Strategic management analysis of GlaxoSmithKline's Alli weight loss program

Strategic Management Analysis of the Alli Weight Loss Program (Makers of)

Obesity is becoming a growing problem in our contemporaneous society as our exercising activities decrease, we become more sedentary and tend to eat less healthy. In this context then, a new market evolved -- that of weigh loss products and services. The aim of this paper is to assess a new player in this industry -- GSK as the makers of the Alli Weight Loss Program.

Company Description

The Alli Wight Loss Program is manufactured and distributed under the GSK logo, the largest pharmaceutical company in the United Kingdom and the second largest in the globe. The history of GlaxoSmithKline is a long and interesting one, commencing in 1880 and continuing to today. The current organization is the result of a 2000 merger between GlaxoWelcome and SmithKline Beecham. The company's mission is organized onto three directions -- growth of a diversified global business; delivery of more products of value and third, simplification of the operating model. More details on the mission statement are available on the company's website, under the heading Our mission and strategy as http://www.gsk.com/mission-strategy/index.htm.

3. External Environment

The most useful means of conducting an analysis of the external environment is that of looking at the political, economic, socio-cultural and technological forces, organized under the PEST analysis (Net MBA, 2007).

Political forces: the political climate in the United States is relatively stable, with modifications being possible to occur due to the recent change in presidents; otherwise put, it is possible for the new Obama administration to issue new laws for pharmaceutical organizations and products; legislative changes generally bring about financial costs as the organizations have to comply with new regulations

Economic features: the current state of the economy is a precarious one due to the crisis that emerged last year and turned into a recession; however pharmaceutical companies are not entirely recession-proof industries, they are among the least affected sectors as people will get sick and requires medicine regardless of economic cycle; in the future, the economy is expected to regain its strength

Socio-cultural characteristics: people are stressed, they eat more and less healthy aliments and exercise less; these led to a situation in which obesity is a growing social matter; due to reduced time, people seek easy solutions to loose weight, leading as such to a growing demand for weigh loss products; the future is uncertain, as there is a possibility the population will realize the danger and care better for their weight or the matter of obesity will continue to make victims

Technological features: the IT is the domain which develops at the highest rate with numerous innovations in healthcare and pharmaceuticals being already available; these innovations improve living standards for the populations, but also support economic agents in increasing their operational efficiencies; it is expected that the ascendant trend be maintained in the future as more and more applications will be developed

4. External Evaluation Matrix

Key External Factors

Weight

Ratings

Weighted Score

Opportunities

1. Demand for weight loss programs

20%

4

0.80

2. Obesity problems

20%

4

0.80

3. Technological Innovations

15%

3

0.45

Threats

1. Legislative change

10%

2

0.20

2. Economic instability

35%

1

0.35

Total

2.6

7. Strategy Overview

GSK uses a multitude of strategic courses of action that are aimed to strengthen the company's competitive position, increase its customer base and ultimately generate sustainable revenues. Two of the most notable GSK strategies include a focus on financial stability and a reliable balance sheet and major investments in research and development (Fierce Biotech, 2008). Overall however, the strategic direction is identifiable with the three points mentioned in the mission statement -- "Grow a diversified global business; Deliver more products of value and Simplify the operating model" (GSK 2008 Annual Report).

An important thing to mention relative to the business strategies of GlaxoSmithKline is that the organization develops specific approaches to each of its products in order to maximize its success rates. The most relevant example in this sense could be offered by the Alli Weight Loss Program. In a context of countless weight loss products and 'miracle' diets, Alli was promoted as a product that would offer the desired results, but only with the condition that the buyer is also engaged in other weight loss activities, namely a careful diet and exercise. The only weight loss item to be sold over the counter and approved by the FDA, Alli is a real product with real benefits; it does not make false promises but simply states that when the user is committed and takes a diet, Alli will help them lose more weight (myalli.com, 2009).

In terms of future courses of action, GSK should increase its investments in biotechnology research and development in order to make new discoveries that will cure, or at least alleviate, illnesses. A timeline for this strategy is yet unavailable as it depends on the progress of the current economic crisis. GSK remains a for-profit organization and must protect itself against the losses associated with internationalized financial challenges. However, once the worst is overcome, the managerial team ought to look into more projects to finance. An analysis of the results would occur every six months and additional decisions would be made at these stages. The rationale behind the utility of this course of action is that it would significantly increase the strength and market perception of GSK (Fierce Biotech, 2008).

Annotated Bibliography:

2007, PEST Analysis, Net MBA, http://www.netmba.com/strategy/pest/, last accessed on June 3, 2009 -- Net MBA represents an online "business knowledge center" that offers objective information on a variety of business topics. It can be helpful for both expert economists and well as novices. A limitation however resides in the reduced amount of examples to make the information presented easier to comprehend and relate to.

2008, GSK Chief Elaborates on Biotech Strategy, Fierce Biotech, http://www.fiercebiotech.com/story/glaxo-chief-elaborates-its-new-biotech-strategy/2008-07-24 last accessed on June 3, 2009 -- Fierce Biotech is a website that focuses on advancements in the field of biotechnology. The articles are generally recent ones but the website also has an archive that allows the users to browse through older articles. The main advantage is that the stories are well documented and written in an objective manner.

2008, GSK Outlines Plans to Become More 'Biotech-like', Fierce Biotech, http://www.fiercebiotech.com/story/gsk-outlines-plans-become-more-biotech/2008-06-10 last accessed on June 3, 2009

2009, GlaxoSmithKline Plc., Hoovers, last accessed on June 3, 2009 -- Hoovers is a centralized database that reveals information on multiple organizations. The benefit is that the data offered is extensive and comprises features such as industry forecasts, competition nature and organizational financial highlight, alongside with description of the respective company. The downside of the source is however given by the reduced amount of free information and for more extensive data, the user has to create a paid account.

2009, The Industry Handbook -- Biotechnology, Investopedia, http://www.investopedia.com/features/industryhandbook/biotech.asp last accessed on June 3, 2009 -- Investopedia.com has been developed as an initiative of the highly popular and leading business publication Forbes. It can be useful for novice as well as experienced economists due to the complexity and sufficiency of the information presented. A highly popular features of the website is the Investopedia explains section, in which the editors use real life examples and explanations in order to help reader better relate to the concepts presented.

2009, Website of GSK, http://www.gsk.com last accessed on June 3, 2009 -- The official of the British pharmaceutical company is a highly useful research tool as it contains vast information on the organization, its strategies and its products. It is however insufficient as it does not contain any information on the overall industry and as the organizational information are presented from their angle, without mentions of organizational problems.

2009, myalli.com, http://www.myalli.com / last accessed on June 3, 2009 -- the website presents the features of the Alli weight loss program in a manner that makes it attractive to the prospective buyer. The main role of the website was that of promoting the product, familiarizing the population with its existence and boosting sales. Despite the offering of extensive data on the product, the website under the patronage of GSK reveals the disadvantage of only praising the product and not seeming objective.

GSK 2008 Annual Report, Retrieved from http://www.gsk.com/investors/reps08/GSK-Report-2008-full.pdf on June 3, 2009 -- The annual report of any organization is an extremely useful tool to assessing the performances of the respective company from numerous standpoints, such as the strategic courses of action implemented in the past year, financial highlights or board decisions. The downside is however that most of the information refers to the past twelve months and it is as such difficult to form an integrant opinion of the overall company and its historic performances. Additionally, as in the case of the website, the AR only tells the story from the angle of the company.