Intercultural Issues at GlaxoSmithKline (GSK)

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27th Apr 2020 Business Assignment Reference this

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COMPANY BACKGROUND

GlaxoSmithKline (GSK) is a British multinational pharmaceutical company headquartered in Brentford, London. Established in 2000 by a merger of Glaxo Welcome and SmithKline Beecham, GSK was the world’s sixth-largest pharmaceutical company as of 2015, after Pfizer, Novartis, Merck, Hoffmann-La Roche and Sanofi. Our strategy is to bring differentiated, high-quality and needed healthcare products to as many people as possible, with our three global businesses, scientific and technical know-how and talented people. Our three long-term priorities of Innovation, Performance and Trust are designed to create long-term value for patients, consumers and shareholders. Our values – patient focus, transparency, respect and integrity – and our expectations – courage, accountability, development and teamwork – define our culture. They specialize in pharmaceuticals our Pharmaceuticals business has a broad portfolio of innovative and established medicines, with leadership positions in respiratory and HIV. We are strengthening our pipeline through a focus on immunology, human genetics and advanced technologies to help us identify the most promising new medicines. Vaccines GSK is the leading vaccine’s company in the world, delivering over 2 million vaccine doses every day to people living in 158 countries. Our portfolio and pipeline help protect individuals throughout their lives. Consumer health care Our Consumer Healthcare business develops and markets a portfolio of globally recognised consumer preferred and expert-recommended brands in the oral health, pain relief, respiratory, skin health, nutrition and digestive health categories. These category-leading brands include Sensodyne, parodontax, Poligrip, Voltaren, Panadol, Otrivin and Theraflu. (GSK, 2019)

INTRODUCTION

An analysis of intercultural problems at GlaxoSmithKline pharmaceutical industry also known as GSK. The company faced different cultural problem as a result of different individuals from different countries with different cultural background. This can bring about cultural problem if not managed effectively. This report examines the cultural issues facing GlaxoSmithKline pharmaceutical industry; red tape, favouritism, bureaucracy politics, market manipulation and bribery and corruption. Lack of feedback from the top management. Centralised decision making by the top management, outperforming peer groups and constant restructuring of the organisation, the senior management is not easily accessible and lack of respect for the employees by the top management. Slow decision making and staffs opinions are not to be considered. Lack of competitive employee package (Glassdor, 2019).  Using different theoretical framework such as the individualist and collectivist, universalism and particularism, internal and external locus of control, high and low context, power distance, and the globe project to critically analyse red tape, favouritism, bureaucracy politics, market manipulation and bribery and corruption in GlaxoSmithKline industry and provide solutions and recommendation to this effect.

ANALYSIS OF GLAXOSMITHEKLINE INTERCULTURAL PROBLEM

Bribery and Corruption

Culture influences the behavioural attributes of individuals, groups, and organisation. According to Hofstede culture is defined as the collective programming of the mind—mental programs or software of the mind that distinguishes one group of people from another. GSK faced According to the Telegraph magazine, According to an analysis by Citigroup, initial feedback following the accusations against GSK and investigations into other firms suggested that Chinese sales at Britain’s biggest drug maker were down as much as 30pc or more in volume terms since June.

Industry insiders say GSK is facing heightened barriers to business in China amid the bribery scandal, with major hospitals refusing entry to sales representatives. While other multinational pharmaceutical companies have also been blocked, GSK’s sales are thought to have suffered the worst.

GSK has declined to quantify its expected sales loss but admitted in its second quarter results that there would be “some impact to our performance in China”. In July, four of the company’s Chinese sales executives were arrested for allegedly funnelling up to £320m in bribes to doctors and officials to clinch higher prices and win market share. The drug maker has since admitted that its own probe into the matter unearthed evidence of wrongdoing by a handful of sales staff, but maintains they worked outside GSK’s control systems. However, Chinese authorities have challenged this defence, saying they believe managers in GSK’s China business had knowledge of the alleged bribery  (Roland, 2019). Also according to the Guardian newspaper, one of the biggest inquiries into marketing practices in the drugs industry ended yesterday with Italian police asking for almost 5,000 people to be put on trial, including more than 4,000 doctors and at least 273 employees of the British pharmaceuticals giant, GlaxoSmithKline. Some face up to five years in jail if tried and convicted.

Italy’s revenue guard, the Guardia di Finanza, said in a statement that GlaxoSmith- Kline and its predecessor firm had spent €228m (£152m) on “sweeteners” for doctors, chemists and others over four years. The alleged bribes ranged from cameras, computers and holidays to outright cash payments. The Guardia di Finanza said GlaxoSmithKline “should be held responsible for corporate crime as its managers and other employees acted in the company’s interest” (Stewart and Hooper, 2019). GSK is based in the united kingdom, as a result of its individualist orientation GSK would not give bribe in the United kingdom because individuals are after their interest they feel that they do not belong to any in group and so do not owe loyalty to anybody as a result of the loose open relationship the individualist culture individuals will open up and this could lead to lawsuit against GSK. Whereas in a collective culture of china and Italy, people feel they are responsible for each other, loyalty lies within the in-group they value their relationship and won’t want to cause any conflict within the in-group in other to save face. They focus on their relationship rather than task and there is less lawsuit in the collectivist culture GSK giving gifts to doctors and hospital in other to prescribe their drugs would work in china and Italy since giving gifts is seen as extending of friendship and they won’t want to jeopardize their friendship by rejecting the gift.

According to Trompenaars, in universalistic cultures people generally adhere to the standards which are universally agreed and relations between them are prescribed by laws, rules, general values and obligations. Always rules come before personal relationships. Collecting gift can be termed as receiving a bribe in United Kingdom and is punishable by the law, they believe that if your product is good and has passed certain regulations there is no need for a gift before it can be implemented they believe in absolute fact, the truth that has been agreed upon. Whereas in a particularist cultures, personal relationships come always before universal rules and laws, and individuals’ behaviour is determined by the particular obligations to the people they know in person. In a particularist society, you need friends or relationships in the government bureaucracy to get your imports cleared or your license extended (TU Delft OpenResearch.net, 2019). In other to get this benefit giving out gifts to the officials in the top offices will help GSK create a friendly relation to get these benefits. GSK giving bribes to doctors in hospitals in china and Italy to sell and prescribe their drugs to their patients needed their drugs to dominate the Chinese or Italian market.

Another theoretical framework that will be used to analyse to analyse GSK behaviour in china is the high and low context. According to Edward Hall (1976), he described high-context culture as one in which people are deeply involved with each other. As a result of intimate relationships among people, a structure of social hierarchy exists, individual inner feelings are kept under strong self-control, and information is widely shared through simple messages with deep meaning. A low-context culture is one in which people are highly individualized, somewhat alienated, and fragmented, and there is relatively little involvement with others (Hall, 1976, p. 39).  The Chinese and Italian doctors would not see taking the gift as a bribe as because giving gift to people is seen as a sign of genuine gesture to show goodwill such as appreciation and congratulations and this wasn’t seen as an offence by the Chinese and Italian GSK managers and doctors since it’s a gift. Another theoretical framework that will be used to analyse GSK behaviour in china is the locus of control. According to potter (1954, 1982) locus of control describes the way individuals attribute responsibility for different events. They feel that they can control events and focus o there development. The internal locus of control is another factor that influences GSK decision to resolve into bribery and corruption in china and Italy in other for GSK product to dominate china’s market.

Power distance is another theoretical framework that will be used in examining the problem faced by GSK in china and Italy. China and Italy are high on power distance they believe that people are not equal and powers are not distributed equally and they prefer not to challenge the authorities of their leaders. They expect their leaders to tell them what to do and how to do it. GSK had to use the influence of the doctors and hospitals to prescribe their drugs to patients since the people believe that the doctor has the power to tell them what drug to use and they won’t challenge the doctors or hospitals for giving them the drugs. While in the low power distance culture like the United Kingdom, they believe that everybody is equal and that power should be legitimate not autocratic. They tend to challenge their institutions often, giving doctors gifts to prescribe their drug to patient won’t work in the United Kingdom.

Market Manipulation

According to the UK Reuters, Britain’s competition watchdog has fined GlaxoSmithKline (GSK.L) 37.6 million pounds ($54.4 million) for market abuse in striking deals to delay the launch of cheap generic copies of its former blockbuster antidepressant Seroxat. Generic drug companies involved, including Germany’s Merck KGaA (MRCG.DE), were also fined smaller amounts, the Competition and Markets Authority (CMA) said on Friday, bringing the total penalties to 45 million pounds (U.K., 2019). Power distance will help us understand why GSK had to get involved in market manipulation in the United Kingdom. The United Kingdom is low on power distance i.e. there is equally distribution of power, autonomy people are free from influence by others in the society  but because of GSK extrinsic motivation they engage in a behaviour not because they enjoy it or find it satisfying, but in order to make their product popular in the market and since the reputation of GSK is at stake if generic varieties of paroxetine should get into the market because it would be sold at a cheaper price they had to influence generic to delay the drugs entering into the market. Companies are motivated to act in a particular way when been threated. Motivation is defined as the process that account for an individual’s intensity, direction and persistence of effort towards attaining a goal (Robbins et al., 2017). According to McClelland’s theory of needs, the need for achievement is the drive to excel, to achieve in relation to a set of standards. And the need for power is the need to make others behave in a way in which they would not have behaved otherwise (Robbins et al., 2017). For example when GSK paid Generics UK, Alpharma and Norton healthcare to keep generic varieties of paroxetine out of the UK market.  The need for affiliation is the desire for friendly and close interpersonal relationships. GSK had to bribe doctors and hospitals in China and Italy to prescribe their drugs, since giving out gift is a sign of friendship in china and Italy they saw as promoting friendly relations. In other to eliminate this treat GSK had to resolve into market manipulation as a result of its power that it possessed and also to make its product the best in the United Kingdom.   Moreover, GSK knew they were responsible for their success and it is up to them if their drug is going to dominate the United Kingdom market. This behaviour is attributed to the internal locus of control, in individualist culture they believe that their success is in their hands and it is up to them to achieve their objectives.

The globe project helps us to understand organisational behaviour, how cultural differences affect and shape leadership behaviour and effectiveness. (House et al., 2004).  Then globe study indicates that a leader effectiveness is based on its environment, it is in the societal organisation, norms, values and believes of the people been led. For GSK to be successful in china they had to incorporate the culture of the Chinese i.e. giving out gifts as a sign of friendship and in return expect favour. As the adage has it “when in Rome, do as the romans do.” The way GSK behaved by manipulating the market in the united kingdom was as a result of his face been threatened and their product could be pushed out of the market which will be a bad reputation for GSK.

Bureaucratic Politics, Favouritism, and Red Tape

According to the company staff review on glassdor, GSK was accused of been bureaucratic; with plenty of rules and regulations to follow and they are very strict with the rules and regulations (Glassdor, 2019). Bureaucracy according to max weber is defined as a form of organisational design defined by a number of characteristics, including a rational career structure as a set of formal relations among positions, arranged in a hierarchy of ascending authority, with rights, responsibilities, and entitlements attached according to the place of the position (Clegg, Kornberger and Pitsis, 2011). United Kingdom been an individualist country is low on uncertainty avoidance they try to have as few rules as possible and allow many currents to flow side by side. As a low UAI country the British are comfortable in ambiguous situations there are generally not too many rules in British society, but the few rules that are there are adhered to.  The staffs of GSK expect that there will be few rules and regulation in the organisation but GSK had plenty of rules and regulations that its staff had to adhere to. According Max Weber he sees bureaucracy as a rational means for the achievement of specific ends, he focused on bureaucracy because it is has been seen as necessary for running of large organisations(Clegg et al., 2016.). GSK is one of the biggest pharmaceutical industry in the world, in other to be successful there has to be strict rules and regulations that its staff should follow failure to comply could lead to sanction.  In a Universalist culture, rules and regulation matters nobody is above the law however they refrain from too much rules they prefer to adjust to the situation they find themselves in.  According to Weber based on rational-legal precepts, members of bureaucratic organisations are expected to obey its rules as general principles that can be applied to particular cases and which apply to those exercising authority as much as those who must obey the rules (Clegg et al., 2016.). In a Universalist culture people do not obey the rules because of traditional deference or submission to charismatic authority; they do not obey the person but the officeholder. As a result of the power the organisation has over its staff members, it implemented its rules and regulations on its member even though the staffs were against plenty of rules and regulations they had to obey. However power works best when it is seen least. If people know already know what to do what is expected of them, there is no need to exercise overt power (Clegg, Kornberger and Pitsis, 2011). GSK had to enforce its rules and regulations on its staff because it is seen as a necessary element in controlling its staffs from misbehaving.

Power distance and leadership style will be used to examine GSK behaviour in the United Kingdom. United Kingdom is low on power distance where there is equal distribution of power, inequality of power among people will require additional justification. In GSK, powers are not distributed equally since the decisions making are been made by the top management which the staff must obey. In other to avoid conflict in the organisation power should be legitimate, because the chance of opposition is greatly reduced since a meaningful context has been created in which actions can be accepted and justified (Edelman, 1964; 1971). Power is a necessary element in an organisation, it ensures that people act in ways that accord with senior management intent. The leadership style employed by GSK was more of autocratic people were been told what to do and how to go about in one of the staff reviews on glassdor, the staff complained about the decision making of GSK been centralised that staffs are exempted from decision making and rules and regulations are imposed on them. In an individualist country like the United Kingdom, individuals prefer the loose end relationship and will go for a decentralised decision making where everybody opinion matters. As a result of different staffs from different cultures working in GSK, some had problem with this method and this led to the questioning of the leadership been employed by the united kingdom. Utilitarianism proposes that decision making is solely based on their outcome, ideally to provide the greatest good for the greatest number (Robbins et al., 2017). The decision to influence generic to delay supplying of paroxetine to UK market was to avoid competitors in the UK market so that GSK drugs would gain more recognition in the UK market and this paid off by the time generic products were out in the UK market GSK drugs had already dominated the market.

As a result of cultural diversity, organisations need to make use of the management style that will be employed. I.e. polycentricity the use of the best system appropriate to the prevailing local contingencies. GSK neglected the culture in UK this resulted in different complaints by the staff in the organisation. If GSK continue to neglect the dominating culture it could lead to a shortage of staffs.

Conclusion

GSK has been involved in different bribery and corruption scandals, market manipulation up to bureaucratic politics red tape and favouritism. The international market is diverse with different cultures, for GSK to survive in this kind of diversify market structure they need to dance to the tune of the host culture that their company is established in. this explains their decision to give bribe to doctors and hospital in china and Italy so that they could prescribe their drugs to their patients since giving gifts is an a sign of friendship in this countries it is not seen as offence by the Chinese and Italian doctors, market manipulation in UK to delay generics drugs from introducing their drugs into the UK market and the bureaucratic practices in the UK necessary for the survival of their Organisation even though UK is an individualist country, they prefer less rules and regulations but GSK saw bureaucracy as necessary in other for GSK to survive.

Recommendations

I recommend the following in other to save business face and encourage decentralisation of decisions;

GSK should encourage cutting process i.e. several steps should be cut out to make work quicker for its staffs so that decision making will be faster.

Staff should be empowered, clear instructions should be given out and they should be allowed to handle things when authorized.

Staffs should be allowed to work without going through lots of procedure when the same goals will be achieved.

There should be anti-bribery rules and regulations about accepting gifts, hospitality and should be reviewed regularly.

References

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