The paper 'Assessment of the Business Environment and the Strategic Challenges Facing GlaxoSmithKline" is a perfect example of a business case study. When organizations are faced by challenging times in their business, such as changing markets, inability to compete favourably or to operate sustainably, or have the drive to rise in the market and become the leading force in the business, changes have to be made in the organization and the management has to lay strategies and make decisions that will facilitate this change. Zanoni (2012) stated that strategy is used to identify activities that are directed towards the management of relations of the organization with the external environment.
The market forms part of the external environment. Glaxo Wellcome has since the late 1980s, rolled out change programmes that are aimed at developing the internal capability of the company to match the changes in the market (Collier et al, 2003). This paper will assess the business environment and the strategic challenges that have faced GlaxoSmithKline. Having dominated the market in the UK in the 1990s, Glaxo faced the threat of external factors that could potentially undermine the competitive position of the company as well as risking its profitability.
This was mainly caused by changing customer demands across the pharmaceuticals’ industry. For instance, reforms were made in the National Health Service and doctors, whose role was merely prescribing drugs to patients, were made to become fundholders and they had to be cost-conscious while purchasing drugs. Other government initiatives were put in place and they threatened to shrink the growth of profits for pharmaceuticals companies. In addition, there were internal issues such as arrogance and complacency among staff, slow decision making by the organization’ s management and strong functional decisions that contributed more to the slow decision making. PEST Analysis Owing to these behaviours, the organization initiated a cultural change programme called RATIO.
This programme purposed to stop the continuation of the status quo. This move by the company was appropriate to it since the company analysed its business and the external environment. This worked according to the PEST analysis model. According to Downey (2007), this model involves scanning of the external macro-environment under which the organization exists.
The tool is useful for the understanding of the economic, political, technological and the socio-cultural environment that the organization operates from. This tool can be used to evaluate the growth or decline of the market including the current position of the organization, the potential that the organization has and the direction that the organization should take. Therefore, Glaxo’ s approach was in line with this model because the organization realized that the market was changing and the organization was bound to face some challenging times in the future. Various factors that the PEST model puts forward were considered by Glaxo.
For instance, the influence of political factors like government regulation was purported to be a threat to the business. This seen in the initiatives that were set and they changed the duties of doctors. This move greatly impacted on the market of Glaxo in terms of how the doctors would spend their money. In addition, social factors like the complacence and arrogance of employees were considered by Glaxo, as the PEST Analysis would dictate. Therefore, the strategy of the company to come up with the RATIO that would change the behaviours of employees and management was ideal for the organization.
However, the strategy of the RATIO programme did not really account for the slow decision making and would therefore not cover the problem this would call for addition on the behaviours that were covered by the programme.
Cameron Sheila, 2008, The Business Student’s Handbook: Learning Skills for Study and
Employment (4thed), Harlow, Essex, UK: Pearson Education Ltd.
Collier et al, 2003, Transforming Glaxo Wellcome Through the 1990s, UK.
Downey Jim, 2007, Strategic Analysis Tools.Topic Gateway Series No. 34, CIMA, UK.
Miguel G. Joseph, 1996, Value Chain Analysis for Assessing Competitive Advantage,
Institute of Management Accountants, Montvale.
Riley Jim, 2012, SWOT Analysis, Retrieved on January 4th 2012 from:
Tutor2u, 2012, Porter's Five Forces Model: Analyzing industry structure, retrieved on
January 12th 2013, from:
UNEP, 2012, Early Warning Systems: A State of the Art Analysis and Future Directions,
Division of Early Warning and Assessment (DEWA), United Nations Environment Programme (UNEP), Nairobi.
Vaitkevičius et al, 2006, Model of Strategic Analysis Tools Typology, Engineering
Economics, No 2 (47) Commerce of Engineering Decisions, Kaunas.
Zanoni B. Andrea, 2012, Strategic Analysis: Processes and Tools, Outledge. UK.