"The key reason for growth is due to increasing population, increase in demand to live healthyand long life and increasing disposable income to spend on health care products and on lifesavings drugs. GSK being one of the oldest company has well positioned itself for healthcareproduct by delivering the promise it made to consumers. GlaxoSmithKline Strategic Position: External Industry Analysis Porter’s Generic Strategy According to Porter (1980) cited by Alen (2014) a firm can reap competitive advantage out ofdifferentiation or cost. Figure: Generic Strategy (Alen 2014 p.98)Strategy BMT7026 Page 5 From competitive scope, GSK adopts “broad target” GSK aims to serve worldwide consumerswho are seeking healthcare and pharmaceutical products (GSK, 2015b)From competitive advantage, the company adopts the fusion of cost leadership anddifferentiation. ? Healthcare products – Differentiation & Cost Leadership (GSK, 2015b). ? Pharmaceutical – Differentiation (only for patented drugs) & Cost Leadership (GSK,2015b). Porter’s Five Forces According to Porter (1980) cited by Alen (2014) there are five market forces that determines theintensity of competition. This tool pinpoints areas to concentrate to reap long-term competitiveadvantage Strategy BMT7026 Page 6 Figure: Porter’s Five forces (Vaz, 2010 p. 86)Bargaining Power of Suppliers Bargaining power of suppliers for GSK is very low as there are more than 250 companies willingto supply raw materials for healthcare and pharmaceuticals products(GSK, 2015) Threat of Substitute GSK faces low threat of substitute as pharmaceutical patented products such as dolutegravircannot be easily replaced unless the consumers switch to homeopathy or ayurvedic which is seenonly in Indian markets. The threat of product substitute are generally high for generic medicinesStrategy BMT7026 Page 7 due to cost pertaining benefit of particular company over the other company. The healthcareproducts high threat to substitute asAquafresh & Sensodyne toothpaste, Horlics, Nicoderm,Night Nurse can be replaced with rival companies products. Bargaining Power of BuyersIn certain countries like US, UK, Canada where there is high intervention of government in pricesetting, GSK has high bargaining power but in emerging market like India, China wheregovernment intervention is less, GSK enjoys low bargaining power of buyers. Threat of New EntrantsGSK faces low threat of new entrants as the pharmaceutical industry is very high capitalintensive and therefore not many companies would be willing in start up in pharmaceuticalindustry. In pharmaceuticals industry, new entrant may face dilemma in economies of scale,regulatory policy, access to distribution channel, hard to fight against companies having hugemanufacturing capabilities with patented rights. But the challenge is to beat the rival companiessuch as Pfizer, Novartis. GSK can beat competitors through continuous improvement in theirexisting healthcare and medicine products and by undertaking discovery and invention of newdrugs and heath care products. Rivalry Among Existing Competitors This is the biggest challenge as there are top companies such as Pfizer, Novartis who captured25% and 23.6% pharmaceutical market share respectively (UK Pharmaceutical Statistics, 2015).The competition is very high in generic medicines as cost of generic medicine may be offered byother company at lower prices in order to gain competitive advantage. Strategy BMT7026 Page 8 "