Chapter 10

CASE STUDY 1 (GSK)

Observations

GSK has pursued a greenfield venture as its entry strategy in Singapore. The firm has decided to spend 190 million to build a new plant. The reasons stated for its choice of Singapore are availability of highly educated employees, sound economy and provision of government incentives.

GSK plans to expand the firms operations further. There are intentions to construct a 1st of its kind R&D plant at its Global Manufacturing Supply location in Jurong.

Discussions & Analysis

The Singapore government intends to make the republic a biomedical hub. It is known that many people from Asia come into Singapore to seek medical help from our doctors. Gsk see an opportunity for profits by complementing the various medical facilities in Singapore.

Asia is rising to become a global powerhouse in the biotechnology industry, with its rapidly-expanding market and enormous talent base. As a leading biomedical hub in Asia, Singapore administers entry to world-class scientific and clinical excellence, superior networks to key regional markets as well as strategic alliance connections with research institutes, corporate labs and public hospitals.

In addition, as part of an ongoing effort to develop talent and leadership in Singapore, GSK is creating a $30 million endowment fund to nurture talents in the fields of green manufacturing and public health policy. The Singapore Economic Development Board (EBD) will add to the fund by a further $20 million.

Singapore with its extensive infrastructure and skilled human resource is viewed by GSK as an export centre to world markets. By concentrating production of vaccines and medical supplies in one location, GSK can achieve location economies thus minimising costs.

Singapore as a member of ASEAN could prove to be very useful to the firm as it set up its distribution networks across other ASEAN countries. With governments of ASEAN advocating economic integration, tariffs reductions as well as more flexible foreign direct investment policies, GSK can reduce time and money associated with burecracy and distribute its products more conveniently to neighbouring countries.

Singapore possess a excellent port, coupled with extensive air freight services, products of GSK can be delivered.