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GIST International College

International Business Management Programme


Academic Year 2012 - 2013

Module Title: Strategic Management


Module Code: BLB 10089-3
Level: 6
Element: Learning Portfolio Assessments
Weighting: 12.5%
Deadline: November 23rd (Friday), 2012
Time: 5.00pm
Submitted by

Students ID Number:
12091008

Lecturer: Maven Foo


Location: Suzhou, China

The merger of the Glaxo Wellcome and SmithKline Beecham has already stirred the
pharmaceuticals world as in terms of turnover these two companies are ranked the number fifth
and twelfth largest.
Definitely this merger happens to bring out good for the organisation. Basically, this merger
happens to

Expand the product and market portfolio merger of Glaxo Wellcome and SmithKline

Beecham will have a market portfolio of 30 new drugs 19 vaccines in clinical trial.
To gain the more market share merger of these two pharmaceuticals companies now
aligned in one. The Glaxo Wellcome is the fifth largest company that indicates to large
market share and SmithKline Beecham is the twelfth largest company that also indicates
to a significant market share. Merging benefits them to have greater market share.

Other than these two reasons there may be some reasons possibly like gaining the top position in
the market as this merger already displaces Aventis from the top position.
This merger may bring out both benefits and problems. But, mostly as we can see the facts these
are benefits. Such as

The merger of these companies has made a savings together of 415 million USD

(estimated), which they can invest on research and development.


The merger benefits Glaxo by the strength of SmithKline in genomics and cell and
molecular biology, and it benefits SmithKline by the strength of Glaxo in combinatorial
chemistry. Together, these companies have the strength over the competitors in certain
areas of research and technology.

Apart from these benefits, this merger may face some problems too. These are actually uncertain.
For instance

The merger may increase or decrease the brand reputation.


The mergers may loss or gain the loyal customers. For instance, the customer who was
very loyal to Glaxo Wellcome may dislike the brand SmithKline; as a result he/she may
switch the brand. Positive things can happen too. By merging both of these companies
having more customers.

An impact may be upon the stock market. If this merging doesnt bring good
performance, shareholders may be unhappy and as a result share prices may be dropped.

Now, if we compare this merge with the organic growth, this has the both advantages and
disadvantages. As Capon (2008, p. 247) says that when an organisation intends to expand
business by using its own resources and competencies is called the organic or internal growth
that often is a slow process. But, the merge of Glaxo and SmithKline benefits them to have a
quick growth in their business. But, in terms of adaptation of organisational culture and
formulating strategies the merger of Glaxo and SmithKline may face problem. From this aspect
organic growth is less risky.

(Total Words: 450)

References

1. Capon, C. (2008), Understanding Strategic Management, Pearson Education Limited

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