1. Executive summary
With the hugely rising competition in the current century, organizations and businesses have to take drastic measures that will allow them to remain competitive in their respective industries even in the wake of the effects of COVID-19 pandemic. GlaxoSmithKline plc (GSK), a company 21 years old since its merging, intends to venture into a daring expansion that entails foraying into more international markets with the objective of extending its operations on the global front. As such, there is a need for change implementation steered by the top management, forming the basis of this report. For GlaxoSmithKline plc, with its new objective of expansion, there is a need for a comprehensive plan of change for the company to be adopted. The change plan is aimed at sustaining the business and successfully venturing into new areas while minimizing and increase revenues in the coming years. The internal and external factors driving the need for change including competition, social and resources are addressed. The Kurt Lewin’s Change Management Model is particularly the main component that is proposed to oversee the change and one of the expected results due to the change that will be implemented is resistance from the employees. The conclusion is that extra costs would be incurred in the course of change but ultimately, expanding the company’s operations is the best move, if the discussed recommendations will be fully adopted by the top management.
2. Introduction
2.1 A background of GlaxoSmithKline plc (GSK)
GlaxoSmithKline plc (GSK) is a British multinational pharmaceutical company that has its main headquarters in London, in the United Kingdom. The company was established in 2000 and this was through a merger between Glaxo Wellcome and SmithKline Beecham (Fox, 2013). From the results by Forbes in 2019 just before the outbreak of the COVID-19 outbreak, the company ranked 6th largest pharmaceutical company across the globe and ranked 296th on 2019 Fortune 500. Some of the achievements of the company since its establishment include developing the first malaria vaccine, RTS, S. GSK has offices in over 100 countries around the world and has employed nearly to 100 to 100 000 people but its main headquarter in London remains the pillar of the company and all activities as well as Research & Development (R&D) are operated from the main headquarters (Cho, 2018).
2.2 Situation that calls for change
Just like other multinational companies across the globe, the outbreak of the COVID-19 has led to a great impact on the company that has vehemently called for organisational change as a result of the rapidly changing environment. Losses have been incurred leading to decreased revenues as restrictions and lockdown were imposed in different countries and regions. As such, with the objective of remaining competitive on the international market and compete fairly with other companies such as Novartis, Roche, Sanofi etc, there is a need to expand now than ever to other countries so that even in the future when such a pandemic strike, the company will still remain competitive as activities halt. This is the priority and main agenda of the current CEO, Emma Walmsley, who took over in March 2017, becoming the first women CEO of the company. Outsourcing, a part of restructuring plan that was adopted in the form of ‘Operational Excellence’ programme and designed to achieve 1 billion pounds in 2007 has not been fruitful (Kumar, 2019, p.4).
3. Main Discussion
3.1 External and internal factors that are driving the need for change
3.1.1 Internal factors
Drivers can be identified to understand the essential factors that influence GSK’s decision to pursue the quest for expansion into new territories. First, the internal environment entails events, people, and systems as well as the structures in place and the conditions inside the organisation that are usually under the control of a company or an organisation as noted by Rizescu and Tileag (2016, p.139). For GSK, suboptimal and outdated IS systems, and outsourcing of production has driven the change to expand into new, foreign markets.
One of the critical internal factors that have called for the need of organisational change is the announcement by Pfizer on the closure of its joint venture with GlaxoSmithKline plc. In December of 2018, GSK had announced that it had reached an agreement with Pfizer to merge and hence combine their consumer healthcare divisions into a single entity and this made GSK to maintain the highest stake while and used the success of Pfizer’s penetration across the globe to expand its operations (Kumar, 2019, p.3). Unfortunately, in August 2019, Pfizer announced closing on the joint venture and this meant that GSK would now go back to its usual position and act on its own capacity and as it had gotten a lot from Pfizer, the company is now ready to move ahead and penetrate more into foreign territories that it has not fully exploited.
3.1.2 External factors
External forces that have an influence on the company’s desire to change, included customers, competition, economy, technology, political and social conditions, and resources, as outlined by Fong, and Wong (2011). According to By (2005), factors associated with customer attraction are responsible for a significant amount of a company’s revenue. This forms the reason as to why GSK has to address issues regarding its IT system and the need for expertise in online services and after-sale services as a way of attracting new customers. The reason is because as a result of increased technological advancement as observed by Cheema, and Papatla (2015), a majority of the consumers are attracted to and prefer online services.
GSK has been known to rely on a third party since 2007 and this has proved to be costly for the company for the purpose of outsourcing its products and the production process at large. Another key factor is that there has been a change in dynamics of the consumers’ taste and preferences even in the pharmaceutical industry and consumers have now resulted to preferring online services and hence order their pharmaceutical products via online, but on the contrary, this was not the trend and when it comes to this, GSK has been caught off-guard due to its suboptimal IS system.
Based on the highlighted challenges and the need for expansion of operations, there is a need to have an organisational change in the main headquarters that will result to effectively dealing with the underlying challenges and as Reynolds (2010) observes, it is essential to embrace change to deal with situations in organisations, and one of the changes is to replace the IT system with a complete new one that will enhance the utilisation of digital technologies to suit the changing customers’ preferences and consumption behavior in the new markets. Also, it will be paramount to eliminate outsourcing through a third party with the objective of reducing costs.
3.2 Critically evaluate the organisational barriers and issues for implementing change
3.2.1 Resources needed to implement change
With the objective of setting up a new warehouse or buying an existing one as a solution to outsourcing hence stop depending on a third party for outsourcing the company’s products, there will be a need for financial support that should come from the shareholders. Convincing the shareholders on the intended move will be a critical barrier. To set up a system by internal development or even the option of hiring an external expert, there will be a need to assess the already existing IS team members with the objective of determining whether the team has the capability to develop the new system. Also, if the option will be to hire an external expert to develop the system for the purpose of expansion, then the tendering process and selection of vendors would be critical to the internal IS team. Training up employees in the new markets for physical stores in the new markets will also require extra resources.
3.2.2 Resistance from employees
One of the expected barriers is a form of resistance to change from the employees before they adapt the new norm of working. It is essential to highlight that a change may lead to increased rate of turnover and therefore in the implementation of change, it will be fundamental to adopt effective communication and topnotch leadership.
3.3 The appropriate leadership style based on leadership theory
With the objective of seeing through change, the CEO of the company and top management will have to adopt appropriate leadership styles and the best leadership style for this case will be transformational leadership with the main objective of the CEO leading from the front line. The transformational leadership style based on leadership theories, will be the most appropriate for the CEO of the company and this is because as a leadership theory, it is hugely concerned with how a leader can expertly interact well with his or her employees by building a strong relationship with them. Through transformational leadership, the employees gain confidence and trust towards their leader as they feel motivated (Charbonneau, Barling, and Kelloway, 2010). A transformational leader can transform the employees and the workforce at large in many ways thereby turning them to professionals by improving their capabilities, morale and adding value to them. For the transformational leadership theory to be successful for the CEO and the other senior leaders of the company, there are several factors that will play a critical role and these include: idealized influence, inspirational motivator, and intellectual stimulation.
3.3.1 Idealized influence
Idealized influence is a feature of a transformational leader whereby employees highly regard their leader, and they build trust in him (Dionne, Yammarino, Atwater, and Spangler, 2004). In this context, the GSK CEO in the course of change must act as a role model to the rest of the employees and this will make employees oblige to any decision made regarding the change with no question. In the common cases when it comes to transformational leadership and idealized influence, it is just like in a football team and the player whereby if the team manager usually arrives early for the practice session, the staff and players follow the same routine as the coach acts as their role model and for those who are late comers, they will tend to transform and be arriving early as their leader acts as an example to them.
3.3.2 Inspirational motivator
Through transformational leadership theory, a leader becomes an inspirational motivator to the employees (Charbonneau, Barling, & Kelloway, 2010). As highlighted earlier, any sporting team has goals to achieve. Through inspirational motivation, a leader brings their employees together, and he or she encourages them to work together towards achieving the set objectives and vision and in this case for GSK, embracing change. Team spirit is enhanced as a result of inspirational motivation through transformational leadership, and therefore each individual puts the interests of the team first rather than personal interests. The strength of the team in a workplace is enhanced when the team works together for a common purpose. Socially, a team’s interaction is enhanced creating a mutual and cordial relationship among the employees, the staff, and their leaders.
3.3.3 Intellectual stimulation
Intellectual stimulation is a crucial aspect of the transformational leadership theory as the leader helps instill into his employees the need to be very creative and innovative hence coming up with new brilliant ideas that would otherwise be effective to the team (Bass, 2009). This will be very important for GSK Company in its quest to bring the expected change successfully. Different scenarios and situations need a different approach and when it comes to the need for change, employees may be faced with situations that need a different approach and they can invent their own way to tackle a challenge posed by the situation at hand. Through intellectual stimulation, a transformational leader has the capabilities of dealing with any problem professionally. Instead of blaming employees and other staff due to mistakes witnessed during change, a transformational leader usually poses the challenge to the whole team positively and looks for solutions as a team, and this ultimately raises the team’s spirit as explained by Dionne, Yammarino, Atwater, and Spangler (2004). A transformational leader usually challenges their followers in a positive manner that would otherwise not make them feel offended but instead, they see the bigger picture of being more creative as in this case of accepting change. Through intellectual stimulation, the leader and his followers are strongly interconnected through a stable framework.
3.4 How the change will be communicated to all key stakeholders
The communication channels that will be used to deliver the message regarding change to the various stakeholders will include the use of a horizontal form of communication rather than the vertical form of communication. The use of horizontal communication will be the best choice based on its advantages in which decisions on change in the company will be communicated at the various levels allowing the staff to be on the same level with the managers when it came to dissemination of information as proposed by Lunenburg (2010, p.5). To the other stakeholders that include shareholders and suppliers, change will be communicated through scheduled meetings as well as the company’s newsletters.
3.5 Appropriate strategies for leading the change
The appropriate strategies for leading the change in GSK will ultimately be the application of related models and frameworks of change and these include the McKinsey 7S management of change framework and the Kurt Lewin’s Model for change.
3.5.1 Diagnosis of the needs of the company using McKinsey 7S management framework
With the objective of determining the needs of GSK, it will be critical to identify the internal elements of the company that will have to align with the desired change to be successful. These elements will essential as they will play an imperative role in the day-to-day affairs of the company and hence manage change. Figure 1 shows the McKinsey 7-S management framework for change.
When it comes to the first element of strategy, it is based on the company’s plan for building and maintaining a competitive advantage over its competitors by expanding into new areas as explained by Ravanfar (2015, p.17) and in this context, therefore, the strategy is to set up the company’s own system by internal development. The basic strategy to achieve this will also be supported by hiring an external expert to develop the system or even buying an existing system. The information system (IS) used now was designed in back in many years as observed by Parker (2017) and had become outdated, the plan is to design a new computerized system for the whole operation of the company and this is either achieved through the company’s own team or purchasing an existing system and going ahead to modify the system for reuse in the new markets.
3.5.2 The use of Kurt Lewin’s Change management model
Based on the situation of the company with the main aim of cutting costs and at the same time expanding into new foreign markets, as well as going along with the tide of digitalisation, there is a dire need to take actions and implement interventions that will be used to oversee the change as advised by Sarayreh, Khudair, and Barakat (2013, p. 626). As such, there will have to be an effective model that will lead to this change as advocated for by Tang (2019, p.49). For this case, therefore, the relevant model and suitable approach for the expected change for the company is Kurt Lewin’s Change Management Model which is also referred to as the Lewin’s 3-stage Model of Change. Figure 2 below represents the model.
As per the model as shown in the figure, there are three key stages of change and these are; Unfreeze, Change, and Freeze in the same order. The effective use of this model will ultimately prevent the company from going into turmoil as a result of undertaking change blindly as noted by Levasseur (2010, p.160). As Lewin rightly puts it, before any change occurs, there has to be the motivations for change, and in the case of the GSK Company, there are several motivations that include eliminating high costs, boosting sales and attracting customers. In the application of this model, the unfreezing stage will ultimately help in preparing the company and all the staff to accept that change is necessary, even though it will have to involve the breaking down of the already existing statuses with the aim of building up new ways of operating and new systems (Tang, 2019, p.52).
In the unfreezing stage which kick-starts the actual changes to be witnessed, the possible actions will include eliminating the outsourced 3rd party w and replacing it with a self-maintained centralised production process. Changes will be made to the IS system at the time as well as do away with the current workflow that was designed by the A&F Director that is now outdated, and devise ways to understand and explore on measures to boost employees’ morale. In the unfreezing stage, it will help in examining and enhancing preparedness to change all the existing foundations as there is a big difference between working in the UK and venturing into new markets (Tang, 2019, p.57). This stage of unfreezing is essential in the sense that it is the core and pivotal point that will help mitigate the risks of the resulting changes collapsing the company. As the norm for successful companies that have utilized this model, the first stage of unfreezing is the most difficult as old habits are being broken and adaptation is needed. Affected parties will be put off-balance and strong reaction opposing change are expected, as noted by Levasseur (2010, p.162)
The second stage of Lewin’s model is the actual change that will take place and will be witnessed in the company. Based on the uncertainty among the staff the unfreezing stage will result in, it will be evident that new ways of doing things will have to be adopted and this wil involve believing and acting in ways that will be meant to support the new direction (Hayes, 2018). As per explanations of the model, all the stakeholders in the company definitely will need time to adapt to change. In this context, therefore, it will be fundamental to incorporate the application of a related model to Lewin’s model that is referred to as the Change Curve and this model is precisely meant to focus on personal transitions among the staff of the company and will help improve the communication process as explained by Hayes (2018). The management will also play a critical role in which the concept of Hands-on management through the help of the managers and department heads to the employees, to use their time effectively in the quest to bring all the members on board and to help them recognise the benefits that change brought as a result of expanding into new territories.
The final stage as per Lewin’s model is freezing, and this will entail the climax of change. In this stage, as Tang (2019, p.51) postulates, changes will have started taking place in a progressive manner and the members will already be accustomed to and will have embraced the new ways of working, such as working in foreign markets. A company is now ready to freeze and in this case of GSK, the outward signs of the freeze will include fine-tuning the inventory management system through the adoption of Just-In-Time (JIT) philosophy, the use of the already designed and implemented customers’ loyalty programs, assessing customers’ feedback through adequate survey and focus groups, working with the restructured HR team, working with either the external expert or the new digitalised and computerised system as well as the staff getting fully accustomed to working in the company’s own production sites as outsourcing will have been done away with. The main objective of this change is to see to it that employees and all the working staff will be confident and comfortable with the new ways of working that will now have been adopted as advised by (Sarayreh, Khudair, & Barakat, 2013).
4. Conclusion and recommendations
4.1 Conclusion
For GlaxoSmithKline plc (GSK), the need to expand into new foreign markets calls for a change implementation plan. There are underlying issues that affect the company’s desire to expand into new foreign markets as highlighted in the discussion. As such, the need to change from outsourcing and changing the IS system calls for a change that will entail change of roles and resource allocation. The company will certainly inject resources in the form of finances and manpower to effect the change and get the desired outcome. The management, especially the CEO, will have to be in the frontline to lead and to achieve the desired change and its outcome through transformational style of leadership. The effective incorporation of Lewin’s model of change will oversee the desired change and will be instrumental. Horizontal communication will also be essential and with the main objective of ensuring that the change is well implemented and successful, the recommendations provided below will be of great essence epically in dealing with resistance.
4.2 Recommendations
In addressing resistance, it will be highly recommended for the top management to adopt using environmental scanning and change to react to the influence of internal and external factors. This refers to the monitoring of the company’s internal and external influence and environment, with the objective of accommodating potential opportunities and threats while enhancing adjustments. As such, conducting a SWOT analysis of the company, which will help to precisely look at the strengths, weaknesses, opportunities and threats in the new foreign markets as advised by Canning and Found (2015, p.278), will be paramount.
The strength of the company includes being a household name that is well known to people and as such, using other companies as a form of franchising for the purpose of expanding into new territories to venture is recommended. This means that franchising is an alternative if the company is not well known in some of the new territories and this will translate to the use of other companies’ employees. Basically, the first step will be analyzing the internal environment by looking into the inefficiencies inside the company such as the inadequate IS.
It is recommended that the change leaders, including the CEO and other key management positions such as the Sales and Marketing Director, the Human Resource Director, the Information Systems (IS) Director, and the Accounting and Finance Director play their roles effectively while having the maximum co-existence and cooperation as this will be integral for the successful change implementation.
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