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Beecham started his factory GSK in 1859 in medicine making in England solely. Further the group passed its many phased in medicine. By merging of Glaxo welcome plc and SmithKline Beecham plc, GSK was founded in 2000.
Now GlaxoSmithKline plc a pharmaceutical company working biological, vaccine and health care of the consumers. It has the headquarter in the London. GSK is ranked as world third pharmaceutical company. GSK products are more popular for the diseases for asthma, cancer, virus affection, stress diabetes and digestive problems. GSK also work as oral awareness to the consumer. Its products also includes like Sensodyne, Horlikcks and Gayjscon as nutrition and for health care.
GSK is primary listed in the LSE (London Stock Exchange) and in FTSE 100 index and it secondary listed on New York Stock Exchange. GSK is operating regularly in 116 countries and its marketing is been operated in 125 countries of the world.
One of the great aims of GSk's in the innovation to promote its own culture. GSK's made its objectives in its annual report in 2004 have now become the world's leader in the pharmaceutical companies.
Purpose of change:
The change management concluded that the GlaxoSmithKline (GSK) need a change to ensure to quit the gap between its practice and theory due to change in the environment and the culture. Follow up these the management decided to change its situation as cultural change and PMI (post merger integrating) of the R&D area in 2000.
The most popular reason for change is to look through the objective of the company, its decision making and for its future needs to stay into the market. The need to change is important for the company to explain its more, to its wider concepts and summarize that what organization has. Company needs to more sustainability power. The company send to ensure its business environment in today's chaotic business and to stay more in the economy of the world.
The merger of the company is defines by the Handy, 1994 by its 'sigmoid curve'. The curve explained that the first start of GSK has the declined in the business but later to rise in the curve before merging the companies. But when after merger occur, curve rise because both the companies has enough time, resources and energy to compete and progress. The experience and the management of the company was impressive to lead into the market and for innovation. This leads them to success change management program.
The merger can be shown on diagram
Right after the merger the company concentrated its innovation, invention and creativity. Before the change company was at risk in the pharmaceutical industry. The reason was that, before start of the merger the company was facing many problems like expiring of its patent and its out of stock situation.
Company CEO changed the strategy of the company as being big and small by dividing in chunks to its main R&D department. Then the R&D department named as centers of excellence for drug discovery. The main benefit of that department was than the department has their own power. Each department starts to work individually n the biotechnology companies.
That changed was occurred can be represented by diagram.
The R&D integration indicated the great output of the company. The resources has been utilize properly and the company starts to flow the five factors i.e, the cultural influenced of the department was prevail, change in the R&D department and the interaction of change, new management within each CEDDs was performed, and change the roles of each and individual worker and team.
After the change, GSK has the main role in the R&D management. This merger can be comprise by PESTEL analysis.
GSk offered China to share into the liberation of international trade by WTO. In 2005 China ends its quota system in medicine to achieve in different segment. Then the process of globalization started for drugs manufacturer like GSK and it opened a large for 1.29 billion people.
There were the concept of parallel trading in some parts of Europe including the Baltic states to the EU, which was effecting the revenue generation of the pharmaceutical companies. Small distribution companies had merged into one in 2004 for the lowest point of supply in Europe through medium parallel imports.
In 2004 the global pharmaceutical industries share was £ 275 billion and the majority of the sales was originated from US,EU and Japan.
The economy of the world on health department was estimated on buying and spending on necessities. The personal income has been rise between 2002- 2005 14 percent. The growth ration has been supported by high employment ratio, low inflation rate and low inflation rate of the period.
National health services estimated that growth rate of health care will increase constantly increase with 7% each year so it will remain constant till 2014. that is the great opportunity for drug manufacturers like GSK
The number of mature people is rising in the country. Their age are 65 or above. One estimation is that the number of aged people will reach at every 5th UK citizen will be aged 65 or more by 2030. this prediction was made by UK Census and National institute. That generation would called Baby Boom generation.
Due to increase in the energy cost, cost of raw material is rising of packaging. The companies making polyethylene are increasing its prices thought the globe. The material is used for making plastic sheets and medical packaging.
The medical companies using animals for the test of the new medicine. They use different experiments to the animals to test new molecules and see the reaction. The animal rights activists are more concern about it and they are raising the issue internationally for the animal protection.
Hatch-Waxman Act was approved in 1984 for the first time resulted as large increase in the sales of the medicine all over the world. After expiry of that patent generic version was all on the top selling drug.
The price of the product was renewed by the government. So the company decides what should be the best price of the medicine. So as a result the revenue generation of the medicine provider has been decreased. They are not generation so much profit as they can.
GSK uses the medium of European Foundation for its quality management measuring system. This has effect whole of the industry because they start to implement the model framework provided by the GSK.
This framework is practicing best not only its own industry but different other industries are following this framework. The use of this framework also best use of auditing management. GlaxoSmithKline is representing its model framework as a leader in the market. It can be defined in following diagram.
the diagram shows the effect in the change process in management, workers, resources and process which is directly effect on the organization output and customer needs. Leadership is more concern in this frame. The process define that how leadership can manage and wrk under pressure. Style of leadership is much different in that framework. Leadership is change from autocraft and task from democratic and people oriented. The process was more "power" culture before then diverted towards the division like structure within wach department resulted a 'task' culture.
Motivation of the employers was very low in the short period of time. But under new culture workers are considered to be more on priorities basis. The budgeting issue and development issue was considered more than any other issues. Then pre managing staff to be trained more. The motivation of the employees was low due to the merger.
This diagram states of the undergoing staff is illustrated as follows:
GSK needed to an approach where they could win the employees confidence. GSK also needed to change R&D department management so that they could manage their budgeting needs. The budget wil ensure the needs of the employers and customer satisfaction in the long term basis within the company.
Change and organizational development theory:
During the merger GSK need to develop theories to mange a proper intermediary period. The change from one R&D department into 7 different independent department team can be represented by following diagram:
That structural change could only be possible a cultural change. Thus develop the cultural change was an another issue for the company to make the CEDD work effectively.
There are many ways that show this characteristic of an organization on a map. Culture of an organization can be shown as I (Integration), D (Development), A (Administration) and P (Performance) logics or some combination of this. Thus the cultural change at GSK can be represented on the following axis:
The different merger position of GSK culture is mentioned above diagram. It is shown on the map that before the change of R&D the culture was more successful after the change and the organization was on its development D side. The strategic change in the culture can be shown on the performance P side which is under the competition and innovation was the main resource of the organization. Strategic position of GSK company was as follows:
The above model shows the direction of internal factors that includes leadership, culture and strategy. After the merger the strategy was to be more connected towards performance within the organization.
Process of cultural change:
The change to culture was to motivate the people and have a consistent plan for the cultural change at GSK's R&D department. The GSK adopted 4 step approaches towards the start of cultural change. The step were taken by the company can be determined from the following diagram.
Build pressure for change:
The pressure of change is important for the effectiveness of the change program. Thus the GSK decided to take step to divide the R&D department into 7 different departments that is CEDDs. Without this integration the culture and organizational behavior cannot be changed.
The restructure within the R&D department was the big step of the organization. Before change the company does not have enough resources for research and development programs. The molecules were not so long lasting and its patent were expire very early. The company employees especially management would need to the realize the threats and opportunities. This creates the sense of urgency.
The many organization has major issues to run its business under operating environment such as deregulation, entering of new competitors in market. These changes create the sense of urgency. Under this consideration GSK create a stakeholder map for a guideline. The definition of these groups helped the company in brining about the change successfully. Different stakeholders for the change can be drawn on the following diagram:
The above diagram shows that the scientists and the customers have their important role. The diagram shows that the first step showed scientists and shareholders to be the center stakeholders in this change and therefore the sense of urgency was induced into these with the help of a clear shared vision.
Establish a clear shared vision:
Establishing a clear vision is the second step of field analysis. If there is no clear vision of change of the organization then process change becomes so quickly but there is no specific aiming of the change. That's why it is the main responsibly of managers to communicate with the employees to make sure the participation of employees properly to change process. CEO of the GSK communicates to its managers but the managers were unable to communicate properly to the company employees. Managers were the main resistance to the change process who were not actually communicating to the workers.
In order to make sure to use its resources properly, company identified the possible impacts of its all stakeholder to plan the strategy to tackle impacts more smoothly. The relationship between the stakeholder to sustain the strategy and the entire stakeholder adopt it in group.
This can be summarized by using Power/ Interest Grid for stakeholder prioritization. The aim of each strategy can be explained with the help of diagram.
The company used a straight vision that is followed by the clear direction to change the journey. The vision need to clear that going to make the journey for change. On the change process the vision should more clear, widely shared and and more understood. Thus the behavior and attitude must be defined more properly in practical ways.
The mission statement of GSK according to its latest annual report is to become the undisputable leader in the pharmaceutical and consumer health industry (Glaxo, 2004). The statement shows the new mission statement of the company after the merger. The statement has really more spirit and more concern to the organization.
Ensure planning for the implementation process and outcomes:
The planning was wade by the management of the company for the change process. The senior management organize the change process because if the employees are not ready to change so it could create anxiety and frustration within the environment of the company. It was concluded that the people really want change but they do not has the capacity to do so.
To face the change within the organization, it must be achieved in individual and group level. The new system of CEDDs was on the way so it was more important of group level as a team. The diagram 'ladder; produces the result of attitude of people.
Before taking any step to change the result should be known of the process so it can be known that what behavior should required. Once if result is identified so change process can lead the development of the required competencies.
There must be the appropriate capabilities for change. The department should have capability to make the change in more proper way mainly in following way.
it should be ensured that the culture designed is appropriate for the department structure. Specifically to change in
allow scientist to ask what need to be done
Structure to reflect the outcome needed to achieve
Control to examine and control the suitable behaviors
Performance Rewards to expect and reward the appropriate behaviors
Allow the department and CEDDs some relaxed during the 'changeover' period. Generally it is difficult to maintain the same levels of efficiency when making changes to one's routine.
DETERMINE ACTIONABLE FIRST STEPS:
The organization provided the initial step for people. The first step taken has direct concern with the first step taken for change. if this step is taken properly so the it would be the sign of success of the organization. The change can fail because no one know what step should be taken at first. Having a proper vision it is need to breakdown into chunks and different parts. Smart objectives need to be setup properly. Listening is the most important part of the change. So this rule should be follow and finally setting performance measure needs to be taken care of. It is need to be ensuring that many works has been done within the proper time and in proper framework.
The transformation of the R&D department from a single unit towards seven smaller, independent CEDDs and the cultural change that will accompany it can be seen as people oriented and also as ignoring the task needs. As the teams will be working independently and there would be a competition between the teams therefore the state that can establish with over emphasis on teams can be illustrated with the help of John Adair's circles (Handy, 1993) bellow:
Therefore in order to keep the team focused on the task, the equilibrium between team, task and individual needs should be catered. This can be done by having a democratic leadership style within each CEDDs. As the needs for creativity is high, confidence in individual scientists is also high and the value system adopted due to the change in culture is also supportive to innovation therefore the leadership style that best suits to overcome this constraint is flexible and democratic.
The content, context and process (Pettigrew 1985) of the change in the R&D department of GSK during the post integration period of its merger can be evaluated by analyzing the Effectiveness, Efficiency, Accessibility, Appropriateness and Economy of this change.
The performance of the R&D department can be gauged by a comparative analysis of the company's pipeline, operation efficiency and costs before and after these changes. Drawing upon the statement of the then appointed CEO Jean-Pierre Garnier who announced the basic objective of the division of R&D department into CEDDs was to increase the productivity of the department as the company had an empty pipeline at the time of merger (Emerald, 2004). As the discovery of the molecules is a lengthy process therefore after 4 years of these changes the results started to pour in. In 2005, GSK has been estimated to have one of the largest and most promising pipelines in the industry, with 140 projects in clinical developments, including 88 new chemical entities, 32 product line extensions and 20 vaccines (Datamonitor, 2005). This shows the effectiveness and efficiency of the change under consideration.
The company has one of the deepest reported early stage pipelines in the industry, supported by extensive in-licensing activity and probability suggest that this will generate a healthy outflow in the mid to long-term. This has managed to balance its product portfolio over the last 4-5 years due to the process of drug discovery adopted due to the change. Currently, none of the therapeutic groups accounts for more than 22% of the company's revenue (GSK, 2004). Therefore the accessibility and appropriateness of the changes can be seen as success.
The company has a strong focus on its R&D department and it has invested heavily in R&D, despite the fallen company sales from 2002-2005 (GSK, 2004). According to Datamonitor (2005) the R&D at GSK is forecasted to generate less than 5% of the total revenue in 2007, highlighting the weak economy of the change under consideration. The company has spent an estimated £ 2.1 billion in the changes in the R&D department over the years (GSK, 2004). Even though in 2004 the company witnessed the lowest turnover since 2001, the company's R&D spending has outstripped sales growth. Between 2001 and 2004, GSK's spending on R&D increased by 3.8%. Although this continuing investment of the company in R&D is vital for the long term revenue and to create sustainable competitive advantage for the company but the change has proven uneconomical for the company over the last 4 years.
In order to sum it up, it can be concluded that the content, context and process adopted by GSK under the light of external market changes during the post merger integration of the company can be seen as a good practice in the change management arena. The PESTEL analysis shows that the need for change anticipated by the management was needed at that time and the evaluation strengthens this argument. The process adopted by the company can also be seen as one of the best practices to be used for benchmarking in the industry because the cultural aspects were spotted and dealt with during the change. Therefore in light of the discussion provided with the help of relevant theories the change management at GSK of division of R&D department into CEDDs can be used as benchmark for good practice for others in and across the industry.