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Business Level Strategy Of GSK Company

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Question:

Discuss about the Business Level Strategy of GSK Company.
 
 

Answer:

Introduction

This paper focuses on the dynamic capabilities of well known pharmaceutical company GSK. It also includes the analysis of capability in context of competition and high level technological environment.     

About Company

GSK pharmaceutical company is a reputed organization in USA. It is a global health care company, which deals in research and development of new and innovative vaccines and other healthcare products for consumers. It also produces the cure for various dangerous diseases like cancer, asthma, infections and mental health. GSK is the leading healthcare company, which has generated revenue of $8222 million in year 2015 (GSK, 2014). It is delivering pharmaceutical products and services in more than 150 countries across globe.         

Dynamic capabilities of GSK pharmaceutical

Dynamic capabilities refer to the ability of an organization to develop the new internal and external competencies to operate in the modern era or environment. Meanwhile, it can also be defined as the capacity of organization to build, adopt and change the competencies as per the competition to take a competitive advantage from the available resources (Davidjteece, 2013). At the same time, renovation in internal and external resources also creates value for the business in competitive market. Resource based view assists the company to gain the higher performance (Rehmanm and Saeed, 2015). Pharmaceutical industry experienced the innovative and modern aspect of competition trends. Meanwhile, the competition structure has been changed globally due to new technologies, strategic developments and resource based approach. Businesses are adopting innovation in the industry to build the competitive advantages in market for effective and efficient use of organizational resources. The organizational performance is also a dynamic capability for GSK pharmaceutical and because of it company gets additional benefit to attract potential customers in the market.

 


GSK Pharmaceutical explores the organizational learning to develop and enhance the knowledge in dynamic and competitive era. Development of strategic asset is another dynamic capability for business. GSK pharmaceutical possess the dynamic capabilities that add value in the market performance, growth and strategic policy of the company. At the same time, key trends in pharmaceutical industry impact the business operation of company. In regard to this company’s key strength capacity is its new innovation to manufacture effective cure practice of new vaccine. Further, it confers global presence and having strong employee base of approximately 100,000 employees (GSK, 2014). At the same time, GSK possess the experts who develop the innovative pharmaceutical products for curing the diseases. USA market is very sensitive in concern to the perception of consumer where consumer can move towards an efficient service provider. GSK pharmaceutical have many opportunities in the US market to expand the business of company and acquire other pharmaceutical companies.

Further, Company focuses on the research and development strategy to acquire new techniques for manufacturing advance healthcare products (GSK, 2017). GSK is also having sound financial power in hand with current asset and fix assets. It generated the revenue of £3681 billion in financial year 2015 (Statista, 2015). In addition to this, it is adopting new technologies to produce new medicines for newly diseases in the environment. Further, it has excellent sales team that manages the global level force to distribute the medicine at every region. GSK has adopted an operating model to produce the product at low cost. Moreover, it has owned fully technological manufacturing laboratories for innovative research. Apart from this, GSK possess intangible dynamic capabilities such as patents of product, portfolio of healthcare and oral care. At the same time, company holds the brand image in the US market. In concern to this, GSK possess the capability to acquire pharmaceutical company to lure the potential customers out of the market and strengthen the dynamic capability.

 

Implications of dynamic capability in concern to the competitive advantages

Dynamic capabilities are the unique capabilities of an organization, which derives values for the business in market to affect the strategy of competitive rivals. These capabilities are acquired and developed through scanning of environment and using the organizational resources. At the same time, reconfiguring the internal assets is also considered as capability of company which strengthens the ability of company. Dynamic capabilities create additional advantage for the company to build the capacity of business to sustain for long time and respond effectively to the fierce competition (Teece, 2011). Further, these capacities are developed as the trends that are moving in the environment through transforming the corresponding competencies. This era of modern business is affected by technology.

Dynamic capabilities contribute in multiplying the ability of GSK pharmaceutical and it supports in creation of competitive advantages in market. In concern to pharmaceutical business, the company innovate new medicine because of its expert team of scientist. Further, it is also getting benefits from the brand recognition in the market, which helps the company in attracting new customers which ultimately explores the competition prevailing in the market. In addition to this, strategic management helps the business to analyze the competitive environment and focus on shaping a strategy to strongly develop the changes in concurrent environment. Moreover, organization seeks to grab the opportunities from the market and develop the strategy to defeat the competitors in the market. Whether, dynamic capabilities positively impact the competitive advantages. In regard to this, ability of marketing managers to renew the internal and external resources in pharmaceutical company, adds value through taking effective decision, brings in new mode to face the competition.  

 


In addition to this, capacity to acquire small pharmaceutical business is a strategic ability of GSK pharmaceutical, which helps in attainment of the sustainable competitive advantages. Dynamic capabilities improve the performance of business in the market through introducing new tactics in the business model and it becomes an advantage for the firm to sustain for long time. GSK pharmaceutical is able to meet the demand of healthcare products and lure the customers, where it manufactures the medicine for effective cure of the disease. The resources are used to enhance the productivity of business in market and capabilities are better than the resource available because sensible capacity can own the resource for the organization. Intangible capabilities for GSK pharmaceutical are strong brand image, patent of drugs; trademark and intellectual property improve the effectiveness of firm in the market and gain competitive advantage.            

Competition in the pharmaceutical industry is a big issue for the firms, where GSK need to evaluate the volatile market and build strong position of brand in the market (Ding et. al, 2013). GSK pharmaceutical can set the new way of resource with value, rareness, Imitability and organization (VRIO) framework to capture the new resources and create new opportunities for business. Further, the company is changing with the time and getting the benefit of dynamic capabilities for instance Apple and IBM Inc. These businesses have an extension of dynamic capabilities to compete with the dynamic environment (Helfat, 2013). The dynamic abilities of the GSK pharmaceutical support the business to adopt new technology to retain the current position in the market and develop the effective brand image to experience the higher market value. In USA, market performance of GSK pharmaceutical is too improved which affectively impact the competition in business line. Therefore, it can be stated that dynamic capabilities are the unique resource for company, through use of which an organization can gain the competitive advantages in market.

 

Differences between Dynamic Capabilities and Resources

Dynamic capabilities and resources are used interchangeable but they are different. The dynamic capabilities are drawn from the internal and external resources to create a competitive advantage. From the view point of Barney, the dynamic capabilities can be identified and developed from the SWOT analysis. In addition to this, he explored that internal evaluation of firm assists the business to understand the competitive advantages. Barney differentiated the resources and capabilities into four dimensions such as value, rareness, Imitability and organization (Faizal, Zaidi and Othman, 2011). In concern to the value proponent, strategic managers must identify the impact of gaining advantages of opportunities and neutralize the threats of company. Further, the resources add value in the new environment opportunities. In addition Author explained that the resources should be rare that creates competitive advantages for the firm. He also reviewed that Imitability of resources helps the organization to create competitive advantages through substitution development would build a competitive strategy. Barney stated that the capability of firm depends on the value, rareness, Imitability of available resources. He focused on organizing and utilizing competitive resources and capabilities for creation of potential competitive position in market.

Implications of dynamic capabilities in context of technological advancement  

Technology has changed the shape of competition, because the firms are introducing innovative, affective and cost effective products in the market. Dynamic competencies are the unique ability of the company to stay in the technique efficient market (Francisco, 2015). Further, in this technology enable environment, these capacities develop the strategy for business firm to come up with new innovation and focus on tapping the market. If the organization has strategic capacity to manufacture the qualitative products through new technology, it enables the business to invent new method to retain competitive position in market. Dynamic capability specifically reconfigures the resources and creates the new technology enabled products to sustain in the competitive era (Rughami, 2013). Along with this if organization possesses different capabilities like strategic management, efficient technology usage, than it adds value in the performance of organization. Moreover, dynamic capabilities adapt the fast changing environment to develop its strategic efficiency and survive in the technology disrupted environment. It helps the business in retaining the competitive advantages for the firms in fierce competition. On the other hand, high level technological advancements compelled the pharmaceutical company to focus on the development of dynamic ability through research and innovation. It is stated that dynamic capabilities differentiate the business from other companies due to its uniqueness which assist the company to stay ahead in the technologically competitive environment.     

Conclusion:

From the analysis of Teece and Barney’s paper of dynamic capability, it can be concluded that dynamic capabilities impact the business operation of companies significantly. It can also be concluded that an organization cannot survive in competitive environment without configuring the unique abilities from the resources.

 

References

Davidjteece, (2013) Dynamic Capabilities. Retrieved from: https://davidjteece.com/dynamic-capabilities/ 

Ding, M., Eliasberg, J. and Stremerch, S. (2013). Innovation and Marketing in the Pharmaceutical Industry: Emerging Practices, Research, and Policies. Germany: Springer Science & Business Media.

Faizal, M., Zaidi, A. and Othman, S. (2011) Understanding Dynamic Capability as an ongoing concept for Technological Capability. International Journal and Business of Social Science. 2(6), pp. 1-11.   

Francisco, J. (2015). Resource-Based View and Dynamic Capabilities Resource-Based View and Dynamic Capabilities. Retrieved from: https://unipub.lib.uni-corvinus.hu/2171/1/VT_2015n11p50.pdf

GSK, (2014). Annual Report 2014. Retrieved from: https://www.annualreports.com/HostedData/AnnualReportArchive/g/LSE_GSK_2014.pdf 

Helfat, C. (2013) How Apple and IBM change with the times, Retrieved from: https://www.usnews.com/opinion/blogs/economic-intelligence/2013/07/02/apple-and-ibm-show-the-power-of-dynamic-capabilities   

Pisani, G. (2015) A Normative Theory of Dynamic Capabilities: Connecting Strategy Know- How and Competition. Retrieved from: https://www.hbs.edu/faculty/Publication%20Files/16-036_3be51325-1fb0-421a-afca-4571d958ebf9.pdf

Rehmanm K. and Saeed, Z. (2015). Impact of Dynamic Capabilities on Firm Performance: Moderating Role of Organizational Competencies, Journal of Business Management, 2(2), pp. 1-23. 

Rughami, J., Aosa, E. (2013). Environmental dynamic capabilities and their effect on competitive advantage and firm performance. Prime Journal of Business Administration and Management. 3(11), pp. 1239-1243.

Statista, (2015). https://www.statista.com/statistics/312366/revenue-of-seretide-advair-worldwide-by-region/ 

Teece, D. (2011). Dynamic Capabilities: A guide for managers. Retrieved from: https://iveybusinessjournal.com/publication/dynamic-capabilities-a-guide-for-managers/ 

Wadhwanim R. and Jones, G. (2016). Historical changes and the Competitive advantages of Firms: Explicating the “Dynamics” in the Dynamic Capabilities Framework. Retrieved from: https://www.hbs.edu/faculty/Publication%20Files/17-052_ce716f44-7adb-40d3-9755-bb311f04c9e8.pdf
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