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CSR, Creating Shared Value and the Case of GlaxoSmithKline (GSK)Prepared for MKTG90005 Marketing Strategy
Presented by:
Mr Austin Chia
Semester 2, 2017
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Session Overview
By the end of the session, you should:
▪ Evaluate differing perspectives about the purpose of
corporations and their role in society;
▪ Describe the similarities and differences between
Corporate Social Responsibility (CSR) and Creating
Shared Value (CSV);
▪ Identify the different levels of Creating Shared Value
(CSV); and
▪ Apply the CSV concept to the prescribed case reading on
GSK in the Philippines.
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3Donaldson, T., & Walsh, J. P. (2015). Toward a theory of business. Research in Organizational Behavior, 35, 181-207.
“Law is to justice, as medicine is to health, as
business is to …?...”
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The Corporate Purpose
▪ If the purpose of a corporation is to create value:
– Value for whom?
– What form of value?
4
“There is one and only one social
responsibility of business — to use its
resources and engage in activities
designed to increase its profits”
“Managers have a duty to individuals and
constituencies that contribute, either
voluntarily or involuntarily to [a company’s
wealth-creating capacity and activities”
Smith, H. J. (2003). The shareholders vs. stakeholders debate. MIT Sloan Management Review, 44(4), 85-91.
Friedman
(Shareholder Primacy)Freeman
(Stakeholder Primacy)
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5
“Do you agree with Friedman’s or Freeman’s view regarding the
corporate purpose?”
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Corporate Social Responsibility
▪ Corporate Social Responsibility is seriously
considering the impact of the company’s actions and
activities on society (beyond profit-making objectives)
– Note: Freeman doesn’t advocate for CSR, but his theory does
illuminate the social embeddedness of firms.
Socially Responsible Brands? Socially Irresponsible Brands?
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CSR Models
7
Triple Bottom Line
(Elkington, 1994)
Pyramid of Social Responsibilities
(Carroll, 1991)
Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4), 39-48.
Elkington, J. (1994). Towards the sustainable corporation: Win-win-win business strategies for sustainable development, California Management Review, 36(2) 90-100
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8
A Mini Debate:
“The only social responsibility of business is business”
Agree/Disagree?
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Arguments against and for CSR
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Classical economics
Businesses not equipped
Too much power already
Global competitiveness
Enlightened self-interest
Proaction against regulation
Resources available
Public support
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Creating Shared Value (CSV)
▪ Shared value is a management strategy
– Business opportunities to solve social
problems
– Business models that differentiate
companies from competitors
– Working in partnership with stakeholders
to create positive social change make
profits
10
“Shared value is not social responsibility,
philanthropy, or sustainability, but a new way for
companies to achieve economic success”
- Porter and Kramer (2011)
Porter, M. R.., & Porter, M. (2011). Creating shared value. Harvard Business Review, 89(1/2), 62-77
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CSR versus CSV
11Porter, M. R.., & Porter, M. (2011). Creating shared value. Harvard Business Review, 89(1/2), 62-77
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Video: CSV Explainer
12‘Creating Shared Value: It’s the Future’. Retrieved from https://youtu.be/1vK3cxnP6I4?list=PL85B3155A0F0B30D0
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Markets and Market Failures
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Levels of Shared Value
1) Reconceive needs, products, and customers
– Products and services that meet societal needs
– Providing products to unserved or underserved customers and
communities
2) Redefining productivity in the value chain
– Accessing and utilizing resources, energy, suppliers, logistics
and employees differently and more productively
3) Enabling local cluster development
– Improving the available skills, supplier base, and supporting
institutions in the communities where a company operates.
– Enhance cluster sophistication in the sector.
14Porter, M. R.., & Porter, M. (2011). Creating shared value. Harvard Business Review, 89(1/2), 62-77
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15
CSV at GlaxoSmithKline: The Case of
Ventolin Rotahaler & Rotacapsules
Chia, A., & Singh, P. J. (2017). Navigating the Unchartered Path to Shared Value at GlaxoSmithKline (GSK) in the Philippines.
Case Folio, 17(1), 44-59.
Company Profile
• Leading global pharma company
• Operates over 150 countries
• Employs over 100,00o people
• Main product categories are:
– Pharmaceuticals
– Vaccines
– Consumer healthcare
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16
“Which of the three-levels of CSV is the GSK case study
focussed on?”
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The Philippines: Some Stats
▪ ~Population of 103.3million
– Life expectancy: 69.41yrs
– GDP per capita:
2,951.07USD
▪ An emerging market
– Growing economy ~6-7% p.a
– People moving up the income
pyramid, but..
– ~80million still considered to
be living in poverty
Chia, A., & Singh, P. J. (2017). Navigating the Unchartered Path to Shared Value at GlaxoSmithKline (GSK) in the Philippines.
Case Folio, 17(1), 44-59.
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GSK Reach in Emerging Markets
18Chia, A., & Singh, P. J. (2017). Navigating the Unchartered Path to Shared Value at GlaxoSmithKline (GSK) in the Philippines.
Case Folio, 17(1), 44-59.
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19
An Experiment: What is asthma?
2 minutes
2:001:591:581:571:561:551:541:531:521:511:501:491:481:471:461:451:441:431:421:411:401:391:381:371:361:351:341:331:321:311:301:291:281:271:261:251:241:231:221:211:201:191:181:171:161:151:141:131:121:111:101:091:081:071:061:051:041:031:021:011:000:590:580:570:560:550:540:530:520:510:500:490:480:470:460:450:440:430:420:410:400:390:380:370:360:350:340:330:320:310:300:290:280:270:260:250:240:230:220:210:200:190:180:170:160:150:140:130:120:110:100:090:080:070:060:050:040:030:020:01End2:00
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Asthma: The Social Issue
▪ Approx. 10.7million people suffer from asthma in the
Philippines
– Estimated the 98% of suffered lack proper treatment
– Asthma accounts for ~2.3% of total deaths (~21.2 deaths
per 100,000)
– Has significant impact on people’s quality of life
– May contribute to numerous other co-morbidities
20
“It is hard to comprehend that in this day and age in the Philippines, when
a child is diagnosed with asthma the parents start creating a cocoon
around the child. They cannot play, they cannot get tired, they cannot
stay out in the sun, they cannot bathe thinking that asthma limits the
activities of their child”
- Francis Del Val, GM for GSK Philippines
Chia, A., & Singh, P. J. (2017). Navigating the Unchartered Path to Shared Value at GlaxoSmithKline (GSK) in the Philippines.
Case Folio, 17(1), 44-59.
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Asthma: The Social Issue
▪ Asthma is a treatable disease
– Treatment has been available
since 1968 and used in clinical
practice for 45 years
– Multi-dose inhalers (MDIs) are
the gold standard treatment for
asthma sufferers
– However, in poorer nations,
people tend to opt for inferior
cheaper oral therapies (tablets
and syrup)
21Chia, A., & Singh, P. J. (2017). Navigating the Unchartered Path to Shared Value at GlaxoSmithKline (GSK) in the Philippines.
Case Folio, 17(1), 44-59.
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22Donaldson, T., & Walsh, J. P. (2015). Toward a theory of business. Research in Organizational Behavior, 35, 181-207.
In light of the social issue described, write a business opportunity
statement for GSK in the Philippines.
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Vision StatementVentolin (Rotahaler & Rotacapsules) to be the treatment of choice for asthma patients in
the lower socio economic group.
Brand Positioning
Ventolin Rotahaler brings a gold standard reliever medicine to a population who
routinely use oral medications and wait days before they achieve symptom relief.
Ventolin Rotahaler/ Rotacapsules are for asthma sufferers who cannot afford the outlay
to buy a monthly inhaler.
Treatment
EvolutionMaximise appropriate use of inhaled medication versus potential inappropriate use of
oral options by introducing an affordable unit dose inhaler
Payer Value
Proposition
Ventolin Rotacapsules are designed specifically to meet the needs of the financially
challenged by offering a means to afford inhaler medication (through small pack
dispensing).
Investment
Category and
Guidance
Invest to grow
Strategic Foundations of the Product
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Product Innovation: VRH/RC
24
▪ Ventolin Rotahaler
– Inexpensive inhaler device
– Price at ~50p (1.22AUD)
– COGS @ 20p (0.49AUD)
▪ Ventolin Rotacaps
– Inexpensive capsule dispersed
in the VRH
– Price at ~4p (.10 AUD)
– COGS @ 3p (0.49AUD)
Poverty Line (Philippines): 100,534 (2,458AUD) per year (equiv. $6.90/day)
Chia, A., & Singh, P. J. (2017). Navigating the Unchartered Path to Shared Value at GlaxoSmithKline (GSK) in the Philippines.
Case Folio, 17(1), 44-59.
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Video: Demonstrating the product
25
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The Business Rationale
▪ The VRH/RC made good business sense
– Efficiency gains: Limited R&D investment required. The
capsule itself involved limited pharmacological innovation and
leveraged the GSK’s strength in respiratory medicines.
– Increased market share: Philippines has a large population of
low-income earners. VRH/RC provided an affordable alterative
to salbutamol tables/syrup.
– Expanding market: Economy in the Philippines is growing,
people are moving up the income pyramid and people will
demand better treatment options which GSK can service.
26Chia, A., & Singh, P. J. (2017). Navigating the Unchartered Path to Shared Value at GlaxoSmithKline (GSK) in the Philippines.
Case Folio, 17(1), 44-59.
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27
Group Discussion:
Is pricing the single biggest barrier for access-to-market?
Discuss.
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GSK’s 5A’s of Patient Access
Chia, A., & Singh, P. J. (2017). Navigating the Unchartered Path to Shared Value at GlaxoSmithKline (GSK) in the Philippines.
Case Folio, 17(1), 44-59.
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29
What do you think are some challenges GSK will face in relation to their product in
the future?
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Potential Future Challenges
▪ Potential channel conflict: Portfolio of high value and low value
products targeted at different levels of the income pyramid.
▪ Economies of scale: Production costs are relatively high. More
volumes required.
▪ Supply chain complexities: Challenges with distributing to
rural communities where the poorest people live.
▪ Knowledge of retail systems: Retail network for low value
products can be fragmented.
▪ Acceptability and awareness of product: Community
engagement may prove too demanding.
▪ Financial performance: Will the product be viable if its not
profitable?
Chia, A., & Singh, P. J. (2017). Navigating the Unchartered Path to Shared Value at GlaxoSmithKline (GSK) in the Philippines.
Case Folio, 17(1), 44-59.
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Some takeaways
▪ The purpose of a corporation is a contentious topic with
no ‘objective’ answer.
▪ CSR is concerned with a corporation’s focus beyond that
of profits.
▪ CSV is a management strategy comprising of 3-levels:
(1) Reconceiving products/needs/customers, (2)
Redefining productivity, (3) cluster development.
▪ GSK is an example of reconceiving needs, customers
and products.
▪ While CSV has strong intuitive/moral appeal, its
implementation is fraught with many challenges.
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Thank you