GlaxoSmithKline in China Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

Globalization is occurring and many companies around the world are expanding their operations and businesses across the boundaries in other countries. If for example, a United States based company wants to expand its operations in China, then it is recommended for that company to understand the local and the foreign policy of China and also the bribery scandal of Glaxo Smith Kline involving four employees of the company. The main emphasis of this case is the Glaxo Smith Kline scandal that occurred in China involving the Chinese government, employees of Glaxo Smith Kline, the response of the management and the CEO of Glaxo Smith Kline and the core lessons learned from this scandal. These lessons would then provide recommendations to the United States based company to counter all the risks in advance and operate successfully in China.

Analysis

QUESTION 1

GSK has featured its robust ethics and compliance program, even a “3rd Party Code of Conduct” for suppliers. What went wrong? What are the main external and internal factors that encouraged the GSK bribery scandal in China? Which, in your opinion, are more important? Explain your position.

Glaxo Smith Kline is one of the leading companies in the pharmaceutical industry. The operations of the company were initiated as an export and import business in New Zealand and the company has since then expanded into many countries such as Greece, Malaysia, China, South America, India and United Kingdom (Quelch & Rodriquez, 2013). One of the challenging factors faced by companies expanding in the foreign countries is the changes in the government policies and political situations (DRS, 2007, p 7). As a result of this, Glaxo Smith Kline has developed strict policies related to corruption, bribery, fraud and regulations.

When a new employee is inducted at Glaxo Smith Kline, he is provided with complete training on the code of conduct of the business that how they should doing business with complete integrity and honesty according to the regulatory and all the legal requirements. Furthermore, all the 3^rd parties of Glaxo Smith Kline are also required to act in their business dealing ethically and with complete integrity according to the “3^rd Party Code of Conduct” (Fox, 2014). All the employees of the company were aware of their actions and expectations as employees of Glaxo Smith Kline and they exactly knew what bribery is.

There were many factors which contributed to this scandal but the significant of all was money. Money was the main internal as well as the external factor which influenced the doctors so that they could bring more sales for their employees and prescribe GSK drugs resulting in higher status and pay. China does not allows their doctors to take second jobs and doctors do not make a lot of money, therefore, it becomes easy for Glaxo Smith Kline to bribe money to these doctors (Quelch & Rodriquez, 2013).

QUESTION 2

Assess GSK’s response so far. Are the initiatives that GSK has implemented to address the bribery problems sufficient or would you suggest further actions? If you were Mark Reilly what would you have done? Explain.

The initial raid date was June, 27, 2013 and the fist response to this scandal was issued by Glaxo Smith Kline on July, 15, 2013 which was just few weeks after the raid (Quelch & Rodriguez, 2013). They supported the government of China in complete investigation of all the allegations and various steps were taken by them for the fraudulent behavior. A detailed examination was conducted for all the business transactions related to the third parties and travel agencies and the travel agencies were also stopped immediately by them (Quelch & Rodriguez, 2013).

Furthermore, in order to discuss the future of Glaxo Smith Kline’s operations in China, the president of international business, Abbas Hussain was sent to China by the CEO of the company, Andrew Witty. Also, the general manager, Mark Rielly was replaced by Herve Gisserot (Quelch & Rodriquez, 2013). All such actions showed that the management of the company felt sorry for the scandal and it wanted the government to restore the situation for the company.

If there was any true zero tolerance policy at the company, then the management should have done something about Mark Reilly and the individuals involved earlier such as checking the background of the employees in detail through external sources and examining all the transactions conducted with third parties and the employees. Also, it is not possible for the CEO to look at each affair; therefore, strict policies should also be devised for higher management so that they could take immediate actions when required...............

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