SWOT Analysis of GlaxoSmithKline Plc-Strategic Evaluation
Strategic Evaluation of GlaxoSmithKline
Swot analysis
Strengths
·
Global coverage –
GlaxoSmithKline has established a global presence in cosmetics and toiletries,
serving to insulate the company against downturns in particular regions.
·
Strong oral hygiene portfolio –
the company owns a portfolio of strong oral hygiene brands with a global
presence.
·
Regional focus – as well as its
global brands, GlaxoSmithKline has a strong regional focus with brands such as
Odol leading in limited markets. This strategy enhances the company's capacity
to cater to local preferences.
·
Core pharmaceuticals business
supports consumer healthcare development – the company's primary
pharmaceuticals business provides a strong foundation for the development of
healthcare-led products, a key cosmetics and toiletries trend for the future.
·
Strong resource pool –
GlaxoSmithKline has strong financial backing, marketing, research and
development and logistics resources because of its activities in
pharmaceuticals and this could benefit its smaller cosmetics and toiletries
business.
·
Leading denture care player –
the company leads global denture care sales and ranks first or second in every
regional market.
Weaknesses
·
Bias towards a single sector –
the company's cosmetics and toiletries sales are heavily reliant on oral
hygiene, making it vulnerable to downturns in the sector's fortunes.
·
Lack of focus on consumer
products – the company remains primarily focused on pharmaceuticals, meaning
that cosmetics and toiletries and other consumer healthcare products, may
suffer from a lack of attention and investment, or be sold.
·
Premium products unaffordable
in emerging markets – GlaxoSmithKline's branded products may be sold at too
high a premium for many consumers in the emerging markets to afford. This could
hinder the company from enjoying the high levels of growth, which are expected
in these emerging markets in the long term.
Opportunities
·
Health-orientated demand – the
rise in consumer health awareness is driving demand for more sophisticated
products and products which form part of an integrated, holistic health
regimen. GlaxoSmithKline has the opportunity to exploit its knowledge of
pharmaceutical research and development and marketing to develop cosmetics and
toiletries products in line with evolving consumer trends.
·
Extending brands across
categories – the growing demand for more systematised personal care routines is
enhancing opportunities to develop brands across categories, encouraging
Sensodyne to move into toothbrushes and Aquafresh to develop a presence in
mouthwashes, for example.
·
Strong growth in emerging
markets – ongoing urbanisation in emerging markets is leading to rising
disposable income, improved distribution infrastructures and an
information-rich environment which promotes health-consciousness, all of which
are set to drive strong growth across the cosmetics and toiletries market
during the forecast period. With an established foothold in every region,
GlaxoSmithKline has the opportunity to exploit such developments.
·
Specialised products draw
consumer loyalty – GlaxoSmithKline's specialised products, such as Sensodyne
for sensitive teeth, tend to retain consumer loyalty, allowing the company to
charge a premium or introduce more products to these consumers.
Threats
·
Consolidation creating larger
rivals – increasing consolidation driven by acquisition is threatening
GlaxoSmithKline with ever larger competitors, which often have a far stronger
focus on cosmetics and toiletries.
·
Changing consumption patterns –
new medical research, shifting consumer preoccupations and scientific
innovation could be responsible for changing consumption patterns in oral
hygiene. In denture care, for example, improved dental health regimens and more
popular cosmetic dentistry may adversely affect demand by reducing the
prevalence of dentures.
·
Aggressive pricing by major
retailers – ongoing consolidation amongst retailers is being spurred by
aggressive pricing strategies, which particularly target essentials such as
oral hygiene products and bath and shower products. This poses a notable threat
to GlaxoSmithKline's cosmetics and toiletries interests, particularly in developed
markets.
·
Segmentation of rival
portfolios – as manufacturers adapt their offers to fit consumer demand for
products suited to their personal needs, GlaxoSmithKline's specialised brands,
such as Sensodyne, face the challenge of retaining a distinctive identity.
·
Limits to premiums charged –
there are limits to how much consumers in developed markets will pay for
increasingly advanced oral hygiene products, especially toothbrushes, which are
seen as basic and disposable. This stands to constrain the company's capacity
to generate growth through innovation in its oral hygiene operations.
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