but
totally relying on would not be a wise decision for the long run. Medicines
especially patented have inelastic demand in nature, the value they provide is
something people do not measure with price. So, the better strategy is to
emphasize on differentiation and try to innovate and work on diseases that do
not have any medicines to cure. With that making on existing medicines work
better, reduce side effects, working on making production system efficient and
productive will be a better idea. Differentiation is necessary because if we look
at Panadol which is manufactured by GSK itself, there are many brands
offerings the same product which provides the same relief and also has the same
raw material but just because of the patent and strong brand, people consider it
to be better than other solutions. This is the benefit of working for so long on
your brand and its image that even simple products are considered to be
different and better than your rivals. Even if Panadol increases prices people
will buy it just because of the perception that it will cure their headache and
mild fever. People do not like to take many risks in term of their health, and this
is a major reason people do not switch easily once they are convinced with
some medicinal brand. In pharmaceutical, if a product is expensive but offers
better result than its competitor’s product then the customer is most likely to
choose the expensive product which provides better results. This is the major
reasons all pharmaceuticals company spends huge amount of their earnings into
research and development because they know a better product will help them
penetrate and gain more market share than a low-priced product. GSK is
involved in those products which Roche and Gilead are not making and that is
healthcare products, vaccines and making medicines for all diseases which
reflects that they are targeting broad market.

Competitive
Advantage

Target Scope Low Cost Product Uniqueness

GSK

Broad Cost Leadership Differentiation

(Industry Wide)

Roche

Narrow Cost Focus Focus Differentiation

(Market Segment)
Gilead
GSK has relied on differentiation and cost leadership strategy to handle the
competitive pressure and sustain the market. The company contributes to
increasing uniqueness as a strategy to reduce the pressure from other brands
because it is an established brand with a solid footing. GSK spends a lot of
money on marketing, R&D, advertising, and celebrity endorsements only to set
itself apart from the competition. Moreover, they produce their own medicines
and patent it as a proprietary member, they also collaborated with Pfizer on a
hidden research and development journey. GSK was able to promote its
Flixonase spray to cure hay fever to its clients using mobile text messages and
its sales force with the support of Vodaphone, which sets it apart from the
competition. They regularly try to convey through their marketing strategies that
they are the oldest medicinal brand with vast experience and strong global
presence over the world to distinguish itself from the rest of the competition.
With primary focus on being differentiation, they also heavily rely on cost
leadership. Their objective is to maintain and increase the market chain with
efficient value chain system and trying to enter new markets. They also place a
lot of focus on targeting middle class customers, which accounts for the majority
of the entire consumer market mix in most nations. The pricing issue is often very
important to middle class customers, and cost leadership is the greatest option for
meeting their demands. To meet sales objectives and deal with competitive
pressure from its nearest opponent, the company routinely gives discounts and
coupons. These discount and promotional efforts are meant to raise brand
awareness and increase demand.
Strategic Analysis and Choice:
SWOT ANALYSIS:

SO Strategies
Establish a robust network and distribution channel by expanding operations all over the
1 world. (O3, S1)
Maintaining a high quality and consistent supply of products as the demand is inelastic. (S4,
2 O7)

ST Strategies
Invest company’s AI mechanisms towards greater use of natural and healthy inputs for
1 pharmaceuticals. (S3, T8)
Spending a substantial amount on training and professional development to build a highly
2 motivated and productive team of experts. (S2, T10)

WO Strategies
Investing in effective marketing campaigns and expanding services in platforms like Amazon
and Daraz can lead to a greater sales volume, proven during times of lockdown due to
1 Covid-19. (W5, O10)
Improve product demand forecasting as medicines are bought on everyday basis while
2 having an efficient flow of supply can reduce the bargaining power of buyers. (W2, O5, O8)

WT Strategies
Better evaluation of supply side forces to avoid conflicts with customers accompanied by
1 reduced profit margin to the company. (W4, T4)
Avoid engaging in illegal tactics resulting in bad reputation of the firm as new firms can easily
access influential entities and sell their products at a lower margin to capture the market.
2 (W1, T1, T2)

GSK is bound have its position much stronger in the global market after having
an established network and distribution channel through tapping the untapped
areas where currently it has to rely on third parties. Risk of failure would also be
eliminated up to a great extent since operations performed would inhibit higher
efficiency. Thereby, leading to an increased market share and competence
globally.

GSK’s success and market share significantly depends on the quality of product
it manufactures. Since it’s a part of such a critical industry, customers wouldn’t
want to go for a low quality products. Medicines are essential for survival in
today’s era and therefore, it’s demand is inelastic as these are purchased on
everyday basis. Customer satisfaction should be a top priority for GSK in order
to sustain and further grow its share in the market. Otherwise, GSK's position
could be highly challenged in the market if it’s inclined towards manufacturing
low quality products for higher profit margin.

GSK’s deployment of AI mechanisms has provided it a solid edge amongst its

competitors. These technology driven tools are highly capable of identifying
underlying causes of serious problems. Owing to increased health consciousness,
people are slightly hesitant considering the side effects of some strong medicines.
Invested AI mechanisms can efficiently assist GSK towards this green step. This
could also turn out to be a potential futuristic investment which would distinguish
GSK amongst its rivals.
GSK has always focused on its professional training and development of
employees. A highly motivated employee would generate greater yields for the
company. Age is merely a number in pharmaceutical industry. Along with young
employees, old aged employees are as important and even more qualified. A high
focus on mental well-being would ensure high efficiency in operations.
GSK can invest more resources into marketing campaign which may include
several promotional activities, pricing strategies, ATL advertising along with
effective channeling. GSK should try to capture online market through platforms
like Amazon and Daraz which hold great potential for high sales.

GSK needs to cater its lacking ability of product demand forecasting. Medicines
are daily essentials and if effective planning along with efficient flow of supply
is executed, GSK can easily turn the most favorable factors on its side. While
reducing the bargaining power of buyers, it can enjoy greater profit margin.

GSK needs to have strong influence on its supply of inputs. Shortage of raw
materials allows suppliers to have a greater influence on the firm in terms of
pricing which increases the cost for the firm. Consequently, customers also have
to bear the increased price due to fluctuations in raw material price which
negatively affects their relationship with the firm. Therefore, GSK may consider
having range of suppliers on board or consider backward integration for long-
term.
GSK needs to abstain from any kind of illegal tactics which may compromise its
integrity. It’s operating under such an industry where a crucial scandal can ruin
company’s long term stake in the market. Moreover, rising number of new
entrants offering incentives to doctors and organizations can help them establish
in the market. Owing to these factors, GSK needs to be highly diligent regarding
its reputation in the market.

SPACE MATRIX

The SPACE Matrix divides GSK into four quadrants in order to identify in which
of the four quadrants the company lies. GSK could either adopt aggressive,
conservative, defensive or competitive strategies which if implemented correctly
generate highest Return On Investment (ROI). Thus the following map builds
better understanding of the strategic resource allocation of GSK.
There are a total of four axis two of which describes internal dimensions and two
of which describes external dimensions.
The above SPACE Matrix depicts that GSK should go for aggressive strategy. As
our company has a strong competitive position in the market along with constant
growth it must use its internal strength to penetrate the market and develop market
strategy. The use of AI also influences the new and innovative products that
promotes healthy medicines to eat. Thus increasing the product development.
This come along with product development, integration with other companies,
acquiring and merging with competitors.

BOSTON CONSULTING GROUP (BCG) Matrix

We evaluated all of GSK's categories - Pharmaceuticals, Vaccines, and

Consumer HealthCare - and then obtained some data by researching on
company's product portfolio and its sales performance.

STAR: High Market Share, High Growth Rate

GSK has a lot of room for expansion. Zentac, Keppra, and Amoxil are some of
GSK's products. Their product development is accelerating, as is their market
share and growth rate. Pharmaceuticals is observed here. These are the revenue-
generating products, but they require significant investment to maintain their
market position. They're also in a highly competitive industry, so there's some
competition to contend with.

CASH COW: High Market Share, Low Growth Rate

Augmentin, Velosef, and Piriton are regarded to be cash cows. GSK is

generating more revenue out of these brands than they require. As these items
have now established in the market, they do not require extra investment.

QUESTION MARK: Low Market Share, High Growth Rate

GSK's vaccine division falls into this category. There are various rivals in the
healthcare business as it's a very competitive sector. Products in this category
operate in a highly competitive industry with low market share, leaving GSK
uncertain over whether or not to allocate resources in them.

DOG: Low Market Share, High Growth Rate

This category includes products that have been scaled down, withdrawn, or
dissolved by GSK. Because they have a low market share and operate in a low-
competitive sector, some GSK products, such as Imitrex, Migril, and Aquafresh,
have a weaker external and internal position
GRAND STRATEGY

The GSM is another widely used tool for formulating alternative strategies. The
Grand Strategy Matrix is based on two evaluation dimensions: competitive
position on the x – axis and market or industry growth on the y – axis.

The diagram above shows that Pharmaceutical performs in the first quadrant.
This shows that it that medicines have strong competitive position and rapid
growth rate. The strategy that must be implemented is that of Product
development and Related Diversification. This is further supported by the AI
strategy that we discussed earlier as the use of green products in medicines
attracts customers and make it compete against rivals.
Vaccines lie under quadrant IV where slow market growth and weak
competitive position is seen. The strategy used is Retrenchment which by the
use of efficient technology and AI can reduce R&D cost.
Quantitative Strategic Planning Matrix (QSPM)
Investment of company’s AI mechanisms towards greater use of natural and
healthy inputs for pharmaceuticals should be done by GSK. Owing to the rising
health consciousness in people over time, this step can allow GSK to specialize
in this segment and capture the biggest share in this market as in future, this
element of healthier medicines will play a crucial part in pharmaceutical
industry. Moreover, AI mechanisms would also improve existing products of GSK
and hence, bring in more efficiency in overall operations.

Better evaluation of supply side forces to avoid conflicts with customers should
be done by GSK. Unsatisfactory relationships with customers eventually lead to
reduced profit margins and also negatively affect future prospects of the
company. Factor of input cost holds great significance in the pharmaceutical
industry. Fluctuations in input cost may raise conflicts with customer. Therefore,
GSK should either consider having a range of suppliers on board in order to
reduce their bargaining power or consider backward integration which would
definitely require substantial investment but provide greater stability and higher
profit margins for the long term.
Strategy Implementation – Balanced Business Scorecard

Objectives Key Performance Initiatives

Indicators
 Enhancement  Inventory Internal Auditors of GSK can
in sales design forecasted cash flow
Turnover ratio to estimate cash inflow and
 To enhance
 Operating Profit outflow each week. These
Financial

spending on
technological (EBIT) estimation will guide GSK
how much to save and how
advancement.  Operating Cash much to spend. Marketing
 To improve the flows department should do
cash flows competitor analysis through
which they can improve
their sales.
 To enhance the  Customer Usage of methods such as
advertisements to improve
quality of
medicines. Survey and your credibility in medicines.
Feedback Usage of customer
 To provide on
commendations and online
time delivery  OTD Rate marketing assistance in
Customer

of medicines to boosting customer’s

customers. Calculation
confidence. Using
OptimoRoute which
independently evaluates
fruitful paths to assist
drivers to curtail mileage,
stop reproducing routes,
and get where they require
to go quicker.
 Excellence in  Statistical analysis Building predictive
quality control maintenance programs
of consumer care allows forecasting when
and
service reports, machines need maintenance
innovation.
Internal Processes

 Technology social networks work so that companies can

and review sites assume the optimal
usage to regularities and periods to
improve  IT Return on perform maintenance.
efficiency Investment Financing in high-quality
technology Zenon
supervises production
equipment as well as other
systems, keeping track of an
entire system and discerning
ways the various
components interact.
  To hire and  Employee Training programs can
retain the best be conducted to
talent for Retention Rate
familiar employees,
Learning & Growth

medicine  Employee
making and
workers about the
Productivity technology used in
technology
usage. the workplace and
 Clear explain the recent
communication strategy and the
about necessity of
comprehension
of new strategy
execution.

Annexure A:
Threat Of New Entrants:
Threat of New Entrants Ye M N
s (~) o
(+) (-)
1 Do large firms have a cost or performance advantage in your
segment of the industry?
2 Are there any proprietary product differences or established brand
identities in your industry?
3 Do your customers incur any significant costs in switching suppliers?

4 Is a lot of capital needed to enter your industry?

5 Does the newcomer to your industry face difficulty in accessing distribution
channels?
6 Does experience help you to continuously lower costs?
7 Does the newcomer have any problems in obtaining the necessary skilled
people, materials or supplies?
8 Are there any licenses, insurance or qualifications that are difficult to
obtain?
9 Can the newcomer expect strong retaliation on entering the market?

7 2 0
Total
(+ factors favorable to industry / -factors unfavorable to industry)
Threat of Substitutes
Threat of Substitutes Yes M No
(some other product or service that performs the same job as yours) (+) (~) (-)

1 Substitutes have performance limitations that do not completely offset their lowest
price. Or, their performance is not justified by their higher price.
2 The customer will incur costs in switching to a substitute.

3 Your customer has no real substitute.

4 Your customer is not likely to substitute.

Total 3 0 1

(+ factors favorable to industry / -factors unfavorable to industry)

Bargaining Power Of Buyers

Bargaining Power of Buyers Yes M (~) No (-)
(To what extent are buyers locked in?) (+)

1 Are there a large number of buyers relative to the

number of firms in the business?

2 Do you have a large number of customers, each with

relatively small purchases?

3 Does the customer face any significant costs in

switching suppliers?

4 Does the buyer need a lot of important information?

5 Is there anything that prevents your buyer from

taking your function in house?

6 Your customers are not highly sensitive to price.

7 Your product is unique to some degree or has

accepted branding.

8 Your buyers businesses are profitable

9 You provide incentives to decision makers?

 4 5 0
Total
(+ factors favorable to industry / -factors unfavorable to industry)

Bargaining Power Of Suppliers

Bargaining Power of Suppliers Yes M No
(+) (~) (-)
1 My inputs are standard rather than unique or differentiated.

2 I can switch between suppliers quickly and cheaply.

3 My suppliers would find it difficult to enter my business or my

buyers would find it difficult to perform my function in-house.

4 I can substitute inputs readily.

5 I have many potential suppliers.

6 My business is important to my suppliers.

7 My cost of Purchases has no significant influence on my

overall costs.
4 2 1
Total
(+ factors favorable to industry / -factors unfavorable to industry)

Rivalry
Yes M No
Rivalry amongst Existing Competitors
(~) (-)
(+)
1 The industry is growing rapidly.

2 The industry is not cyclic with intermittent overcapacity.

3 The fixed costs of the business are relatively low portion of total
costs
4 There are significant product differences and brand identities
between competitors.

5 The competitors are diversified rather than specialized.

 6 It would not be hard to get out of this business because there
are no specialized skills and facilities or long-term contract
commitments etc.
7 My customers would incur significant costs in switching to a
competitor.
4 My competitors are all of approximately the same size as I am.

3 3 2
Total
+ factors favorable to industry / -factors unfavorable to industry)

OVERALL INDUSTRY RATING

Particular Favorable Moderate Un-favorable

1. Threat of new entrants. 7 2 0

2. Bargaining power of buyers. 4 5 0

3. Threat of substitutes. 3 0 1

4. Bargaining power of 4 2 1
suppliers.

5. Intensity of rivalry among 3 3 2

competitors.

TOTAL 21 12 4

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