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Executive Summary
SmithKline Beecham is a healthcare organization that manufactures prescribed drugs as well as a range of non-medical products (for instance, toothpaste). The organization has a firm position in the world market; however, recently the number of consumers, the company used to have, has started declining. Contemporary business organizations such as SmithKline Beecham are now faced with numerous challenges because of the ever-changing and evolving business environment which is principally accredited to the impact of the globalization concept.
It is for such reason that SmithKline Beecham should formulate and redesign its marketing strategies; this will guarantee success of its business operations in the quest for larger market share. It is undoubtedly that stiff rivalry in the pharmaceutical industry has turned out to be the norm of the day and SmithKline Beecham has had a challenge of attempting to remain competitive plus striving to be international in its span.
This report contains a list of strategies SmithKline Beecham should follow to reach its main goals and objectives. The report presents two years supply chain strategic plan; it also considers different aspects which influence directly the companys development and consumer base.
The report concludes that SmithKline Beecham will be able to fulfill its main objective (to affirm its positions as a world-famous healthcare organization), in case that all the strategies and plans suggested by this report are followed. It is recommended for the company to work out marketing plans which would make the work of the company more successful.
Introduction
The main objective of any firm is to attract and maintain its customers, i.e. to build a wide customer base in its respective industry in order to augment its output that later leads to a boost in return margins, which ensures the success of the business.
SmithKline Beecham was founded in India in1984; at first, it was a private limited company aimed at acquiring related businesses by either amalgamation or purchasing. Gradually it was transformed into a public limited company continuing to introduce new pharmaceutical products and widening the consumer base.
For such business organizations as SmithKline Beecham, the introduction of such changes into the structure is necessary for successful performance of business operations. This is because every day the modern business environment, perhaps because of the business world taking the shape of being global village, changes and, therefore, such firms ought to respond to any market changes with the right marketing strategies (International Marketing Strategy: Analysis, Development and Implementation, 2003).
Therefore, my role in the organization lies in working out strategies and a chain supply plan which will ensure proper development of the company and will contribute to the fulfillment of its main goals and objectives.
Further research reveals that saturation of home market makes firms like SmithKline Beecham go global; thus, the company has to make more comprehensive action plans in order to counter its competitors in the pharmaceutical industry. Hence, by constantly carrying out marketing research, SmithKline Beecham will be able to successfully plan its future business operations by formulating business strategies that incorporate all the projected changes in business environment and ensure that the stipulated objectives of the firm are accomplished with simplicity.
It is evident that SmithKline Beecham is currently daunted by challenges such as stiff competition and depleting resources; its management ought to design a viable marketing plan that will augment the expansion and continuity of its business undertakings not only in the UK but in other countries as well.
Company/products/industry
The study will focus on SmithKline Beecham, one of the leading business organizations that deal with business of manufacturing and selling prescriptive drugs in the world. It deals not only with manufacturing of prescription drugs but also is reported to be engaged in production of other non-medical products, for instance, Aquafresh and MacLean toothpaste; soft drinks, such as Ribena, Lucozade, and other Horlicks drinks belonging to attractive brands. SmithKline Beecham falls under the category of pharmaceutical industry; it is argued that it has revolutionized the treatment of diseases with its products, particularly, with the prescribed drugs.
Research reveals that SmithKline Beecham produces in total four hundred different brands which it supplies to the world market. It is evident that the company has a well-established financial base as it is reported that it earns thirteen billion dollars annually from its sales across the world. For instance, its estimated profit after tax yearly has been way above one billion dollars since 1998. Also, the firm is among the leading employers not only in the UK but across the world; the latest statistics reveal that it has an estimated fifty thousand employees. In the UK, SmithKline Beecham employs close to ten thousand staff.
Situational Review
Market serves as an intermediate between buyers and sellers with the former being able to purchase the products they wish and the latter selling the products at competitive prices and obtaining profits. Traders and customers are interdependent; the traders are always interested in attracting a bigger number of customers, which results in competition between them. Any market has its core competencies which are responsible for the development of core products and which help different businesses to achieve competitive advantage. Competition between different manufacturers is all about competence mastery, rather than fighting for stronger market position alone. Core competencies include the principles the company observes; these may be manufacturing of unique products which would be difficult for others to imitate; special price discounts and attractive advertisements; stability of prices for the products; aiming to produce smaller amount of products of high quality instead of producing bigger amount of products of low quality, etc.
SmithKline Beecham also faces high competition; the industry is subjected to competition not only in the UK but all over the world as well. Just like any other company, SmithKline Beecham faces some consumer behavior problems, such as losing customers due to high competition and dissatisfaction of some customers with the quality of products the company supplies them with. The company management, therefore, has to come up with supply chain strategies in order to become competitive, as well as meet the needs and demands of its customers through provision of high-quality prescription drugs and other non-medical products. In reality, PESTLE analysis is commonly deemed to cover situational analysis which covers political, economic, social, technological and legal factors of a firm before investing in the chosen potential market. Thus, the company must concentrate on diversifying the range of products and improving their quality at the same time; to achieve this, political, economic, societal, technical, and legal aspects should be taken into consideration.
Political issues
Research reveals that issues of politics determine market position of a firm and there are several issues that ought to be taken into account by SmithKline Beecham Company to attain its desire to extend its products to wider market; such issues include the nature of government practice being practiced in the potential market and the stability of such systems adopted in that country (Principles and Practice of Marketing, 2001). Therefore, SmithKline Beecham has the duty of critically examining the political systems being practiced in the potential. SmithKline Beecham will need to come up with a clear decision regarding the inherent political differences that it might face after choosing the preferred market as a result of the nature of political system adopted in such market; for instance problems associated with either socialists or capitalists forms of governments. It is recommended that SmithKline Beecham Company should invest in those countries with flexible capitalist political systems because it allows labor, capital and resources to flow freely in and out of their countries, thus, making those destinations the best target markets for SmithKline Beecham to market its prescriptive drugs as well as the non-medical products.
Economic aspects
The economic aspects will entail critically examining any issues related to economy of the potential market and particularly focus on those aspects which may negatively affect its business operations in the pharmaceutical industry of the chosen markets.
Such trade barriers like restriction of imports and exports as well as foreign exchange rate systems should be carefully evaluated by the management of the company to carry out its operations without economic constraints. Other economic factors of importance to be analyzed by the company will include, inflation particularly anticipated inflation, balance of payments, countertrade, fiscal and monetary policies among other significant factors. (Principles of Marketing, 2000).
Although SmithKline Beecham may not be subjected to many of the above factors, it will be prudent to critically analyze these factors, particularly inflation and foreign exchange systems, by utilizing forecasting techniques that can give the company a clear picture of the future.
Societal aspects
On the other hand, social issues that need to be taken into consideration by the management of SmithKline Beecham Company, include critical analysis of average level of income of target customers, communal compositions, educational setting as well as matters about both religion and family composition; these issues should be taken into account prior to marketing the companys pharmaceutical drugs and other merchandise to the community. In fact, past experience shows that customers prefer goods because of some social reasons and such factors primarily comprise societal issues, such as beliefs associated to religion and traditional customs among other social factors (Top management group heterogeneity and firm performance, 1989). This implies that SmithKline Beecham will have the duty to design quality products that will satisfy all its potential customers across the board, i.e. without infringing their religious or traditional beliefs. Social factors may influence beliefs, interests and attitudes of the consumers and, therefore, the management of SmithKline Beecham Company has to consider in detail these factors in order to avoid losses associated with them.
Technical aspects
It is evident that modern know-how and improvement in technology has changed the way business organizations operate in this modern business organization with particular regards to competing for the ever informed modern customers (Electronic Commerce, 2004). Through utilization of modern innovation, SmithKline Beecham will have a chance of getting a larger market share; however, the company may become a victim of different technological advancements, since its competitors may utilize such advancements in dominating market share unfairly. In this case, SmithKline Beecham will not only need to make use of modern technologies, such as online marketing, but it will also have to utilize modern equipment that will aid in production of quality products faster and at low costs; this is likely to attract more customers than competitors. Such technologies are beneficial for any company because they allow saving time and financial resources that could have been spent otherwise; moreover, management can use the surplus resources for further expansion of the company or for paying back its shareholders returns, thus, getting shareholder confidence in the process (Marketing in Hypermedia Computer-mediated Environments, 1996).
Legal aspects
Research indicates that business firms including SmithKline Beecham should carry out their business activities within the law in the potential market in order to avoid unnecessary conflicts between the local authorities concerned and the firm; such legal factors as obtaining valid license before commencing business is crucial to the firm (Managers and the Legal Environment: Strategies for the 21st century, 2006). The company will have to make sure that the marketing and selling of pharmaceutical prescribed drugs and other non-medical merchandise are authorized in any of SmithKlines potential markets; this would help to evade preventable lawful clash which may cost the business a fortune. SmithKline Beecham also must follow the existing laws regarding business transactions in the target market particularly, avoiding unfair competition. Also, the company should observe other legal aspects, such as the areas of corporate social responsibility, whereby SmithKline Beecham will be expected to manufacture and sell its products protecting at the same time the environment and benefiting the surrounding community by employing them and also participating in community projects.
Mission Statement
SmithKline Beecham is one of the world-known companies manufacturing prescription medicines; the company also deals with non-medical products which only increases its profits. The main goal of SmithKline Beecham is to become the worlds leading healthcare company in order to supply people with high-quality products at available prices. The main strength of the company is the strict division into three businesses, namely, healthcare services, consumer healthcare, and pharmaceuticals; the company is independent and unified. The main weakness of the company was the control of different distribution channels; being unable to cope with this weakness, the management of the company decided to sell it in 1999. The company is planning to merge with Glaxo Wellcome, which gives it an opportunity of obtaining an 8% market share. However, the threat for the company lies in changing the demand for medications for the past 20 years. Rising standard of living and consumers being oriented at complex drugs led to decline in the companys profits.
SmithKline Beechams vision is attaining the standard of being the leader of the worldwide quality producer of pharmaceutical products in the pharmaceutical sector.
The general mission of the SmithKline Beecham is to become a world-famous healthcare organization; to achieve this, the company will need to widen the range of its products, enhance production efficiency, and to implant the main beliefs of corporate social responsibility in all the branches of the firm in order to become a world-famous healthcare organization.
Marketing Strategy that Enhances effective Supply Chain Management
A marketing strategy in essence is a plan of action which SmithKline Beecham will have to make use of so as to respond to the stiff competition from its competitors and thus accomplish a considerable market share in pharmaceutical industry. Research reveals that SmithKline Beecham Company is quite a big multinational company that has in the past chosen to compete in the world market. Nonetheless, this decision has not gone on well with the company because in some places, particularly in Australia, it has lost ground in terms of market share. Therefore, the best marketing strategy for SmithKline Beecham Company is to compete only in those segments which will perform much better than the companys competitors. If the company aims to improve its performance, market segmentation practice should be carried out by the firm prior to any desired marketing activities.
One of the main objectives of the marketing strategy for SmithKline Beecham is to ensure the customers with a wider range of products at available prices. This means that the company will have to reduce costs in order to subsequently reduce prices for its products. The management of SmithKline Company should ensure that the target market, which it had selected, provides an opportunity of accessing the market information required in order to save time and financial resources which SmithKline Beecham can further concentrate on market penetration strategies, whereby the company will be involved in manufacturing of new pharmaceutical products and other non-medical products for both the existing and new potential markets in the pharmaceutical industry. Such a strategy, if it succeeds, will lead to large market share and will help the company to maintain the old customers and to attract the new ones.
Identification of portfolio plans for the company will also be an important strategy for the company; the management will be able to identify those subsidiaries that are not performing well in the market. This will help to set business priorities and to manufacture only highly specialized products which are in special demand.
Such a strategy involves classifying the branches of the company into four groups as follows. The first group is that of a star which symbolizes a branch that does well and is said to have large market share in a growing market. The strategy adopted is that of building the business unit. The other group is question mark or problem child, which is a branch of the company characterized by declining market share in expanding industry. The strategy is that of harvest or divests to other markets. The third group is of cash cow which is characterized by low market share but in a growing industry. Cash cow normally sustains other branches because its cash flows are constant. The strategy associated with cash cow is harvest. The fourth group is that of the dog whereby the business unit in question has low market share in a declining industry. Such a business requires a lot of financial resources and time thus losses are experienced. The strategy for such strategy is to divest to other branches or business units in order to avoid losses. (Top management group heterogeneity and firm performance, 1989).
Though the company specializes in producing prescribed drugs, non-medical products should be its main focus because they are likely to attract a broad base of users. Prescribed drugs are, without any doubt, in demand, but they are also sold at high prices. The costs for both manufacturing and marketing of non-medical products are lower; moreover, non-medical products find a ready market and are likely to attract a great number of consumers under condition that their quality is worth their price.
Supply Chain Management Elements
Supply chain is the network of all people involved in trade who are participating in manufacturing, distributing, and delivering the products to consumers. Supply chain management, in its turn, deals with controlling these processes of manufacturing, distributing and delivering the products to the consumers; it takes care of resource management, organizations structure, and other related issues. In essence, supply chain management will consist of marketing mix elements; therefore, SmithKline Beecham management will have to clearly draft out a marketing mix that will entice potential customers from its rivals. For this reason, SmithKline Beecham Company should put into practice marketing mix strategy, which makes use of a 4 Ps that is; product, price, place and promotion. Such fundamentals are supposed to be integrated mutually and the company needs to apply the elements in its both existing and target market. Marketing strategy of any company should be worked out taking into account these 4 Ps; thus the company should aim at producing the goods of high quality, selling them at available prices, organizing a marketing department that would allow selling these goods at places where they would be competitive, and creating advertising campaign which will help to promote the goods. This is an effective strategy, since if the company is customer-oriented, then it will be able to meet the requirements of the customers without any delay and at affordable prices.
Element of Product
Since the product is the basis of any existence of any business, the company needs to put more emphasis on supplying quality products (Introduction to supply chain management: International management, 1999). The pharmaceutical drugs and other non-medical drugs manufactured by the SmithKline Beecham Company should be of high quality, which would help in attracting the customers. Therefore, the production of counterfeit drugs and other non-medical products in search of abnormal profits should not be tolerated because it will affect profitability of the company in the long-term perspective. The products also should also be packaged in such a way that they will appeal to customers and attract their attention. Although the current products of the company are rated well in the market, it should utilize new technologies and scientific inventions to improve the existing products or develop new ones in the marketplace.
Element of Price
Price is very important for any business because it determines cost and profitability of the products produced in the company. Since the customer has to bear the ultimate cost of production, it will be prudent to set prices that will be affordable to the customers in order to avoid low sales volume. Although over the past years SmithKline Beecham is reported to have been selling its products at affordable prices, in actual sense the prices are still. The company should consider the level of income of the target market before setting prices. Premium pricing strategy in this case might not work because SmithKline is not the only company that functions in pharmaceutical industry. SmithKline Beecham should make harder effort to become a low-cost manufacturer, so that the cost of production could be lower and products could be sold at more affordable prices.
Element of Place
Place in this context refers to availing the products to the consumers for their use. SmithKline is known to have best-distributing marketing channels in the world and therefore has the ability to reach a larger market share.
The use of internet should be used for marketing transactions to minimize delivery procedures. The utilization of agents or setting up overseas offices for storing the products will be effective and efficient to the company in that customers will get the products quickly and in time. Distribution of products is a major stage in which rival firms try to out do each other (Electronic Commerce, 2004).
Therefore, it will be advisable for SmithKline Beecham to regularly use non-physical methods of distribution such as the use of internet marketing where customers can source products electronically.
Element of Promotion
Promotion is the last element of marketing mix and companies including SmithKline Beecham Company should focus on this area in order to popularize their products in the market. In order to attain a larger market share, it will be advisable for the company to constantly advertise its products so that customers could find out more about the products, especially about new or modified products. SmithKline Beecham Company marketing executives will have the responsibility of ensuring that the best mediums of advertisements are chosen in order to reach wider audience in the target market. For example, the use of radios, televisions and newspapers will be advisable since it reaches large group of people. However, other promotional tools like the use of billboards and roadshows campaigns should be incorporated in order to sensitize the customers about the products in the market. (Global Vision: Building New Models for the Corporation of the Future 1993).
Marketing Research and supply Chain Management
It should be noted that all the strategies involved in this marketing plan of SmithKline Beecham will be attained with particular regards to managing an effective supply chain; an in-depth marketing research should be carried out before entering the market and at the same time it should continue in order to cope with changing business environment.
Through marketing research SmithKline Beecham will get to know the true position of its competitors in the market and thus design products that fit its customers in terms of product quality, affordable products, and full information regarding the products as well as accessing the products by customers easily. It also provides an opportunity for the company to position itself in terms of planning for the future on ways on how to survive and at the same time remain international in scope. (Marketing Management, 2007).
With marketing research, SmithKline Company can get a chance to identify its strengths, opportunities, weaknesses, and threats that it is facing in the market and thus can fully prepare itself for the situations which might not be beneficial for the company. Also, without marketing research the company will not point out the political, social, legal, and technological influences that might affect the running of the business.
Marketing research will also present an opportunity to the management of SmithKline Beecham Company to make decisions on whether to maintain or do away with other branches that may not be performing to the expected results. It is also through marketing research that firms can be able to meet the needs and the requirements of their customers in the marketplace. For example, customers may complain of poor quality or high prices, thus giving the company an option to seek other alternatives of satisfying them in future. Also, the company should carry out market research in order to identify the market segments which are considered suitable for the company to invest in without being subjected to losses. For example,
the management will be able to save a lot of time and funds that could have otherwise been spent on markets that may have not been successful thus affecting the productivity of the company and hence in the long-term profitability levels of the company will be affected negatively. (Global Marketing- A Market-Responsive Approach, 2004).
Performance, Appraisal and Budget
Under this, performance implies the implementation of chosen market strategies by SmithKline Beecham management; this means the respective managers ought to carry out their duties to ensure that each detailed task will be accomplished within the set timeframe, as well as it will be done in the best possible way in order to attain quality results. In brief, implementation procedures require SmithKline Beecham management to schedule the budgeted tasks and select the viable alternative causes of actions deemed to be effective in order to attain quality results. The success criteria for SmithKline Beecham are available prices for its products, which can be achieved by means of using advanced technology which will allow reducing costs and, as a result, prices for the companys products; high repute, which will attract investors and give the company a possibility to get a market share; reliable management of the company able to conduct economic evaluation of the company, predict possible incomes and losses, and ensure proper allocation of the companys resources.
Therefore, the use of advancement in technologies, for example, the use of Just in Time and Total Quality Management approaches will better the performance of the company. Implementation of the market strategies adopted will require both management and the staff of the SmithKline Beecham Company to be committed to ensuring that all the set objectives are achieved and carried out in line with companys policies and regulations as well as taking into account any legal considerations from the external environments. Performing these tasks successfully will lead the company to a new level of development contributing to the fulfillment of its main goal to become world-famous healthcare organization.
Further, the implementation procedure encompasses SmithKline Management assigning the available resources to specific units of the company that does well in order to fulfill their mandate of attaining large market share. Although SmithKline Beecham Company is said to be financially strong, this does not imply that the management should just allocate resources arbitrarily to the target market. Prior research should be done before implementation; the research will reveal the number of resources required to implement the strategies adopted by the company. SmithKline Beecham should encourage the utilization of mathematical series particularly forecasting future trend analysis of sales in order to avoid heavy losses that may cost the business profits. Such financial analysis will give the company an opportunity to do away with the strategic business units that make losses, to maintain those units that profit the firm, as well as to improve the units which were considered profitable. For example, the company should aim to be a lost cost producer; at the same time it should ensure that the profitability levels and cash flows of the company are not adversely affected.
Then, the strategy of control should be practiced; this implies that overall organization team of SmithKline Beecham ought to relentlessly keep an eye on the business operations with particular regard to output levels.
It is the duty of the management concerned to ensure that all production activities are in order, the human resource recruited are competent and that the products manufactured are availed to the market without further delay. Controlling activities will also provide an opportunity to compare the actual results with the expected outcomes and thus identify the areas that need to be addressed urgently. (Marketing Management, 2007).
Economic Evaluation is crucial for the company; therefore, the management of SmithKline Beecham has to come up with viable assumptions that will foster attainment of goals. For instance, the planning of activities through effective and clear budgeting systems has to be outlined in a way that will ensure equitable distribution of resources, equitable allocation of tasks, and will result in attainment of goals.
The concept of forecasting sales and costs by management of the company by means of using such techniques as time series method of forecasting called for implementation so as to enable the company to have the ability to forecast sales, as well as its costs for future years with certainty. Through effective budgetary control measures, SmithKline Beecham can forecast profitability with ease; for instance, the utilization of break-even analysis concept will allow forecasting profitability of the company. Therefore, the firms revenues will be fully outlined and the expected costs ascertained.
The strategies seem to be flawless and if all of them are implemented, the company is likely to reach its main goals and objectives. However, it should be noted that the companys sensitivity analysis is considered to be fair and that is the reason why the company has grown and performed well in the industry. The methods of sales and forecasting have been argued to be the best and thus evaluation and monitoring of companys activities have been made easy in the process (Links between Business Strategy and Human Resource Management Strategy, 1995).
The Supply Chain Strategic Plan
To work out the Supply Chain Strategic Plan for SmithKline Beecham, four elements of the marketing mix (product, place, price, promotion) should be taken into account. The plan for the first year will comprise the means for branding the companys label in order to assure the consumers that the companys products are sold at affordable prices and are simultaneous of high quality. Dealing with the second element of the marketing mix, the company will have to restructure its logistic department in order to avoid the repetition of 1990s situation (when the company was sold because of a poor distribution network). During the first year the company should be oriented at retail sales, which will build a firm basis for the wholesale in future.
Anot
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