Research Korner: Glaxo SmithKline Inc Case Studies

OPERATIONS & LOGISTICS MANAGEMENT: GLAXOSMITHKLINE

OPERATIONS & LOGISTICS MANAGEMENT: GLAXOSMITHKLINE   Introduction             In any given week, a large percentage of adults in the United Kingdom use some form of medication, half of these prescribed by a doctor. Sales of creams, ointments, vitamins, herbal supplements, headache pills, digestive aids, and other over-the-counter medications amount to a large sum of money. The pharmaceutical industry comprises of physical products which can be packaged, stored, and shipped, a primary reason this part of health production is truly international.             Yet, the pharmaceutical industry is in an increasingly complex and dynamic environment. There have been a lot of changes in recent years in the pharmaceutical industry and this trend is likely to continue. The opening of markets, increased buyer cost sensitivity, global competition and technological advances have increased levels of uncertainty. There has been an inexorable rise in patient expectations, increased costs of health-care and the inability of economies to meet the increased costs. Consequently, governments have introduced a number of measures aimed at increasing competition and accountability and thus reducing costs (2002). The top brand name blockbuster drugs have more than $2 billion in annual sales, and a single drug can make or break a company. The largest pharmaceutical companies (Merck, Johnson & Johnson, Pfizer, GlaxoSmithKline) each have more than $30 billion in sales. For this paper, the pharmaceutical giant GlaxoSmithKline will be used for discussion. GlaxoSmithKline is the world's largest pharmaceutical company with pro forma sales of 15 billion pounds ($22.5 billion). It has leading market positions in four classes of therapeutics. GlaxoSmithKline has number-one positions in central nervous system drugs, anti-infectives, respiratory products and vaccines. It also has the number-two position in gastrointestinal and metabolic drug sales, taking into account the Kytril, Famvir and Vectavir divestitures, according to the company. It holds an 11.6 percent share of the central nervous system drug market, 6.1 percent of the gastrointestinal and metabolic drug market, 16.7 percent of the anti-infective market, 17.7 percent of the respiratory market, and 26 percent of the vaccines market. Change is never easy, and the merger between Glaxo Wellcome and SmithKline Beecham in December 2000 to create GlaxoSmithKline Pharmaceuticals certainly caused a lot of change as the organization chose the best structures, systems and solutions with which to move forward. Now, nearly seven years on, information management (IM) is emerging with an improved, streamlined information service to serve research and development (R&D) business needs with a holistic article access strategy, of which document delivery is recognized as an important part. This situation is changing as new methods of accessing full text emerge. Funds that flow into GlaxoSMithKline are used in a variety of ways. For example, they are used to support research and development efforts as the pharmaceutical company seeks to develop newer and better drugs before their competitors. These funds are also used to support marketing and promotional efforts needed to get physicians to prescribe their drug rather than a competitor’s drug. In addition, some of these funds are used to cover the costs of manufacturing, distribution, and administration that go along with any production process, and a portion of these funds are profits, which are either given to stockholders in the form of dividends or reinvested in the company in the form of retained earnings (2004). A breakout of the uses of funds is shown in the table below:   Uses of Funds for Pharmaceutical Products ________________________________________________________________ Cost of goods                                               30% Research & development                          13% Sales, Marketing, administrations                        31% Taxes                                                               6% Net income                                                   20% Source: CMS Health Care Industry Update – Pharmaceuticals, 2003.               Before being able to analyze and comprehend the strategy used for a pharmaceutical company, it is important to first understand industry structure and competition. The market of pharmaceutical products can be divided into three segments based on the type of buyer: individual patients, group purchasers, and government ( 2004). The competition for sales differs significantly across these segments.             The structure of the pharmaceutical industry is dictated by a single fact: the large and important costs are all sunk costs. The value of a drug depends on how useful it is in treating disease, not how many years it took to conduct clinical trials or perfect the production process, nor on the number of failed projects the company had to fund in order to get a winner. Research and testing to bring a pill to market costs so much more than manufacturing that there is essentially no rational connection between price and cost, however measured. Instead, value and price depend on therapeutic effectiveness (1998).             Marketing creates additional divergence between price and “unit cost” because the value of each pill increases as it becomes better and better known as a brand name drug. While clinical value may not depend on marketing, economic value does. Once the drug is launched in the market, any distinction between the value added from increased therapeutic effectiveness and the value added from increased marketing is not wonderful.             Once GlaxoSmithKline marketing launches a drug, the brand name is worth something even if the drug has been superceded by superior competitors. The brand-name version will often continue to sell at the old high price even after the patent has expired in order to capture the consumer surplus of customers who are not price sensitive.             In addition to broadening its product portfolio, GlaxoSmithKline has strengthened its sales and marketing position. The merger creates a company with one of the drug industry's largest sales and marketing forces. It has more than 40,000 sales and marketing personnel throughout the world, including roughly 8,000 representatives in the US. Overall, the combined company will have 100,000 employees.   Part A To some, providing a global service may feel a little daunting and it certainly does have its complications – differing copyright laws being just one of them – but on other levels it feels like the most logical way of providing a service which when it comes down to it, is the same whatever country you happen to be in. When Jean-Pierre Garnier became boss of Glaxo Wellcome and SmithKline Beecham when they merged four years ago, he realized that without huge innovation the company was at risk. Increasing competition from other pharmaceuticals and practically empty pipelines meant that Garnier had to rethink how the firm could maintain its 7 percent market share. His solution was Tadataka Yamada, his top researcher, who was instructed to find a totally new way to discover drugs. It is easy to understand why quality is of utmost importance in the field of pharmaceuticals. Alongside other industries where safety is critical, the pharmaceutical industry is heavily regulated and for obvious reasons: mistakes in product design or production can have severe, even fatal, consequences for patients (1999). To ensure a place in the emerging market, given today’s competitive environment, industries must achieve internationally accepted quality levels. Global competition calls for higher levels of quality, efficiency and service. As the pursuit for global manufacturing expanded, several standards organizations worldwide developed guidelines on quality. Terms like quality control, quality assurance, quality management, quality policy, quality plan, quality system, etc., acquired different or conflicting meanings in different countries. However, it is all easier said than done. Pharmaceutical companies cannot make new drugs just at a whim. Neither can they sell them as easily. These processes have to go through certifications and quality management. There are certain series of standards such as the International Organization for Standardization (ISO). Recognizing that there was a need of standardization for quality management as well as for quality assurance, the International Organization for Standardization (ISO), headquartered in Geneva, established ISO-TC - which was a technical committee on quality - to write new quality standards (1996). There creates the basis for thorough and unambiguous documentation and that each pharmaceutical product runs through various stages of the quality control process during production - from the laboratory analysis of the base materials and tests during each individual production stage right through to the final checks (1993). These tests and checks, for example, verify that the active agent content and its release correspond precisely with the manufacturing specifications. When numbering individual production batches and managing test and release information, provides the manufacturer with assistance (2002). More extensive analysis options are also available, enabling product quality to be tracked through analyses of the number and type of fault reports per batch. This industry solution is also augmented by options for total quality control in the production of medications and sample data for various administration forms For example, pharmaceutical companies need to accurately weigh out all the substances and materials according to the formulas prescribed by the authorities before production actually begins. (2002) The security of documents in the pharmaceutical industry has become a critical issue since the advent of electronic data transfer. The regulations also require that secure, computer-generated, time-stamped audit trails are used to record the date and time of operator entries and actions that create, modify or delete electronic records.   èAdvantages             Expectations of the standard, for the most part, are based on previous experiences or claims made for it cited in the literature of the major ISO certification bodies, such as the British Standards Institute (BSI), Lloyd’s Register Quality Assurance (LRQA) and SGS as well as from empirical research studies. Among the cited benefits of ISO 9000 are: <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> increased market opportunities, as customers will see you as more effective and better organised; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> reduced costs; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> stronger reputation in the eyes of stakeholders; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> reduced waste (time and materials); </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> win more business through complying with an internationally recognised and respected standard; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> compete more effectively through increased customer satisfaction (SGS, 2001); </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> improved management control; and </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> higher profit margins, sales per employee and a higher profit per employee than the industry average (1993). </li> </ul> Empirical studies conducted in the USA ( 1994) and in the UK (1996) found that the main external benefit of the standard was higher perceived quality by the customer, the main internal benefit being better documentation. The preservation of reliable records depends in part upon the maintenance of essential metadata as it is a vital tool in helping an organization fulfill the recordkeeping specifications required by external bodies, including compliance with ISO 9000 requirements. The purpose of the guidelines is to improve the quality of products and services while increasing productivity and reducing costs. This standard has increased the importance and profile of many records management programs. Organizations have always kept records, but prior to ISO 9000 such managers considered them to be a necessary evil instead of an essential component of a quality system (2002).  (1996) found the highest ranked benefit to be improved efficiency, followed by an improved awareness of procedural problems – both internal benefits.   èDisadvantages              (1997) outlined ten main criticisms of ISO 9000 including: (2) quality by inspection is not quality; (b) too heavy reliance on people’s and, in particular, assessors’ interpretation of quality; and (c) when people are subjected to external controls, they will be inclined to pay attention only to those things which are affected by those controls.              (1996) identified eight major disappointments with becoming ISO 9000-certified. The main one cited was the time required to write the associated manuals, while the high cost of implementation came a close second. Of the seven major problems of the standard, once it was implemented ( 1996), the highest ranked was the high cost of maintaining the standard, closely followed by the high volume of paper work.              (2001), while agreeing that ISO 9000 was based on good intentions, suggested the following problems with the standard: (a) the fact that the standard creates unnecessary paper work is unquestionable; (b) the four main areas of cost (time, training, consultants, and registration) may never actually be recouped; (c) the standard may interfere with new and better ways of operating; and the standard is too general and not industry-specific.               Part B Comparing the contribution of TQM and ISO, it will be found that the companies adopting TQM achieve higher improvement than those adopting ISO at all levels of application. Companies which had fully implemented ISO had an average improvement of 36 per cent, while companies which had fully implemented TQM had an average improvement of 99 per cent. The comparison shows that TQM as a whole is more beneficial than ISO (1999). The ISO 9000 series is currently used in more than 90 countries. The standards that it provides apply to a variety of areas of manufacturing and service organizations. The standards developed by ISO and the implementation of these standards are voluntary. ISO does not have any legislative power and is not a part of any government or the United Nations. Governments as well as individual companies make the decision to voluntarily integrate ISO standards into their systems on a voluntary basis. Also, many companies decide to implement ISO 9000 to reduce costs related to quality problems such as after-the-fact inspections, warranty costs, and rework. ISO 9000 is also implemented to have an edge over the competition. A few governments require that some industries meet the international standards that ISO 9000 has created. On the other hand, the total quality management (TQM) philosophy of many organizations stresses a systematic, integrated, consistent, organization-wide perspective involving everyone and everything (1999). Quality standards for pharmaceuticals have been built up over the years from experts from industry, pharmacopoeial authorities, regulatory agencies and academia and are based on experience and the need to safeguard the safety and efficacy of the product, for the sake of the patient’s health (2002).             Pharmaceutical companies also followed the path of achieving a quality certification; namely, ISO 9000 accreditation, in the pursuit of excellence (1993). Certification is attractive as a means of impressing new customers and convincing existing ones that they are dealing with a progressive company, which is continually seeking improvements. However, certification was seen as a stepping-stone on the journey towards excellence. Certification was found to represent a milestone, a recognition that progress is being made and that TQM efforts are paying off. Enthusiasm for TQM can quickly fade if there are no tangible results. The survey indicates that commitment to TQM among senior management is high. Strong leadership has directed companies to attempt to make the TQM process “belong to the company” and so foster employees ownership.             Total quality management has demonstrated its potential to be a successful way for organizations to eliminate costs, improve productivity and gain a competitive edge in the marketplace (1999). One of the main elements of TQM is the need for adequate customer focus. Companies have to identify current and future consumers’ needs and their level of satisfaction and loyalty. It is foreseeable that in the future global consumers will become increasingly demanding, in particular with the development of TQM in the less-advanced countries (e.g. China, South America and South-East Asia). Any changes which are made have to be undertaken with customer’s needs given full consideration, therefore this TQM dimension constitutes a stimulus to business innovation ( 1999). In the late 1970s and early 1980s, a great awareness of the need to provide a greater level of protection than was required by simple legal compliance led to the development and adoption of internal global EHS standards by all the heritage companies that merged to form GlaxoSmithKline. These standards defined the ways of working that met or exceeded legal and regulatory requirements in all countries in which heritage GlaxoSmithKline companies did business. Compliance with both legal requirements and internal standards were tracked through routine audits of all manufacturing and research and development operations ( 2004).             Total quality management strategy at GlaxoSmithKline called for establishing a formalized, ongoing quality assurance program that would improve the company's efficiency and enhance service to customers, which would help the company to grow and become more profitable. ISO certification requires that the company develop a quality-management system to ensure that products and services conform to customer requirements. The system must be subject to continual performance improvement. There is perhaps no better way to demonstrate return in a service industry than through measurable quality of service and ISO certification to be a powerful tool in measuring and maintaining customer satisfaction ( 1993). TQM led to measurable bottom-line benefits and many other organizations was quick to follow down the TQM route to quality ( 1990). Henceforth, the TQM adoption strategies suggested that many had simply attempted processes that could be described as overlay and resulted in low levels of ownership and poor integration far from being of advantage to quality management, it became counter-productive with staff losing motivation and are able to demonstrate quality improvements with concomitant improvements in production and decrease in costs (1996). A successful implementation of TQM can lead to improvements in the quality of products and services, reductions in the waste of resources, and overall increases in efficiency and productivity. Such improvements contribute to good customer relations, growth in market share and sustained competitive advantage (1990). The benefit of the use of management systems has recently been demonstrated by the ability of the company to maintain its levels of compliance and environment, health and safety performance during the last merger of companies to form GlaxoSmithKline. The company is now embarking on a programme to embed sustainable development into the fabric of the operations. The initial phase is to look at natural resource utilization, both to improve efficiencies and to examine the possibility of a greater reliance on renewable resources. The emphasis at present is to develop and implement processes in research and development, procurement, capital expenditures and other related areas. These areas will be controlled through the use of management systems and then tracked by audits (2004). There is a commonality between TQM and ISO in terms of contribution. For both factors, the contribution from “little use” to “much use” increases slightly. The contribution increases dramatically at the high use stage. This result has many implications. Theoretically, it suggests a learning effect in applying quality methods. Practically, the suggestion is that companies should not be half-hearted in applying quality methods, and that companies should not be frustrated at the slow contribution of quality methods at their earlier stage of application. It also suggests the necessity of continuous improvement.

OPERATIONS & LOGISTICS MANAGEMENT: GLAXOSMITHKLINE

OPERATIONS & LOGISTICS MANAGEMENT: GLAXOSMITHKLINE Introduction In any given week, a large percentage of adults i...

CORPORATE STRATEGY

1. Identify and briefly describe the portfolio of businesses in the organization.   Tool & Die Design & Fabrication             - Tool & Die Design & Fabrication refers to the stage wherein issues found during the prototype fabrication needs to be improved prior to any quantity production.   Prototype Fabrication             - The prototype fabrication is the attempt to determine the completeness of the detailed design and to make appropriate corrections to the design documentation as necessary. This phase is a more detailed systems integration phase then the earlier integration that was performed during preliminary design. This phase is also the first integration of all the mechanical components in the assembled unit.   Precision Metal Stamping & Assembly             - Stamping services is the process of creating three-dimensional parts, lettering, and other surface definition onto materials.  This is achieved through the use of forms and dies which are forced into the surface of the material by extreme pressure.  When removed, the patterns on the forms and dies are indelibly stamped into the material.  Many standard and exotic engineering materials can be stamped or formed with pressure, although metal stamping is the primary application.  Stamping and forming services providers are able to perform a number of different processes, which lead to different styles of finished product.  Some of these stamping techniques include fine blanking, deep drawing, wireforming, and fourslide and multislide stamping.   Electronics Manufacturing Services             - Refers to the design, assemble, produce, and test electronic components and assembles for original equipment manufacturers (OEMs). Electronics manufacturing services (EMS) has also started to provide design services used in conceptual product development advice and mechanical, electrical, and software design assistance. Testing services perform in-circuit, functional, environmental, agency compliance, and analytical laboratory testing. Electronic manufacturing services are located across the United States and throughout the word and usually vary in terms of production capabilities and comply with various quality standards and regulatory requirements.   R&D and Manufacturer of Consumer Products             - Manufacturer of consumer products refers to the transformation of raw materials into finished goods for sale, by means of tools and a processing medium, and including all intermediate processes.   2. Prepare a list of the identifiable stakeholder groups for the organisation, what they contribute to the organisation, what they expect from the organisation and what the organisation expects from them. Focus-tech Holding Pte Ltd 64,982,822 17.40 HSBC (Singapore) Nominees Pte Ltd 41,599,000 11.14 DBS Nominees 36,765,905 9.84 Raffles Nominees 19,742,200 5.28 Dr Felix Ong Kim Huat 19,412,992 5.20 Seah Cheong Beng 7,911,544 2.12 Citibank Nominees Singapore 6,397,600 1.71 UOB Kay Hian Pte Ltd 6,152,000 1.65 United Overseas Bank Nominees 5,100,000 1.36 OCBC Securities Private Ltd 4,859,400 1.30 Seah Chiong Kok 4,741,540 1.27 Citibank Consumer Nominees 4,356,200 1.17 DBS Vickers Securities(S) 3,253,012 0.87 OCBC Nominees Singapore 2,804,200 0.75 Hong Leong Finance Nominees 2,648,802 0.71 Kim Eng Securities 2,619,200 0.70 HL Bank Nominees 2,090,000 0.56 Phillip Securities 1,718,340 0.46 Soh Lay Choo 1,449,110 0.39 Chio Kian Huat 1,326,800 0.35       Total 239,930,667 64.23                       The company's strategy is developed by the executive management, although it is normally necessary for the approval of the board to be obtained for major transactions or changes in strategy, and sometimes necessary for shareholder approval to be obtained as well.  The board usually meets monthly, and performs (or is supposed to perform) the functions of reviewing strategy and monitoring the performance of the executive management. This division of functions between the shareholders, the board, and the executive management is an inevitable consequence of the large size and scale of operation as of most companies.   3. Develop a set of Balanced Scorecard type of "perspectives" which are appropriate to the selected organisation. Develop a corporate strategy map which maps out the organisation's current corporate strategies within those perspectives. Develop an appropriate set of "metric" which can be used for corporate reporting and management purposes.   Relationships with competitors focus particularly on pricing and market positioning. In some markets, competitors have reached a point, in which there are generally understood rules of the competitive game. In others, there is no sense of a repeated game, and competition may be pursued to mutually destructive lengths. Sometimes technological change, or new entry, may shift an industry from stability to instability in its competitive process. Positioning and pricing are relevant to relationships with customers as well as with competitors. Advertising and branding are mechanisms by which firms communicate with their customers, but are also strategic tools governed by competitive interactions.   The strategy of the firm is the match between its internal capabilities and its external relationships. It describes how it responds to its suppliers, its customers, its competitors, and the social and economic environment within which it operates. The analysis of strategy uses our experience of the past to develop concepts, tools, data, and models which will illuminate these decisions in future. Success in business derives from adding value of your own, not diminishing that of your competitors, and it is based on distinctive capability, not destructive capacity. Distinctive capability becomes harder, not easier, to maintain as size increases. Yet in descriptions of both business and public policy, the equation of scale, power, and effectiveness is often simply assumed.   Strategy Map:             Developing strategy map in context of the perspectives recurs attention to understanding the basic structure of strategy, learning and mastering the nature of business relationships, acknowledging Seksun distinctive capabilities offered by its Human Resource people and creating a competitive advantage from these distinctive capabilities.   Metric 1: Market Position and Product Price An effective metric to consider are the issues of market position and product price. The two key influences on market prices are the costs of firms and the value offered to consumers. The less stable the competitive environment, the greater is the degree to which prices will be determined by cost rather than value. In the worst case, prices can be driven down to marginal or incremental cost. Marginal and incremental costs are often thought to be very low, but I explain how this is often a mistaken view and describe how activity-based costing helps to bridge the gap between theoretical concepts of marginal cost and accounting systems of cost allocation.   In other market environments there is more opportunity for prices to reflect the value of products to customers. In these, market segmentation-the identification of as many distinct product and geographical markets as possible--is a principal means of securing as high a proportion as possible of the value offered to consumers as added value for the firm. There are two necessary conditions for effective market segmentation. There must be economically relevant differences between the separated markets. These may arise from differences in the incomes of customers, or in the ways they use the product, or in competitive structure.   Metric 2: Competitive Environments             Positioning decisions are partly dictated by the firm's distinctive capability. Some firms are naturally suited to up- or down-market positions. But positioning is also a matter of competitive dynamics. When there are few firms in a particular market, clustering behaviour--in which several firms jostle for the same market position--is a likely outcome. As the number of firms in the market increases, they are likely to spread themselves more evenly across the range of available positions.   Increasingly, a product can only be described by reference to a wide range of its characteristics. Many different features of a car are relevant to potential buyers, and a supermarket must decide which selection of many thousands of goods to hold in stock. For commodities like these, successful firms have to make a well-matched selection of product attributes. For these firms, focus--the consistency of attributes with each other--may be as important as position. Shifts of market position, which require changes in customer perception as well as product specification, need to anticipate competitor responses. They raise special difficulties for multiple-attribute products.   Metric 3: Advertising and Branding While advertising creates brands, there are some differences between the functions of advertising and of branding. Brands are more often discussed than defined. A brand is established when an item sells for more than a functionally equivalent product. It is that characteristic which distinguishes a brand from the name of a product. The most usual reason for a price premium--and the most profitable reason--is that the customer is uncertain about the attributes of the product and is reassured by the supplier's reputation. But brands have other purposes. Some brands are little more than labels, although labels have their uses. Brands may be used by consumers to signal information about themselves to others--these are what are usually meant by brand images. Yet other brands may be attached to distinctive recipes or incumbent positions. The greatest corporate successes built around advertising and branding are those based on brands which have established several of these characteristics.   4. Identify and critically discuss the major corporate strategies that have been employed by this organisation during the last 5 years.                         The Seksun group has been shaping itself in growing as a company upon the  guiding vision of the simple notions of (1) developing its expertise, (2) Expansion of its company (3) Their commitment and resolve for service and quality (4) and its pursuance for results in conjunction with its set objectives and goals. In a more definite and recent perspective, Seksun believes that the Hard disk drives (HDD) industry is resuming healthy growth boosted by new applications for HDDs in consumer electronics devices, such as digital music players, digital cameras, digital entertainment systems, etc. Additionally, they also believe that demand for HDD components in these new devices will significantly increase production volumes that will improve the utilization rates of their FIPG operations, allowing it to contribute positively to their net profit last 2005.   The group, however, anticipates prices of raw materials to gain further in 2005. While raw material price increases have been factored into the selling prices for new programmes, the increase in prices of raw materials for existing programmes is likely to be partially or fully absorbed by the group.   Seksun believes that its shareholders will profit from the agreement with ZF Array and the adoption of a strategy to target Seksun's contract manufacturing operations at customers seeking low-to mid-volume production capabilities. This strategy will leverage on ZF Arrays San Jose-based product development centre and Seksun’s lower-cost Asian operating environment. While there would be no material impact on Seksun’s financial performance for FY 2005, they are confident that the expansion of the contract manufacturing operations will produce longer-term benefits for the performance of the Group and better returns for their shareholders. …“The current year will also see us adopting a strategy to intensify our focus on our contract manufacturing operations for the Consumer Electronics segment…” Given the above, Seksun expects that they will remain profitable for the current financial year.   Analysis: …In 1959 BMW was on the edge of bankruptcy. The company recovered to become one of the world's most profitable automobile manufacturers. Honda became the leading supplier of motor cycles in the United States within five years of entering the market…   Success is most illuminating when contrasted with failures. Corporate success, of the kind achieved by BMW, Honda, and Glaxo, is not the realization of visions, aspirations, and missions--the product of wish-driven strategy. It is the result of a careful appreciation of the strengths of the firm and the economic environment it faces. But nor is success often the realization of a carefully orchestrated corporate plan. The strategy of successful firms is adaptive and opportunistic. Yet in the hands of a successful company an adaptive and opportunistic strategy is also rational, analytic, and calculated. The capacity to adapt does not mean waiting for something to turn up for opportunism is only productive for a firm which knows which opportunities to seize and which to reject.    5. Discuss what you perceive to be the corporate direction and governance for this organisation?   Additional directives of which Seksun wishes to achieve are as follows: (1) Proposed listing for China operations in two years. The China operations have the required three year profit track record, having been profitable since inception. According to press reports, after tax profit from Seksun's China operations in 1999, 2000 and 2001 were 10.8m RMB (S$2.4m), 16.5m RMB (S$3.6m) and 30.8m RMB (S$6.8m) respectively, or 39%, 44% and 70% of group net profit (2) Move into contract manufacturing to expand service offering. Seksun bought into a contract manufacturing business last year by paying RM1.85m for a 56% stake in a Johor plant. The motivation was to offer more services its customers to deepen the relationship. The plant is already producing game controllers for the Xbox and Digital Media Recorders (which operates in DVD, SVCD, VCD, CD-Audio, MP3 and MPEG standards) for Seagate. Digital Media Recorders use a built-in HDD. With a full year contribution in FY02, Seksun is targeting to bring the business to profitability this year. (3) Lowest valuations in the sector. Current valuations do not justify Seksun's exposure to the strongest growth trends in the HDD industry and its track record of profit growth in a volatile sector. Unlike many of its peers, Seksun has stayed profitable throughout its operating history, which is a commendable track record given the industry's boom and bust trends.   These programmes are in conjunction with the Seksun group’s mission and vision statements which specifically underscores its quality policy on total customer satisfaction. While delivering products and services which meet all relevant requirements on time and by doing right the first time. Additionally Seksun continually reviews and improves the effectiveness of their quality management system to remain current and competitive.   6. Identify and discuss any current issued of corporate direction and governance for this organisation.   …A company's social responsibility program has three major areas: complying with laws, setting -- and abiding by -- moral and ethical standards, and philanthropic giving…   Social responsibility is a major subject of concern and action for all but the smallest or least aware of companies. Today it is generally accepted that business firms have social responsibilities that extend well beyond what in the past was commonly referred to simply as the "business economic function."   Quite often the responsibility for actions in this area is vested in an individual or small staff, frequently within the human resources management area. Personnel assigned to this area, then, have responsibility for social issues in three major areas: (1) Total compliance with international, federal, state, and local legislative laws and acts (2) Moral and ethical standards and procedures under which the firm will operate (3) Philanthropic giving.   Most companies find it no simple matter to formulate and implement socially responsible actions and programs. However, all companies must become concerned and involved in this area. To operate without major disruptions, a company must at all times be in compliance with legal requirements -- international, federal, state, and local. It must develop, establish, implement, and police a code of ethical and moral conduct for all members of its organization. In the area of philanthropic activity, where there is considerably more latitude of operations in how, when, where, and even if the company or division wants to contribute money or other resources to "worthy causes," the firm must deliberate about and resolve many questions prior to establishing fair and workable guidelines.   In compliance with this business requirement, Seksun has been awarded as among top SGX's "Most Transparent Companies" last 13th September 2002. Furthermore, Seksun has been granted ISO/TS 16949: 2002 Certified IATF Cert. No.:0022032 and ISO 9001: 2000 Cert. No.: 160220

CORPORATE STRATEGY

1. Identify and briefly describe the portfolio of businesses in the organization. Tool & Die Design & Fabrication ...

Glaxo SmithKline Post Merger Objectives Performance, Reasons for Success or Failure

Glaxo SmithKline Post Merger Objectives Performance, Reasons for Success or Failure Introduction Mergers and acquisitions often referred to as M&A is also a tool for expanding ones business or get around different laws or regulations such as tax laws or monopoly regulations. Merger and acquisition (M &A) has been the most debatable issue in the field of management and finance. There are arguments for and against corporate restructuring and mergers. Lambrecht (2005) argued that although M&A activities occur in waves but M&A activities are as a result of the economic environment. In the analysis pre and post merger performance of GlaxoSmithKline, Barron (2000) called this merger as ‘‘a marriage of convenience-with lots of tough issues to be worked out. He added that SmithKline is wedding itself to a slow-moving company with a lackluster pipeline of new drugs coming to market’’. It is found that mega pharmaceutical merger hasn’t delivered value. The stock prices underperform both in absolute and relative terms against the index. The merger has resulted into a substantial R&D reduction and downsizing instead of a potential employment haven (Ullah, et. al., 2010). The Mergers and Acquisition In the beginning of the merger and acquisition, it is expected to have a different side of view between the combined companies. At first, the business struggles to identify the goals, objectives, and processes that they will use. The new business or the business leaders must weigh the advantages and disadvantages. The business leaders are also entitled to take a good care their employees thus, they have to explain to the people the importance, reasons and possible outcomes of the business combination to the employees. Part of the duty of a leader is to make an effective development and implementation of strategies and programs for the employees. The action for merger and acquisition is one of the answers towards the globalization, technological developments, and deep market competition. Making this action also deserves to face various challenges and strategic planning. Scope for Merger and Acquisition The scope of merger and acquisition are from providing the market share up to meeting the global competition. The difficulty appears under the business combination is making a successful integration in contributing the necessities needed for the new company. The main objective of the entire business community, except for those non-profit organizations, is to generate or gain profit. Part of the scope is acquiring the needed strategic tool that is appropriate for expanding and entering in a new market, which involves the acquisition of new technologies and establishing a new organization with power and resources (Bhat, 2009). The course of competition will depend on the particular combinations of industry structure and competitors in any individual scenario, so it is hard to do more than give some very general guidelines. Some key strategies for competitive interaction are considered below. Surprise is a key means of securing short-term advantage. For example: (1) When engaging in acquisition of a competitor, the ability to move quickly and unexpectedly can be crucial to achieving a successful result. (2) When launching a series of new products, companies may deliberately disguise the roles they see for each; so as to divert defensive marketing responses towards a wide range of products, rather than allow competitors a focused response to the true product champions. (3) Where resources are in short supply, companies can secure major competitive advantage by acquiring control of them before competitors notice that they are doing so. Property and mining companies, in particular, go to great lengths to disguise their processes of site acquisition. Building a capability to spring such surprises – for example, by developing a flexible and responsive organizational structure, or an ability to evaluate opportunities very fast, or simply an ability to keep secrets – is a strategic process. That is because it requires cross-functional co-ordination and integration across operating units to achieve such a capability, from which the whole organization benefits (Bakhru, 2006). Conclusion Issues of timing are often sources of potential competitive advantage. Glaxo SmithKline, a UK pharmaceuticals firm, significantly shortened the clinical trial period by conducting simultaneous clinical trials in 20 countries and then building production plants before obtaining clinical approval for its drug Zantac. This illustrates why the development of an ability to respond quickly is an increasingly important strategic objective. As companies move towards time-based competition, with shortening development and production cycles, they gain an ability to influence the pace and nature of competition, to decide when and where the competitive battle is to be fought (Stalk, 1988). Maximum use of resources may seem to be an operational issue. Yet the ability to control and co-ordinate all aspects of a company’s operations, so that they are simultaneously engaged in enhancing a competitive position, is an important one (Clausewitz, 1982). References: Bakhru, A., (2006) Analyzing the External Environment, The Open University Barron`s .2000. Wedded bliss? Don't bet on it. Forget throwing rice; some Glaxo and SmithKline holders are throwing up. January 24, p. 20. Bhat, P., (2009) Impact of Mergers and Acquisition on Employees and Meaning of Mergers and Acquisition. India Law News. [Online] Available at: <http://www.indlawnews.com/display.aspx?4495> [Accessed 18 March 2011] Clausewitz, Karl von (1982) first published 1832) On War (trans. Col. K. Graham 1908; 1982 edn edited by A. Rapaport), London, Penguin. Lambrecht, B.M., 2005. Mergers and acquisitions as a response to economic change. Journal of financial transformation. Vol.13: 73-76  Ross, Westerfield and Jaffe, 2002. Corporate Finance. 6th edition. Boston: McGraw-Hill/Erwin.                                                                                      Stalk, G. (1988) Time – the next source of competitive advantage, Harvard Business Review, July–August, pp. 41–51. Ullah, S., Farooq, S.U., Ullah, N., & Ahmad, G., (2010) Does Merger Deliver Value? A Case of Glaxo Smith Kline Merger, European Journal of Economics, Finance and Administrative Sciences, Issue 24.

Glaxo SmithKline Post Merger Objectives Performance, Reasons for Success or Failure

Glaxo SmithKline Post Merger Objectives Performance, Reasons for Success or Failure Introduction Mergers and acquisitions often refer...