SM

Applying Tools like SWOT, Space matrix. Evaluate Choices and conclude about feasible direction after
mitigating risk.

GSKCH

SWOT ANALYSIS:

 Strength:
o Has a Global footprint with operations in nearly 150 countries;
o A wide-ranging portfolio with products which are at top of their respective markets and
are well established;
o Strong distribution channel with the help of 34 distributors nation-wide;
o Connects with the locals through their global objectives and strategies;
o State of art manufacturing technology based in Jamshoro serving three markets
Pakistan, Philippines and Vietnam.
 Weakness:
o Absence of helpful policies by regulatory bodies that make it harder to buy / sell in the
already challenging price-controlled environment in OTC market;
o Highly dependent on imported raw material.
 Opportunity:
o Huge potential in the export market to penetrate new markets and continue growing
the customer base across the globe;
o Great potential for e-market in the Consumer Healthcare business, further developing
the customer growth;
o There is an increase in the awareness and demand for healthcare products that can
prove beneficial for GSK CH;
o Diversify and enhance the portfolio by adding new innovative products and adding new
variants to already existing products.
 Threat:
o Implementation of Intellectual Property Rights have been an issue in Pakistan for a long
time, which can lead to a loss of market share if not implemented efficiently;
o Volatile exchange rates pose a great risk to the profitability as GSK CH depend heavily on
importing raw materials;
o Amidst COVID-19 pandemic, the consistent increase in cost of doing business including
raw material prices and associated handling and freight bill pose a challenge in
generating revenue.

SPACE MATRIX:
 6
5
CONSERVATIVE AGGRESSIVE
4

3
2

1 0.5

0
-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6
-1
DEFENSIVE -2 COMPETITIVE
-3

-4

-5
-6

INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION

FINANCIAL STRENGTH (+1 ENVIRONMENTAL STABILITY (-6

worse, +6 best) worse, -1 best)

Y Axis ROE 5 competitive pressure -5

price range of competing
Revenue Increase 5 products -4
Liquidity 4 demand variability -3
EPS 4 Inflation -3
CFs 4 Tech changes -4
Efficiency Ratios 4 Price elasticity of demand -4
-
Avg 4.333333 Avg 3.83333
total 0.5

COMPETITIVE ADVANATGE (-6 worse, -1 INDUSTRY STENGTH (+1 worse,

best) +6 best)

X Axis Market share -1 growth potential 5

product quality -1 profit potential 5
brand image -2 ease of entry into market 4
customer loyalty -2 tech know-how 4
customer service -1 resource utilization 4
manufacturing expertise -1 capital intensity 5
Avg -1.33333 Avg 4.5
total 3.166667
The SPACE matrix is a management tool used to analyze a company and determine what type of a
strategy the company will benefit from considering its internal strategic position and external strategic
position.

The internal strategic position includes: Financial Strength and Competitive Advantage of GSK CH
The external strategic position includes: Environmental stability and Overall Pharmaceutical Industry
Strength in Pakistan.

Then the SPACE matrix is broken down into four quadrants where each quadrant suggests a different
type or nature of a strategy:

 Aggressive
 Conservative
 Defensive
 Competitive

Analysis:

We have concluded from our SPACE matrix of GSK CH that an aggressive strategy will prove beneficial
for GSK CH in the current state of market. GSK CH, over the last two years have grown tremendously
having a strong competitive presence in the pharmaceutical industry. The use of their internal strength
(i.e., their strong position in the industry) will prove to be crucial in developing a strategy that leads to
market penetration and development. The strategy can include making new innovative products or
adding new variants to the already existing products, acquisition of new competitors in the market to
increase market share, and so on.

Within Aggressive strategy, GSK CH should take a role of prospector and a defender. A mix of both will
prove to be successful because being at the top currently they should diversify their product portfolio
and differentiate themselves from the rest of the competitors. Being at the top they will have the ‘first
move advantage’ which will set the parameters in the market with regards to standards and pricing.

As a defender, GSK CH can look at their operational side of the organization to make them more efficient
as well as effective. Such as, increasing their customer base and trying to lower their advertising and
marketing costs or costs of doing business altogether.

GSKCH Feasibility of Strategic Choices:

The company aims to boosts pipeline value by introducing new brands, variants and line extension and
by ensuring that high quality products are delivered to the costumers. By consistently investing in the
upgrading of manufacturing upgrading capacity which is sustainable in accordance with the improved
capital governance and supervision of the board, the company has achieved remarkable operating
cashflows i.e., 164% profit excluding tax, which shows a tremendous increase than last year's cashflow
which was 78%. Moreover, the acid-test ratio has also shown a significant improvement from 0.72 to
0.78 within a year.
Thus, no issues with liquidity have been encountered, and the company is able to manage its working
capital adequately and efficiently. The company's department of treasury invests the residual funds in
favorable rates, which sequentially augment its investment income and also provides the company with
the funds required to meets its operational demands. In addition, improved capital expenditure
arrangement and desirable operating cash inflows is aiding the company's dependency on running
facility towards the end of the year. (31 December 2020.)

Mitigation measure of risk /Description of opportunity:

 GSK CH is already actively managing their Environmental, health and safety standards by
ensuring that their practices are environmentally sustainable and compliant, this is a long-term
obligation for GSK CH.
 GSK CH has set proper controls in place that take into account the changing and volatile nature
of Intellectual Property threat in Pakistan with regards to Pharmaceutical Industry, this is a
short-term goal for mitigating the risk.
 GSK CH ensures that proper and effective security and communication measures are in place to
alert their employees in certain situations to be better equipped and act efficiently when
necessary. This is medium term goal for GSK CH.
 GSK CH will maintain its market share through enhancing and upgrading their plant capacity,
launching new product, R&D technology / and strategies and providing affordable healthcare
solutions to their customer base to maintain customer loyalty. This is a long-term goal of GSK
CH.
 GSK CH will secure price increases to offset ongoing inflation and devaluation in the prevailing
economic environment. This is a long-term goal of GSK CH.

Taking all measures of risks mitigation and the strategic choices made by GSK CH to further develop and
grow their business, into account we can conclude that its highly feasible for these choices / strategies
to work in the current state of the Pharmaceutical Industry in Pakistan. GSK CH by making these
strategic choices will likely keep their first rank in the industry in consumer health sector and maintain
their market share for years to come.