Introduction
Globalisation has changed the dynamics that operates in global economies. It has altered some conventional corporate practises and introduced new methods of efficient operations. The idea of globalisation posits expansions and diversification. These two aspects are viewed as primary goals of most enterprises. Firms of today have become focused on exploring various markets and developing products. In addition, globalisation has created several ideas that promote flexibility. It is imperative for companies to remain open to possibilities as globalisation attempts to shape the inner processes and strengthen the external economic foundations.
It is believed that globalisation impacted some concepts that are being used in production. Since companies are now catering to vastly diverse markets, production scheme have been revisited to make the necessary modifications. Moreover firms have realised that changes will continue to happen. Aside from the production chain, there are certain shifts observed in firms that were influenced by globalisation. Corporate social responsibility, for instance, is fuelled by the different conditions where the firms operate. Companies have also exercised business ethics, which is critical in building its reputation and credibility in the market.
The succeeding discussions will centre on the impact of globalisation in a firm that operates in a global scale. GlaxoSmithKline (GSK) will used as referenced since it operates in various global locations. GSK is also known to have a manufacturing plant and wide-scoped distribution scheme. The discussions will also consider the practises of the company that promote corporate social responsibility. Further, GSK will be evaluated based on its position in reference to globalisation.
Objectives of the Study
The aim of the study is to determine the impact of globalisation in a company. This research has highlighted GlaxoSmithKline (GSK) as the firm to be studied. It has to be noted that GSK is a multinational firm that operates in almost 100 locations in the world. In addition, GSK has several manufacturing sites to boost its capacity to meet the demand in the market. Specifically, the study seeks to ascertain the effects of globalisation in the production schemes used by GSK. Moreover, this study will investigate the firm’s view on Corporate Social Responsibility (CSR) as affected by globalisation. Further, the research will emphasise the actions taken by GSK on its workforce to respond with globalisation issues.
Company Background
GlaxoSmithKline (GSK) is multinational pharmaceutical firm based in London, United Kingdom. It has a varied business portfolio ranging oncology to vaccine products. In addition, GSK’s Consumer Healthcare segment is the world’s leader in providing oral healthcare products and nutritional drinks. The drug manufacturer was created out of the merger between GlaxoWellcome and SmithKline Beecham. As of 2005, GSK has a reported 100,000 workforce across the globe. The manufacturing sites are located in the U.K. and some parts of the U.S. It operates in 72 countries and also has minor presence in other vital locations (GlaxoSmithKline, 2007).
GSK is known in the industry as a diverse and creative firm. The products cover several segments in the market and cater to most medical necessities. Part of the company strategy is to focus on maintaining high quality standards. Its production process prides on the value that is being added in the medicines. GSK is also known for its vast and comprehensive research and development processes. The firms has innovated some drugs that are regarded as breakthroughs. All of these processes follow the cost-effectiveness program of the company. These are the most important components of its strategies for continuous growth and goals to expand in other markets.
GSK is also known as a responsible company. It has been a major contributor in the quest to eliminate several infectious diseases. The firm has devoted its resources to ensure that these illnesses have medical cures. It is committed in supporting other initiatives that will ensure better health in deprived communities. GSK has joined global alliances that monitors that health condition of target areas and provides financial and research aid to improve the state of these communities.
Impact of Globalisation
Mann (2006) viewed globalisation as a major breakthrough in the global economy. For GSK, it is an opportunity to introduce the products in foreign markets. Aside from its domestic targets, the focus of operations has shifted to other parts of the world where medicines are heavily demanded. The role of globalisation is to open markets that are untapped. These markets are still in the process of developing and GSK needs to take advantage of that rapid growth. Globalisation will also allow GSK to determine the different needs of these diverse markets. This will boost their research and development programs and long-term product prospects.
Because of globalisation, taxes in foreign countries were considerably reduced and markets became flexible in welcoming foreign products (Kellner, 1998). Taxes and tariffs have been considered as major barriers for global firms such as GSK. The ides of globalisation allows GSK to distribute its goods in foreign markets without being exposed to high tax rates. The cost of transporting the commodities is lessened and revenue possibilities are high. In addition, globalisation has opened the doors for agreements made by states. These economic pacts provided protection to the products being distributed by GSK.
Globalisation has propagated the concept of information technology. Drucker (1993) noted that the impact of information technology is evident in firms. Because of the computers and the Internet, GSK has been provided with another avenue to introduce its products. The scope that information technology covers is wide and critical to the operations of the company. Instead of the traditional processes of marketing, GSK can exploit the speed and reliability of information technology to its advantage.
Boosting the Production Chain
The production chain is all about the value being added to the product. These stages of manufacturing have to be improved since markets are now competitive. GSK needs to ensure that quality is being emphasised in all levels of production (Deming, 1986). It is important that GSK understands the needs of its customers. As a response, GSK has instituted a team dedicated to address consumer needs. These teams are responsible to determine balance the requirements of the market and the goals of the firm. In the production process, stages that are deemed as efficient are retained while stages that result to wastes are eliminated.
Barney (1991) asserts that quality has to be instituted in the components of the production process. Because of globalisation, the need for quality has become more intense. Without that commitment, GSK will have difficulties sustaining its presence in the market. It is imperative that quality checking is maintained from the product development stages until the finished goods are delivered to the customers. Globalisation has totally altered the production system where quality is maintained in one stage. Each process needs to be evaluated meticulously. This is the only way in which GSK can assure the efficiency in its production system.
The value chain is another concept being used since globalisation emerged (Porter, 1980). The value chain highlights the importance of each stage after production is completed. Once the finished products are packed it is important for GSK to provide a quality storage room. This will prevent the products from being damaged or exposed to external elements. GSK also has to maintain a fast distribution scheme. The high demand for its products means that supply needs to readily available.
In a global market, efficiency is always the key to success. Globalisation has led to firms becoming more efficient producers. Flinchbaugh and Carlino (2006) stress the value of reducing cost in the manufacturing process. As GSK expands, its exposure to losses and risks has become more relevant. Aside from avoiding excessive cost, GSK needs to evaluate its products in the market. Conventional wisdom suggests that products that fail to acquire reasonable market share needs to be scrapped. But this will entail more losses as cost in developing such products have been incurred. GSK has to be creative in handling these circumstances. The products’ lack of appeal can be compensated by through aggressive marketing.
The need to develop a computer based production scheme is also needed. This will allow GSK to eliminate other stages that will become useless. Jonscher (1995) pointed out that most business today under the guidance of computers. These machines are important in creating order in the production schemes. In addition, computers can be used to serve as the memory of the production process. All the necessary aspects of production can be stored in the computers. This will prevent the production personnel from going out of the system. The processes are also protected being accessed by individuals who are unauthorised by the firm.
Globalisation also paved the way for the emergence of outsourcing. Outsourcing has become an important avenue for companies to minimise cost and improve operation efficiency (Erber and Sayed-Ahmed, 2005). Outsourcing, however, has created several labour issues. There have been reports of employee maltreatment by multinational firms. These companies which took advantage of globalisation are also exploiting the weakness of some personnel.
The impact of globalisation is evident in the management of operations that are related to production and other activities. Operations management is defined as the design, operation, and improvement of the system that creates and delivers firms’ products and service combinations. It also deals with the proper allocation of resources and the strategic acquisition of technology (Juran, 1974). Operations management also includes the proper consideration of the outside entities as contributing agent that will eventually affect the performance of the firm. The external environment consists of the customers and other economic indicators. These are major catalysts where production processes have to be referenced.
Begin (1991) argued that the means have to work with the ends. In relation to GSK, the production processes have to be based on customer satisfaction. The technical process of production pertains to the emphasis of quality in the different stages of operations. The rationale behind this strategy is that the continuous inclusion of quality in the process will result to highly competitive and superior products. As discussed earlier, the value added to each process will sum up the value of the product. Any miscalculation in the process will result to problems in the succeeding stages. Maintaining quality will ensure fast flow of production.
Globalisation has pushed GSK to create strategies that will improve production management. Mintzberg (1989) observed that strategy is linked to plans and the behaviour patterns within organisations. Management of production chain has to be associated with long-term plans of GSK. Because of this notion, GSK has changed its process and make these more flexible. GSK needs to ensure that its production schemes are in-line with its strategies.
Enhancing Corporate Social Responsibility
According to Lewin (1983), corporate social responsibility (CSR) highlights the duty of the organisations to their stakeholders. Instead on focusing on corporate activities, firms have decided to undertake endeavours with perceived social relevance. The views on the existence of firms have become diverse because of the improving consideration on social welfare. Although still inclined with profit maximisation, several companies have started allocating funds for activities that goes beyond the corporate purpose. Some firms use CRS as strategy in building a strong market reputation and will eventually command high rate of market share.
Another important definition of CSR was provided by Mosley, et al. (1996) stating that organisations have the obligation to formulate policies and make crucial decisions that are beyond the scope of law. These policies and decision, however, are deemed as promoters of values and objectives of the society. In short, CSR underlines the responsibility of the organisations to their stakeholders and their accountability to the actions taken within societies. The organisations have to use their respective resources to ensure that the goals of CSR are attained. Also, firms have to persuade the stakeholders to actively participate in such activities.
The emergence of globalisation has exposed GSK from several ethical queries. The most common perception is that GSK is only focused on profits. Although revenues are primary targets, GSK has been sharing its earnings to the public. Another ethical issue being raised by some groups is the environmental exploitation being manifested by firms such as GSK. Globalisation has been linked as to the degradation of the environment because of the production plants that these companies establish. Further, GSK is being accused as one of the firms which take advantage of varying laws in foreign locations. Lawsuits are major obstacles that GSK try to avoid.
There are several aspects that are attributed to the prominence of CSR. Usually, CSR is derived from the focus provided by firms in contributing to the overall welfare of the society. This is usually done by channelling to individuals the benefits enjoyed by firms. CSR also details the necessity for organisations to develop and maintain relationship with stakeholders. Aside from good corporate governance, this is observed through quality performance (Van de Ven, 2006) Globalisation has further outlined the role of CSR in the society.
Shrader (1994) observed that social responsibility has been studied and equated with the performance of organisations. Several groups have been calling out firms to reveal their social responsibility strategies. In response to these issues, GSK has enhanced its efforts on incorporating social responsibility on its operations. Since the concentration of GSK is in medicines, it has conducted several medical missions. This is important because there are several areas where medical assistance is unavailable. GSK participates with non-government organisations and local government units to ensure that ample health services are delivered.
GSK needs to address the ethical allegations through its CSR system. The CSR program is primarily in-charge with the promotion of the image of GSK. The company has been conducting wide information campaign on the products its sells. It is part of GSK’s responsibility to inform its clients on the safety measures in consuming its products. On the issues of waste, the CSR is tasked to provide policies that keep the wastes of the production plants from being exposed to the environment.
Enhancing Human Resources
Becker (1994) highlighted the contention of Adam Smith that since training of employees in costly, it has to be considered as an investment. From this conception, several theories on human resources have evolved. Amit and Schoemaker (1993) mentioned that the internal resources of the company are responsible for the formation of distinct competitive advantage. Human resources are one of the internal resources that companies have. The interaction contributes to the promotion of competitive advantage. Human resources that create value, rare, inimitable, and non-substitutable are vital components in sustaining competitive advantage.
The function of human resources is critical to the success of GSK. Basically, the employees are responsible for the reinvention of GSK product and the efficient manifestation of its operations. Providing the employees with all the needed resources contributes to their effectiveness. Quality equipments and machineries ensure that the processes are completed with ease. The workplace of the company is also important. Promoting quality atmosphere will limit incidence of conflicts between and among employees. Also, the working station acts like the second home of the workers. It is time to give justice to such distinction.
The salaries and benefits provided to workers are mandated by laws. Some perks, however, are introduced by GSK to improve performance and loyalty. Once workers are paid well, there is a perception that their value is being recognized. Monetary mechanisms are used to motivate employees the increased income will boost their spending capacities. Likewise, the improved financial benefits will likely result to loyalty for the employees.
GSK has to outline the importance of Human Resources Management (HRM). It has to be in line with the changes as affected by globalisation. The role of HRM is threefold: to hire, to train, and to maintain. It is the task of HRM to seek for competent applicants that will contribute and make a difference once hired. Moreover, HRM practitioners identify suitable training schemes that are designed to improve the skills and competency of the employees. In addition, HRM revolves on the creation of programs that will keep the employees loyal, contented, and productive. Because of globalisation this task has been grown as HRM practitioners have been accorded the capacity to settle employee related disputes.
Globalisation serves as an event that makes Strategic Human Resources Management necessary. Miller (1987) stated that SHRM are decisions and actions that pertain to the management of personnel. It is important that the employees play significant roles in implementing business strategies geared towards sustained competitive advantage. It also concerns the development of appropriate strategies and policies in relation with the employees. SHRM has become an important instrument among firms; several methods were developed to successfully introduce SHRM. One of the methods used was aligning the attributes of the manager to the strategic goals of the firm (Barney, 1991).
It is important to understand the globalisation has change the value of the workforce. Also, it is important for the workers to be equipped with the knowledge used in their tasks. The training and advancement programs of the company will help employees be fit in all aspects. These improvement mechanisms are designed to inject versatility among workers. Such is important because changes in the industry are prevalent and multi-faceted workers have the best value for the company.
Recommendations
GSK is on the verge of reaching the peak of its business cycle. Globalisation, however, can alter the firm’s direction and stall its expected growth. The role of globalisation extends beyond providing opportunities for expansion. It also poses some challenges that GSK needs to overcome. In the production chain GSK has to continually focus on being cost-effective. Each stage in the production process has to be added with a certain value. Another viable option that GSK can employ is to transfer its production plants to areas where production inputs are cheap. The CSR initiatives of GSK are known in the industry. But GSK can still improve its CSR policies through active participation in health related advocacies. Finally, GSK has to recognise the role of its personnel in its growth and development. Personnel enhancement and provision of sufficient benefits will ensure quality performance and loyalty from employees
Conclusion
The effect of globalisation is the world is huge. Globalisation paved the way for trade and exchange of goods. It is also globalisation that has opened the doors of once closed markets. The emergence of globalisation has led to opportunities for firms to expand. Domestic markets have become saturated and consumers have moved to substitute products. For these firms to continue growing, foreign expansions are needed. Moreover, globalisation pushed for the changes in the metrics where global markets are based. Reduction to taxes on foreign goods and protection to imported products are some of the highlights of globalisation. These specifically have change the direction where GSK is headed in the future.
Globalisation has altered the processes being maintained by GSK. In the production cycle, the importance of quality is always emphasised. The research and development structure of the company has improved immensely. In addition, the product pipeline that GSK maintains has been geared towards diversity. Production process has been shortened to ensure more efficiency and reduce waste. Computers where installed to store the production schemes and protect there processes from threats. The gradual improvements in the processes can be deemed as globalisation backed.
Aside from the production process, there are other company practises that were affected by globalisation. GSK has become more involved in communities through its participation is medical missions. The firm donates medicines and supports other activities where its expertise is needed. CSR has become an important tool in improving its image in the market. GSK has worked extensively in developing its personnel and make the workforce a major contributor to sustained success.
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