GSK is one of the leading pharmaceutical players on the planet whose operations span 117 countries globally and it trading markets to 140 countries across the world. (Source: www. gsk. com) It is mostly organised along product and regional divisions, including Prescription Drugs, Vaccines and Consumer Professional medical. In recent times it has been through a major streamlining of its operations in order to better respond to the environments in which it operates. Clearly, its environment is seen as a a great deal of change and uncertainty and hence it is rather important that the composition set up is one that allows for information stream and knowledge exchange between subsidiaries and procedures throughout the world in order to attain its objectives and also to "anticipate change and transform it to its edge as a Marketing opportunity, somewhat than be surprised by it when it occurs and understand it as a threat". (Baker, 1992) It is primarily structured on the local basis covering European countries, THE UNITED STATES, Central and SOUTH USA, Caribbean, Asia and Australasia, Southeast Asia, Africa and the center East. The type of the industry and the differing legal and regulatory conditions which govern the industry makes this necessary as the conditions are highly variable with different stakeholders and interest communities taking part at different levels with differing degrees of specialist and effect, though convergence is significantly evident. Although generally involved in pharmaceuticals and healthcare, the company also produces a variety of consumer products with some leading brands such as Lucozade, Aquafresh and Ribena. This implies that the business is rather different in conditions of its product portfolio and therefore, the structure must be adapted based on the markets it assists which are plainly varied on a global basis.
In recent times, the pharmaceutical sector became ever more consolidated on a worldwide level as a number of significant mergers occurred throughout the last mentioned part of the 20th Century as companies sought to get competitive advantage by merging skills and possessions and also to achieve scale economies in research, development and production. One of the primary characteristics of the industry is that it is intensely competitive and the overriding goal of nearly all players is to provide innovative and speedy responses to advertise. The industry in addition has come under the spotlight for several unethical tactics, reflective of the type of the industry all together and specially the undeniable fact that its success is very much reliant on the purchasing power of nations. Hence, there has also been much criticism voiced, especially in expanding and poorer countries where usage of medication and treatment is clearly much less available such as the developed Western. As a result, recent years have observed many of the bigger players becoming a lot more involved with issues of Corporate Sociable Responsibility, integrating the idea into the overall strategic platform of the company. (Katsoulakos & Katsoulacos, 2007)
The pharmaceuticals sector has been damaged by the great velocity of change in its operating environment, one of the main being that of the introduction of the web and other marketing communications technologies. Before 20 years or so, the industry has been through major upheaval and loan consolidation has been widespread. In order to survive, business models and organisational set ups have had to be modified to cope with the wider exterior pushes or contingencies and the complexities which are present within the industry. The high number of mergers and acquisitions which have take place has also obviously impacted on the subsequent structures in place, especially relevant regarding cross border offers where cultures change at both organisational and nationwide level. It has been a major factor in the development of the composition within GSK as the company has had to deal with 2 major mergers within a comparatively short time and has considerable implications for the management of the many ethnicities, both at organisational with national level, which it subsequently had to cope with. Hence, the creation of any uniform GSK culture across its many divisions became of paramount importance for the command of the business. This is clearly a significant area of concern, especially in post-merger management as the right structures and ethnicities have to be set up if synergies are to be realised and was a problem area in the beginning for the Greek subsidiary.
If we look back again to the 1960s as enough time when the Pharmaceuticals Industry began to evolve, the business models implemented by companies then were mainly based on innovation and the creation of new and effective drugs. Many were organised along functional lines, which arguably, were appropriate at the time. Much good Contingency theorists, particularly Burns and Stalker (1961), environmental factors have had an astounding effect on the way organisations in the sector are set up and subsequently been able. The 1960s were characterised by immediate growth in monetary terms generally in most developed countries, which new prosperity obviously brought benefits to many market industries, the pharmaceutical industry being one such benefactor. At the same time, the regulatory environment was considered to be significantly less rigid than that we know today and therefore it was easier for drugs companies to bring products to market and secure patents to ensure exclusive circulation. Differentiation became an integral strategy which thus damaged the structures set up (Lawrence & Lorsch, 1967) which tended to concentrate on the different competencies and specialisations within the firm.
Up until the 1980s, research and development was still an integral part of the value string and the product offering, but costs were continuously growing and the profits were slowly but surely being eroded. Some might say that consolidation was inevitable, but this by themselves had not been enough. Companies was required to rationalize their manufacturing techniques and many opted to locate operations in just several markets around the world, to gain both cost savings and create hubs of specialists who would donate to the extended drive for creativity on the market. The structures set up were no longer fitting to the environmental factors at play nor performed they help in the execution nor realization of aims, which got also transformed radically. Regarding GSK, it managed, because of its sheer size and consequently, resources, to take good thing about technology so as to create competitive benefit in its market, much good source dependency view as advocated by Pfeffer and Salancik (1978) as opposed to the view of Hannan and Freeman (1977) who tended to see the environment as being constraining to organizations, somewhat than considering how companies can benefit or exploit what others may view as contingent factors.
One of the very most significant developments impacting all players on the market was the development of the web. This ultimately offered up choice to the finish user, increased distribution attempts as well as facilitating discussions and alliances between suppliers in the market, but eventually, it made consumers more educated and automatically made them part of the purchasing process. This eventually needed new structures to be placed in place that could satisfy all stakeholders in the string while still retaining and concentrating on center competencies of research and development, though the pressure to innovate has become much more strong.
"All of the top 15 pharmaceutical companies have undergone mature executive-level changes within the last two years, bringing in an influx of new C-suite talent that includes a lot of people from industries that have efficiently tackled the challenges now confronting Pharma, These management changes should help progressive companies to change their money function, organizational design, and business models with techniques that permit them to keep to prosper in a challenging time. "
(Carolyn Buck Lane, Global Pharmaceutical Innovator, Ernst & Young, available at http://www. pharmaceuticalonline. com/article. mvc/Pharmaceutical-Industry-Needs-To-Speed-Up-0001?VNETCOOKIE=NO)
Organizational Structure
"For most companies, company design is neither a science nor a skill; it's an oxymoron. Organizational set ups rarely derive from systematic, methodical planning. Rather, they evolve over time, in meets and starts, molded more by politics than by regulations. " (Goold & Campbell, 2002)
Globally, the company is organised along regional and product lines and also involves a framework which encompasses the various functions of the business. As research and development is so high on the main concern of the organisation, and the industry in general, this area of the company seems to operate almost individually, though with links to the the areas of the business enterprise.
As the company has evolved over time, and obviously therefore of its merger with Smithkline in the 1990s, the power structures within the company have also evolved somewhat and is much more wide-spread and less centralised. It is evident that the business has attempted to capture the essence of Drucker's "information-based organisation" (1988) recognising that information must be allocated throughout in order to capitalise on the prevailing expertise within the company also to promote further learning and development of individuals within, promoting cross-collaboration and knowledge exchange which shall subsequently produce creativeness and invention, much consistent with Quinn's theory of the "learning Group" (1980). That is viewed as a key to attaining competitive advantages and naturally, the quest for finding new and ground breaking solutions for the marketplace in any way levels. In addition, it recognises how distinct and different functions must work together so that there surely is cross-collaboration, communication and knowledge exchange as propagated by famous brands Drucker (1988) and Handy's notion of federalism (1992), "The states of federation keep together because they want one another approximately they need the center. " (Pg. 65)
One of the major problems for GSK in terms of structure is that it not only operates across different and unique functional lines, but also across various national conditions. Contingency factors are therefore also varied across legal, politics, economic and public spectrums, demanding different approaches to different surroundings. Bartlett and Ghoshal (1990) seemed to the matrix structure as a response to this problem which essentially required a amount of centralised control but also national responsiveness to the several contingency factors at play. In theory, the matrix structure should have had the opportunity to deal with the complexities, but as argued by Bartlett and Ghoshal (1990), the inability of such a composition was due to the fact it had not been created in the brains of management plus they had continued to use at local or national level. This was apparent within the Greek businesses as well as visible in other procedures worldwide, who essentially believed isolated and independent of HQ at the end of the 1990s, and far was done to get over this problem through superior communication networks and attempts at promoting an organisational-wide idea and objective which in the end translated into a far more even culture, while still retaining a amount of local responsiveness. The necessity for the effectiveness of the matrix composition is the fact that it required a specific mindset and a significant shift in organisational culture and values. Trans-nationality was a new management mentality; the one that essentially attempted to recognise and deal with complexity somewhat than attempt to remove it. Within such an organisation, the anatomical composition of the company itself concerns less, and the internal element, people element is now the most important factor to do business internationally, hence the search to form organisational culture and mentality. Good overall development of tactical management, individuals factor and the organisational culture element, became more important in eventually shaping both strategy and structure within organisations and has been the road pursued by GSK.
Within the GSK, incorporating control and responsiveness has been difficult as employees are geographically dispersed, such much like the Greek subsidiary, functioning within different socio-economic conditions, whereby it is impossible and inadvisable to expect that they will share common worth and be encouraged by the same things. "Consistency" was highlighted by Bartlett and Ghoshal who observed that many commercial objectives were not being achieved as specific country subsidiaries were too worried about the attainment of national targets, alternatively than overall global company aims. Subsequently, developments in technology have facilitated and improved communication and reporting lines overcoming a few of the obstructions and hurdles, yet internal barriers stay the most difficult to deal with and shall absolutely be a major hurdle. The evaluation shows that GSK chose this as a suitable structure as it allowed, "focus on specific assignments or special attempts" and essentially it allowed for a "mix of the previously offered practical and product structure" (Held et al, 2009, Pg. 58) while still keeping responsiveness to specific situations or marketplaces as required.
Although some principal functions remain essentially centralised from the company HQ in the united kingdom - Finance, HR, Legal, Marketing communications, Ethics and Compliance and IT, they work directly and in unison with the company's various divisions and regions across the globe, including Greece. It is deemed necessary to have these areas to be centralised to a certain level in order to exert a degree of control and allow for regularity. However, gleam lot of focus on autonomy of the many items while still allowing for a unified vision and the quest for common targets. As Huczynski and Buchanan explained, "Insurance firms a power composition, the group avoids extended power challenges which can disrupt its functioning" (1991). That is much consistent with Handy's view of the Federalist Organisation, and the subsequent structure which includes been created is simultaneously a a reaction to the environments as well to be predetermined by individual thoughts and the objectives of the company, as the Strategic Choice perspective of organisations advocated and reinforces Chandler's notion that structure follows strategy. One of the problems for GSK is the expanse of its procedures globally which makes control and co-ordination difficult, but necessary. As Bartlett and Goshal argued in the 1990s,
"top-level managers are losing control of their companies. The situation is not that they may have misjudged the requirements created by an extremely sophisticated environmentnor even that they have failed to develop strategies appropriate to the new issues. 60 that their companies are organisationally incapable of undertaking the superior strategies they are suffering from. "
GSK have attempted to create a structure which is partly evolutionary, a a reaction to its environment and marketplaces, thus following a contingency view of the organisation, and in addition has been predetermined by management, as highlighted by Thompson and McHugh (2002). As later commentators seen, the contingency theorists did not take into account the fact that organisations as entities could actually change the contingency factors deliberately or unintentionally through their activities. Introducing new products or new means of doing business, can actually alter and in most cases shape their environment, as argued by Moss Kanter (2002). GSK wished to push accountability to all levels of the organisation, finding this as necessary to capitalise on the internal assets available to them as well as recognising the variety of its divisions, its markets and its employees. There's a great sense of urgency surrounding the notion of a and unified perspective and the creation of an structure that allows a positive and unified culture throughout the business, while still allowing for a amount of autonomy throughout the various divisions and functions regionally.
For such a long time structures have been very mechanistic with clear reporting lines and lines of power in place. Such organisations are now generally referred to as bureaucracies. It is now accepted that power must be coordinated and integrated in some way and GSK recognized that by tugging together the entire power of the organisation is increased at a global level. They may have attemptedto apportion the same degree of capacity to different divisions, recognising that they all have a valuable and proper role to try out in the organisation's overall success. Again, consistent with Handy and Drucker's predictions, employees are now viewed as possessions, and although technology has considered on an extremely dominant role in all organisations, in essence, it is viewed as a facilitator to fully take advantage of the abilities and assets a firm may have in its possession, that is its people. Hence GSK fosters a learning procedure, investing substantially in its people at both a functional and personal level and recognises that without them, it shall not achieve its goals.
Organisational Goals and Quest - Strategic Fit
Prahalad and Hamel's (1989) view of "strategic intent" being the necessary ingredient of success is highly relevant to GSK. The authors saw that the "Empowerment of the Strategic Purpose" was key to the potency of strategy process and this it was,
"a matter which involves everybody. . to task the traditional downward communication style to an upward communication stream of new ideas coming from all the organization. " (Source:http://www. valuebasedmanagement. net/methods_hamel_prahalad_strategic_intent. html, seen 11/11/09)
The fostering of open communication system while still preserving central control and course should facilitate the exchange of ideas across the company, thus boosting knowledge as well as market perception from specific customer marketplaces, and so promoting and inciting imagination and creativity which is one of the most crucial goals of the business. At the same time, it develops not just a sense of common purpose across the organisation but makes employees feel part of the overall strategic plan, therefore increasing inspiration and productivity levels that have knock on results across the mother board as employees feel empowered (Kotter, 1995). GSK has realised that much more important than the anatomical framework in place, there's a sense of common goal across the company and its divisions that happen to be characterised by diversity in useful, people and cultural terms.
The important element of the new structure is that it revolves around the marketplaces it serves somewhat than around useful areas, though they are still of great importance, especially the R&D function. You will find much fewer reporting lines to permit for the free movement of information and communication throughout the company. Flexibility and 360 level feedback are built into the machine and an open up network of communication is inspired to assist in the creativity process. As Barr (2005) concedes, "According to Tidd, Bessant and Pavitt, (2005), innovative organisations are those that are adaptable, adoptive, learning, characterised by "organic culture", with capacities of networking and team-working. " (pg. 1)
Although the overall objectives have continued to be mainly the same over the years, there has obviously been a move in emphasis, particularly a renewed importance placed on technology, in light of increasing competitive intensity as well as the expiration of many patents globally. Furthermore, there has also been a larger importance mounted on the notion of men and women as resources and the acceptance of the variety of its workforce, its operations and the differing needs of its market segments. This is especially relevant given the emphasis on new and growing economies of China and India who shall become progressively more important strategically in the near future, as well as the concerns encircling access to medication and health care in developing countries. In this admiration, the environment and the external individuals which impact upon it, produce an overriding affect on the strategy and composition adopted by the company. It might, however, also be argued that the companies themselves also have had an amazing impact on environmentally friendly landscape because of the sheer size of some of the best players as well as the inventions they have brought to market that have ultimately molded the industry, specifically with respect to consolidation. This is more likely to continue, so set ups and strategies shall be part evolutionary consistent with external trends, but also determined by individual organisations through their activities.
In summary, the main objectives of the company are as follows:
Grow a diversified global business
Deliver more products of value and
Simplify the operating model.
The quest is:
"We've a challenging and uplifting mission to improve the quality of individual life by permitting visitors to do more, feel better and live longer. By centering our business around our strategic priorities, we're self-confident that people can fulfil this promises. "
Source: GSK Total annual report, 2008
Conclusion and Recommendations
"The dictum ''Structure follows strategy'' refers specifically to the historical change in the strategy and framework of large organizations, first noted in the development of American industry (Chandler 1962). This switch involved the changeover in strategy from single to multiple product lines and the concomitant structural innovation, the launch of divisional composition, which made it possible to conquer the inefficiencies of useful structure (in particular, decision overload near the top of the organizational hierarchy). " (Source: www. le. ac. uk/ulsm/doc/suhomlinova_organizational. pdf, utilized, 02/07/09)
GSK have worked extremely hard at creating an organisation which is responsive to its environments and also one that allows it to shape the environments in which it operates. Even though many view the viewpoints of Burns up and Stalker to be outmoded for business in the 21st Century, the analysis has shown that lots of of their assumptions still carry true today matching to both firm and industry context and are particularly highly relevant to the pharmaceuticals industry and GSK in particular. The overriding thrust of the examination carried out in light of considering the company from the point of view of the contingencies impacting it, is that an overwhelming emphasis of the structure which it has generated is the one that is liquid enough to aid development and the exchange of knowledge, and also one that recognises the diversity of its labor force, its markets and its own operations, thus it essentially takes the best elements from the contingency school and the tool dependency theory which in the end translates into the proper choice point of view. In this respect, it is attempting to achieve an "organic" composition which is flexible enough to react to the uncertainty and unpredictability of the sector while together actually taking action which in the end shapes the environment in which it operates. It appears that diversity is currently a challenge of all business today, especially those involved in global businesses, and it appears that GSK has attempted to use this variety as a key to its competitive benefits rather than seeing it as a challenge which should be overcome. Simultaneously, though it recognises that a certain amount of flexibility is required in its composition, it is also vitally important for the company to exert control and power, specifically given the depth of competition and the fact that a lot of its business is of an especially sensitive nature, both socially and politically. Ability is dispersed throughout the company so that folks, models and functions, can be exploited with their full potential. As Moss Kanter (1989) highlighted, "to include value, professionals think and work across boundariesevery supervisor must think cross-functionally because every office has to play a tactical role. " Hierarchies show up no longer to be always a source of ability in terms of both skills, knowledge and success available on the market.
GSK appears to be in a great position to capitalise on the opportunities available to it in the markets it serves globally. Its ongoing investment in learning and its own support of personnel, should allow it to recruit and retain the best skills open to it in its market. Clearly, more work not to mention, changes to structure may be needed as the market changes further, particularly in regards to to growing economies, but its recognition that it is both a product of its environment as well as a shaper of its environment, should allow it to make the best possible strategic decisions in the years ahead. Organisational set ups are no longer used as a way to exert control and no longer operate in the same function as politics systems. This would be too rigid and would be at chances with the increasingly dynamic dynamics of the global business environment we realize today. There shall be a continued emphasis on alliances and sites, internally and externally and the framework in place should be the one that facilitates the pursuit of objectives however, not be too rigid as to make changes, when required, impossible to achieve. As objectives change as time passes, the structure which accompanies it, might need to be altered as a result. As Kim and Mauborgne (2009) concede, "You will discover three factors that determine the right approach: the structural conditions in which an organization performs, its resources and capabilities, and its proper mind-setEven in a not-so-attractive industry, the structuralist procedure could work well in case a company has the resources and functions to beat out your competition. In either case, the concentrate of strategy is to leverage the organization's core strengths to achieve acceptable risk-adjusted earnings within an existing market. "
In conclusion, our examination of the industry has highlighted the value and relevance of external events on the company's business design and tactical offering to the market. The type of the industry over the value chain has changed considerably, with new entrants to the marketplace and new plus more demanding consumers of the finish product. Differentiation strategies are much more difficult to create and certainly, even more difficult to keep, hence many have made partnerships or mergers in a bid to improve their competitive position. Price is extremely important, as we have seen from the success of the generic companies, but this by themselves will not suffice in such a competitive environment where stakeholders' requirements and objectives are constantly increasing, and the search for innovation will continue to be important. As Daft and Marcic (2007) contend, "The right structure is designed to "fit" the contingency factors of strategy, environment, and production technology. " (Pg. 273) The task is to explain a business model which enables research and development to continue and do well, while making certain returns are adequate and the marketplace accepts a good price. Over time, business models also have changed to be more centered on key competencies and proper capabilities of the organization, much in line with the post-entrepreneurial model advocated by Kanter (2002), with many non central functions being outsourced in a mission to secure a sustainable competitive gain, others have opted for strategic partnership, discovering collaboration with noticeable competition as a viable option to outstripping the competition and obtaining market command. The contingency Approach, many claim, was a reply to these new requirements being located on companies. On top of that, many also argued that it was in essence an extension of the Systems College, which centered more on the internal subsystems and interdependent functions within organizations. The challenge now, was to discover a new and improved organization that installed with its environment, which arguably calls for elements of each approach corresponding to both external factors and internal capabilities (reference view). The top point is that there surely is no uniform answer to this problem as different establishments and various companies need different responses. What may work well in a single company will not necessarily translate across industry or organizational boundaries. What is becoming more important is the fact if strategy changes, for reasons uknown, (internal or external), organizations must revisit framework to ensure that there surely is a fit between the two.
