“Executive Summary:
Johnson & Johnson is one of the largest companies in its industry if not the largest. Johnson & Johnson is a holding company which has more than 250 operating companies conducting business in all countries of the world. Its primary focus has been on products related to human health and well-being in a worldwide Family of Companies shares this value system in 36 languages spreading across Africa Asia/Pacific Eastern Europe Europe Latin America Middle East and North America. J&J Company has several alternatives to make it strong internally such as; its large workforce of 118000 employees 125 years of experience which add to value of the company and when it comes to products It is well observed that the most powerful aspect that they occupy is about the baby products that make them have this significant brand image. The company is well known for their baby products. Actually in society the babies smell is linked to Johnsons product (E.g. baby powder no more tears shampoo). On the other hand Johnson & Johnson is suffering from several issues which might be considered as weaknesses for the company. For example; the demand of the drugs will decrease once the copyrights date expired and the customers have a substitute with more affordable medicine also Johnson & Johnsons subsidiaries are facing intellectual property lawsuits in respect of Medical Devices and Diagnostics. Besides that the high barriers of an entry for a new product; especially in the pharmaceuticals industry is considered as a external threat for the company as well as the product should get over several tests before it is offered in the market it which could delay the release of it or even make competitors able to offer it first. Moreover competition is strong in all product lines without regard to the number and size of the competing companies. Johnson & Johnson has a high level of competition amongst its rivals especially in research involving the development and the improvement of new and existing products and processes. Several companies are trying to compete with Johnson & Johnson whether internationally such as; Procter & Gamble and Merck & Company Inc. or regionally such as; Al-Batterjee.
Introduction to organization
We immediately think of clean fresh smell of baby powder when we hear the name of Johnson & Johnson. J&J definitely worked very hard to establish that image but J&J has much wider scope of other products and operations. J&J started with the idea of creating a line of ready to use surgical dressings. In 1886 J&J started with the production of sterile dressings and medical plaster Robert Johnson and his two brothers James and Edward created J&J. In 1944 J&J went public creating a global culture with their brand names having become generic household words. The company probably best known for its products Johnsons baby powder introduced in 1893 and Band-Aid introduced in 1921. Johnson &Johnson has three business units all of them focused on healthcare.(1)The pharmaceutical business develops new chemical and biological compounds used in the prevention and treatment of various diseases. (2)The medical devices and diagnostics business develops products used to diagnose and treat various health problems.(3)The consumer health care segment owns many brands such as the J&J baby care product line Neutrogena Listerine and Tylenol. Johnson & Johnson and its subsidiaries have approximately 115500 employees worldwide engaged in the research and development manufacture and sale of a broad range of products in the health care field. Johnson & Johnson is a holding company which has more than 250 operating companies conducting business in all countries of the world. Johnson & Johnsons primary focus has been on products related to human health and well-being. In 2011 J&J returned to deliver operational sales growth(JNJ 1997-2012).
2011 results: Worldwide sales were $65.0 billion an increase of 5.6 percent.
Sales increased by 2.8 percent reflecting the launches of new products in the pharmaceutical business segment.
Approximately 70 percent of our sales were from products with No. 1 or No. 2 global market share positions.
Approximately 25 percent of our sales were from products introduced in the past five years.
The adjusted earnings were $13.9 billion and adjusted earnings per share were $5.00 representing increases of 4.4 percent and 5.0 percent.
J&J invested $7.5 billion in R&D and advanced robust pipelines across all three business segments.Sales by Business Segment: Pharmaceutical business sales were $24.2 billion and ranked #8 among the largest pharmaceutical business in the world.
Medical devices and diagnostics business unit is one of the largest medical device business in the world with $25.8 billion sales.
With $14.9 billion sales consumer business segment is the sixth largest consumer health care company in the world.
The figures show every segment and sales by major product and franchise:
Pharmaceutical segment sales (J&J Annual Report of 2011 2012)
Medical devices and diagnostics segment sales (J&J Annual Report of 2011 2012)
Customer segment sales (J&J Annual Report of 2011 2012)
Mission and Vision Statements:
At Johnson & Johnson there is no mission statement that hangs on the wall. Instead for more than 60 years a simple one-page document Our Credo has guided our actions in fulfilling our responsibilities to our customers our employees the community and our stockholders. Our worldwide Family of Companies shares this value system in 36 languages spreading across Africa Asia/Pacific Eastern Europe Europe Latin America Middle East and North America.
Our Credo
We believe our first responsibility is to the doctors nurses and patientsto mothers and fathers and all others who use our products and services.In meeting their needs everything we do must be of high quality.We must constantly strive to reduce our costsin order to maintain reasonable prices.Customers orders must be serviced promptly and accurately.Our suppliers and distributors must have an opportunity
to make a fair profit.We are responsible to our employeesthe men and women who work with us throughout the world.Everyone must be considered as an individual.We must respect their dignity and recognize their merit.They must have a sense of security in their jobs.Compensation must be fair and adequateand working conditions clean orderly and safe.We must be mindful of ways to help our employees fulfilltheir family responsibilities.Employees must feel free to make suggestions and complaints.There must be equal opportunity for employment developmentand advancement for those qualified.We must provide competent managementand their actions must be just and ethical.We are responsible to the communities in which we live and workand to the world community as well.We must be good citizens support good works and charitiesand bear our fair share of taxes.We must encourage civic improvements and better health and education.
We must maintain in good orderthe property we are privileged to useprotecting the environment and natural resources.Our final responsibility is to our stockholders.Business must make a sound profit.We must experiment with new ideas.Research must be carried on innovative programs developedand mistakes paid for.New equipment must be purchased new facilities providedand new products launched.Reserves must be created to provide for adverse times.When we operate according to these principlesthe stockholders should realize a fair return. (J&J official website 2012)
Vision:
To maximize the global power of diversity and inclusion to drive superior business results and sustainable competitive advantage.
Organizational Structure:
J&J Corporate Officers and Worldwide Chairmen (J&J Annual Report of 2011 2012)
Value Chain:
Johnson & Johnson Value Chain (J&J Official website2012)
Internal Strength It has a large workforce of 118000 employees.
Product diversification has enabled the company to avoid dependence on any particular market segment or product portfolio. Its long-range plans of diversification are set to be completed by 2014.
Presence in 60 countries which increase the number of consumers and reputation. At the same time make their brand recognized internationally.
The 8th largest pharmaceutical business and the 6th largest biotech business in the world.
The company is well known for their baby products. Actually in society the babies smell is linked to Johnsons product (E.g. baby powder no more tears shampoo).
Recognized by the United Nations as the Humanitarian of the year for 2011 for the work of philanthropy touching lives of billions of peoples basic health care.
125 years of experience which add to value of the company.
They have a good marketing strategy (Try and buy) by offering a tester of their new-lunched products with their best-seller products to track in more customers. Mostly they use this approach to the baby products.
Johnson and Johnson Company participate in most needed and expected to succeed projects most of them are new innovative products to meet the unmet health care needs across the world (E.g. Alzheimer drug cancer drugs)
Delivering sustainable growth for shareholders.
Johnson & Johnson has customer sensitive products specifically made for each region such as J&J Oud powder which is distributed only in gulf countries.
R & D efforts in the segment of Medical Devices and Diagnostics (MD & D) and consumer platforms such as contact lenses electrophysiology advanced energy biosurgicals oral care and skin care. These amount to $ 7.5 billion. Still they show a continuous development for their products.
Ingenuity resiliency tenacity integrity and compassion shown by the people of Johnson & Johnson during the period of industry and global changes.
Maintained AAA credit rating in financial reporting.
Exceeded Standard & Poors 500 and Dow Jones Industrial Average in respect of one-year shareholder return at nearly 10 percent.
Johnson and Johnson was the first to introduce a sterilizing technique for catgut sutures.
The company shows responsibility in their participation in World War II to provide drugs and medicines for people.
The company is able to offer discount for their baby care products and contact lens. Its promotional campaign Beauty for all Ages has been quite popular at Walgreens; this shows the excellent promotional strategythat thecompany follows.
The company is involved in helping manage many cases such as healthy life styles. There were a lot of programs to promote a healthy living such as the campaign for Nursings future Having a Baby Changes Things and Because We Care We Act. And here is a very effective way to show public the companys concern about them.
Its decentralized management approach gives its employees an entrepreneurial feel of the belief that they succeed to meet the customer needs. Also they provide their employees with a very good insurance which increase the loyalty of their labor force.
Internal Weaknesses Patent expiration in two years for two of the companys major drugs Risperdal and Topmax which gained $ 6 billion in sales.
The demand of the drugs will decrease once the copyrights date expired and the customers have a substitute with more affordable medicine.
Uncertain macroeconomic conditions that could effect on the demand on baby products of the company.
Johnson & Johnsons subsidiaries are facing intellectual property lawsuits in respect of Medical Devices and Diagnostics.
As a pharmaceutical business the company it is based on continuous Research and Development for better drugs and substitutes with less side effects. They are expected to spend a lot of money on that and its either going to be very successful product and make a lot of sales or they will lose their money because it would be invalid to introduce to the market. So they are taking a high risk.
Unlike competitors Johnson and Johnson are not showing any concern to animal health which may make them lose a number of consumers.
There is a lot of force in the pharmaceutical markets to cut prices of medical drugs to keep the medicine in a price range where most people could afford.
Johnsons and Johnson products are expensive relative to the competitors.
The company hasoverdependence on minor companies for various supplies which increase the expenses of it.
The company incurs heavily on expenditures related to information gathering having no value added output or input.
Its new products recently launched are subject to uncertainties of market forces and regulatory overview.
Internal Factor Evaluation Internal Strength Evaluation Matrix
Weights
Rating
W/score1
Different approaches to increase employees loyalty
0.20
3
0.62
Showing their responsibility in many cases to ensure their good public image
0.25
3
0.753
Their succession in associating baby products to the smell of a baby
0.35
4
1.44
J&J is present in more than 60 country around the world
0.1
2
0.25
Customer sensitive products which are made specifically for a certain region
0.1
2
0.2Total
1
3.15
Based on the information given in this research J&J Company has several alternatives to make it strong internally. It isobserved that the most powerful aspect that they occupy is about the baby products that make them have this significant brand image. And overall the strength W/Score is 3.15 which indicates a positive position in the market.
Internal Weakness Evaluation Matrix
Weights
Rating
W/score1
Patent expiration in two years for drugs
0.30
4
1.22
J&Js subsidiaries are facing intellectual property lawsuits
0.15
3
0.453
High Expenses for the continues Research and development
0.30
4
1.24
The market pressure to cut prices in of the medical drugs
0.5
2
15
Overdependence on minor companies for various supplies
0.20
3
0.6Total
1
4.45
J&J has minimal weaknesses in terms of quantity but the ones that have been identified may dramatically change the position of it. For example the patent expiration of the drugs is for two years after that competitor would be able to reproduce and offer a similar product to the market in a very lower price by that time J&J have only two options either to lower the prices or lose most of the consumers. And for these strong segments of weaknesses the W/Score reached 4.45 although the high strength W/Score could back it up.
External Opportunities Ageing of the world population contributes to more spending on health care costs.
Growth in the economy round the corner promises increased customer spending which will in turn reflect in companys enhanced sales revenues.
International presence and noticeable growth help the company to have the opportunities for additional business emerging from global health care reforms.
The company has been leveraging its international presence with the strategies of joint ventures and acquisitions.
Cancers mental health disorders diabetes heart disease stroke rheumatoid arthritis and HIV present opportunities in the unmet medical needs. These give chances to control the market where the company has presence and can make investments to gain leadership.
Johnson & Johnson enjoys competitive edge to enhance its market capture by way of innovative products and sustained product development.
People have more trust in the quality of J&J baby products than other competitors due to their long experience and appearances in the market.
Health care improvements growing around the world requiring more cost effective health care solutions by the government payers and regulators present opportunities to make investments in modified medicine.
Company supports strong regulatory presence since it ensures patient safety and fast approvals of lifesaving medicines (Johnson & Johnson 2011).
The global expansion of the company around the world.
External Threats:Slowdown in economic growth fluctuations in financial markets increased unemployment and pressure on heath care costs has a negative impact on health care spending (Johnson & Johnson 2011).
The high barriers of an entry for a new product; especially in the pharmaceuticals industry.
The position of the company relative to it major competitors.
The company may have issues with uneducated consumers; they may use their products in a wrong way that could harm their health.
The bargaining powers of costumers or in J&J Company they are mostly patients. They could replace their product with other substitutes and decrease the sales of the company.
There is global competitors are able to offer substitute products at lesser prices.
There is a regulatory high-handedness.
The ongoing technological improvement in the industry that the company may keep in concern to not be left behind.
Established pharmaceutical products with brand selling face major threats from generic manufacturers from local markets.
Biotechnology may wipe out pharmaceutical technology in future.
There exist regulatory pressures of different kinds in different countries (MBA Lectures 2010).
External Factor EvaluationExternal Opportunities Evaluation Matrix
Weights
Rating
W/score1
Ageing of the world population contributes to more spending on health care costs
0.25
3
0.752
International presence make an opportunity for more business emerging from global health care reforms
0.15
3
0.453
Appearance of several diseases with unmet medical needs
0.4
4
1.64
People have more trust in the quality of J&J baby products
0.1
2
0.25
The global expansion of the company around the world
0.1
2
0.2Total
1
3.2
J&J most significant opportunity is the appearance of new diseases that need to develop a medicine for. Than J&J may have the patent for and could have high earnings if they had it first. The W/Score for the external opportunity is 3.2 generally we can say that it is sold to be over 2.7 and we can observe that the company never been lower than this which shows how J&J is strong in the market.
External Threat Evaluation Matrix
Weights
Rating
W/score1
The high barriers of an entry for a new product
0.4
4
1.62
The company may have issues with uneducated consumers
0.1
2
0.23
The bargaining powers of costumers
0.1
2
0.24
The ongoing technological improvement in the industry
0.3
3
0.95
Biotechnology may wipe out pharmaceutical technology in future
0.1
2
0.2Total
1
3.1
The major threat that a company in the pharmaceutical industry has is the high barriers of the industry for the entry of a new product. Before the product is offered in the market it should get over several tests which could delay the release of it or even make competitors able to offer it before. External threats W/Score if 3.1 which is the least among the SWOT analysis.
Competition:
In all of their product lines Johnson & Johnson companies compete with companies both large and small located throughout the world. Competition is strong in all product lines without regard to the number and size of the competing companies.
Areas Where Johnson & Johnson focus on: Competition in research involving the development and the improvement of new and existing products and processes.
The development of new and improved products is important to Johnson & Johnsons success in all areas of its business and this significant investments in continuing research and multiple sales forces.
The development and maintenance of customer acceptance of the products involves significant expenditures for advertising and promotion.
Industries Where Johnson & Johnson Competes: Medical Equipment & Supplies Manufacturing
Consumer Products Manufacturing
Baby Supplies & Accessories Manufacturing
Eyewear Manufacturing
Personal Care Products Manufacturing
Cosmetics & Skin Care Products Manufacturing
Major Competitors: International Competitors: Procter & Gamble:
P&G is a global consumer goods company founded in Cincinnati in 1837 by William Procter an English candle-maker and James Gamble an Irish soap-maker. Started as key manufacturer of soap and candles. At present it is a fortune 500 company responsible for the manufacture and distribution of a number of the largest consumer goods. P&Gs product offering includes:applications for personal
home family/baby pet nutrition and care
online expert advice solutions regarding each product.P&G has one of the largest and strongest portfolios of trusted brands including:Pampers
Tide
Ariel
Always
Pantene
Bounty
Pringles
Charmin Downy Crest and Olay.P&G strengths:P&G carry 50 leadership brands which are the worlds best known household names and account for 90% of P&G sales and more than 90% of profits.
P&Gs work is driven by a purpose of providing branded products and services of superior quality and value to improve the lives of the worlds consumers now and for generations to come.
No company in the world has invested more in market research than P&G. The company conduct over 20000 research studies every year.
They interact with more than five million consumers each year in nearly 100 countries. The company invest more than $400 million annually in consumer understanding.
P&G is the industrys innovation leader. Nearly all organic sales growth over the past decade has come from new brands or improved products. In 2009 SymphonyIRI recognized P&G as the most innovative manufacturer in the consumer packaged goods industry for the last decade presenting the company with its Outstanding Achievement in Innovation award.
P&G has also shown that it is an environmentally friendly company. In 2008 the company reduced energy consumption by 6% carbon dioxide usage by 6% and water consumption by 7%.
Recently P&G launched a global thank you mom campaign it is the biggest campaign in P&Gs nearly 175-year history and will run through the end of the Olympic Games. The campaign launched around the world today with the Best Job a short film that celebrates the role moms play in raising Olympians and in raising great kids.
P&G External Recognition: Ranked #5 among the Global Most Admired Companies.
Ranked #10 on the Worlds Most Respected Companies List .
Ranked #25 among the Worlds Most Innovative Companies.
Named to list of the Global 100 Most Sustainable Corporations in the World with top rankings from 20002011.
Ranked #3 on the Research Supply Chain Top 25.
Recognized as one of the Top 20 Best Companies for Multicultural Women.
Ranked #25 among the Top 50 Companies for Diversity.
Global 500 List.Merck & CompanyInc. :
Merck was established in 1891engaging in the discovery development manufacture and marketing of a variety of products mostly to improve human and animal health. Merck sells products through drug wholesalers and retailers hospitals clinics government and managed health service providers. Merck is a top competitor of J&J and its the eighth largest pharmaceutical firm in the world. Merck acquired the eighteenth largest pharmaceutical firmSchering-Plough which allowed Merck to raise to number two worldwide just behind Pfizer. Merck has devoted itself to increase access and to deliver donated medicines through far-reaching programs to people who are in need. Merck publishes unbiased health report as a not for profit service. Merck has a strong position in the pharmaceutical over the world with advancements as Gardasil the first anticancer in the world vaccine diabetes medications eye disease treatments and multiple cardiovascular drugs such as Cozaar and Hyzaar. The company proved to be successful by being research-driven and keep producing new and innovative products. Over the years Merck entered into many joint venture agreements with companies such as Sanofi Pasteur S.A. Rhone-Poulenc S.A Johnson & Johnson Astra AB Schering-Plough and many others.
Regional Competitor: Al Batterjee Group:
Al Batterjee Group established in the year 1975 is engaged in diversified areas such as:Batterjee group of Industries
Ice Cream and Juice Factory
Cosmetics & Baby Care
Garments & Leather Products
Food Stuff Factory
Pharmaceutical Factory
Bravo Oil Co. Bravo House Hold Products Co.
Factory for Healthy Food
Batterjee Real Estate Co.
Batterjee Medical Co.
Batterjee Trading Co.By its nature and by its various activities and products Al Batterjee Group is contributing well to the nations welfare and economy. In addition to that Batterjee group provides employment opportunity to many Saudi National citizens. Al Batterjee Group operate in dynamic and highly competitive sectors which force the group to use modern and up to date technologies to ensure that all products are produced by high quality distributed effectively and efficiently and priced competitively .These factors helped the group to maintain a major position and reputation on Saudi industry as well as on international market.
Competitive Profile Matrix:
P&G
Merck&Co.
Al-BatterjeeWorldwide sales
$82.6 billion
$12.2 billion
not available
Strengths carry 50 leadership brands which are the worlds best known household names
provide branded products and services of superior quality and value
huge amount of its investments are in researches
invest more than $400 million annually in consumer understanding
industrys innovation leaderBrand Image and Awareness
Merck Lobbies for Healthcare reforms
Highest Profit Margin in the industry
High volume of product approval by FDA
Diversified Product Portfolio
Knowledge of benefits of risks offered
Sophisticated Online Search Tool (mercksource.com)
IPhone application
Transparency
Expansion to developing countries (Access)
use modern and up to date technologies
high quality products
products are distributed effectively and efficiently and priced competitivelyCompeting industrys
consumer products
Pharmaceutical industry
pharmaceutical industry
Cosmetics & baby care
Price
increased price
high prices
average
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