This document provides an analysis of Johnson & Johnson, a global healthcare company. It begins with an overview of the company's history and operations, including its founding in 1886 and presence in over 60 countries. It then analyzes Johnson & Johnson's business segments, competitors, mergers and acquisitions, sales, value chain, and SWOT profile. The document also performs a PEST analysis and recommends how Johnson & Johnson can improve its response to quality control issues to restore its reputation. In summary, the document analyzes Johnson & Johnson's global business environment through an examination of its operations, strategy, and external factors.
3. Johnson & Johnson is a U.S multinational medical devices,
pharmaceutical and consumer packaged goods manufacturer founded in
1886. Its common stock is a component of the Dow Jones Industrial
Average and the company is listed among the Fortune 500. In the
Johnson and Johnson Company efforts to improve the quality of life for
people everywhere while still maintaining a standard of employee and
customer service. They are committed to working with moms, healthcare
professionals, scientists and experts in public health to ensure that their
products continue to achieve the highest of the JOHNSON'S® Brand
standards. They continue to work to reduce environmental impact to help
leave behind a world which the next generation will proudly inherit. In
the given project I have tried to encompass the various products and
services offered by Johnson & Johnson, the market trends, the sales and
distribution, the various competitors and value chain activities of the
company.
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4. Johnson & Johnson was formed by three brothers in 1886, Founded with
the ideas of Doctors and nurses using sterile suture, dressings along with
bandages where used to treat peoples’ wounds. Since more than 125 years
ago the company Johnson & Johnson, through its Family of Companies
(“the Company”), is the world’s most comprehensive and broadly based
manufacturer of health care products, as well as a provider of related
services for the consumer, pharmaceutical and medical devices and
diagnostics markets. Our more than 275 operating companies employ
approximately 127,600 employees in 60 countries, Globally, the supply
chain network across Johnson & Johnson includes 125 manufacturing sites,
400+ distribution centers and more than 600 external manufacturers.
According to J&J official Sales by U.S. companies were $29.8 billion in
2012, $28.9 billion in 2011 and $29.5 billion in 2010. This represents an
increase of 3.2% in 2012, and decreases of 1.8% in 2011 and 4.7% in 2010.
(Johnson & Johnson 2012 – Annual Report)
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5. Strategic Business Unit
1. Consumer Health Care: Each day, millions of people of all ages in
homes around the world use products from one or more of J & J
consumer health care companies. These products keep babies clean and
comfortable, hold allergy symptoms in check, help heal wounds, relieve
muscle pain, prevent sunburn, and help ensure a healthier diet. (Johnson
& Johnson, 2013)
2. Pharmaceuticals: J & J pharmaceuticals companies offer medicines
that treat many of the world's most serious and widespread diseases. In
2011, J & J invested $5.1 billion in pharmaceutical research and
development for new medicines to treat these and many other diseases.
It’s all part of their commitment of helping people lead longer, healthier
lives (Johnson & Johnson, 2013)
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6. Strategic Business Unit (Contd.)
3. Medical Devices & Diagnostics: The Medical Devices and Diagnostics
segment produces a broad range of innovative products used primarily
by health care professionals in the fields of orthopedics, neurovascular,
surgery, vision care, diabetes care, infection prevention, diagnostics,
cardiovascular disease, sports medicine, and aesthetics. This segment is
comprised of Global Medical Solutions, Global Orthopedics and Global
Surgery Groups (Johnson & Johnson, 2013).
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7. Mergers & Acquisitions
Company Acquired
Primary focus
Date
Amount (In Billion
US $)
Neutrogena
Skin and Hair care
1994
0.9
Cordis
Vascular diseases
1996
1.8
Biopsy Medical
Breast Cancer
1997
0.3
Depuy
Orthopedic Devices
1998
3.6
Centocor
Immune related disease
1999
6.3
Alza
Drug Delivery
2001
12.3
Inverness Med. Tech.
Diabetes self-
2001
1.1
2003
2.4
management
Scios
Cardio vascular
diseases
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9. Sales
(Dollars in Millions Except Per
2012
Share Amounts)
Sales to customers - U.S.
$29,830
Sales to customers - International 37,394
Total sales
67,224
2011
2010
2009
2008
28,908
36,122
65,030
29,450
32,137
61,587
30,889
31,008
61,897
32,309
31,438
63,747
Sales by U.S. companies were $29.8 billion in 2012, $28.9 billion in
2011 and $29.5 billion in 2010. This represents an increase of 3.2% in
2012, and decreases of 1.8% in 2011 and 4.7% in 2010. Sales by
international companies were $37.4 billion in 2012, $36.1 billion in
2011 and $32.1 billion in 2010. This represents increases of 3.5% in
2012, 12.4% in 2011 and 3.6% in 2010. (Johnson, 2012)
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15. PEST Analysis
PEST Analysis is a macro environmental framework used to
understand the impact of the external factors on the
organization and is used as strategic analytical technique.
PEST stands for "Political, Economic, Social, and
Technological” factors. Francis Aguilar is referred to as the
originator of this tool. (Pandey, 2011)
Political Environment: The politics on local, regional,
national, or international scales can exert strong forces on
businesses. Since Johnson & Johnson operates worldwide, it
must keep track of the political developments that may affect
its business.
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16. PEST Analysis (Contd.)
Economic Environment: The economic climate is also important
for Johnson & Johnson to analyze in order to predict when its
business may face challenges, as well as when it can seize an
opportunity for growth. Operating in the European Union and
larger European community means that Johnson & Johnson has
felt the effects of the current economic crisis. Aware of the crisis,
the company has been able to plan for its impact, and fortunately,
the effects on Johnson & Johnson have not been severe, as medical
products remain necessities even in periods of economic downturn.
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17. PEST Analysis (Contd.)
Social Environment: There are two major social changes on the
horizon that will both affect Johnson & Johnson as well as provide
tremendous opportunities. The first is the aging population. The baby
generation, has a huge social and economic impact on the world since
its birth. This trend will continue as the generation is beginning to
enter old age. The influx of senior citizens will create huge demands
throughout all realms of medical care. J &J can expect to see
increased sales across all three of its segments in the coming decades.
In response to a falling birth rate, companies like J&J, involved
with the provision of baby-care products, have effectively targeted
these products at an adult female audience. For example, their baby
lotion is now marketed as being kind and gentle to women’s skin, as
well as that of babies. This represents a response to changes in the
general environment that directly affect their industry.
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18. PEST Analysis (Contd.)
Economic Environment: The economic climate is also important
for Johnson & Johnson to analyze in order to predict when its
business may face challenges, as well as when it can seize an
opportunity for growth. Operating in the European Union and
larger European community means that Johnson & Johnson has
felt the effects of the current economic crisis. Aware of the crisis,
the company has been able to plan for its impact, and fortunately,
the effects on Johnson & Johnson have not been severe, as medical
products remain necessities even in periods of economic downturn.
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19. Value Chain
The term ‘Value Chain’ was used by Michael Porter in his book
"Competitive Advantage: Creating and Sustaining superior
Performance" (1985). The value chain analysis describes the activities
the organization performs and links them to the organizations
competitive position.
Value chain analysis describes the activities within and
around an organization, and relates them to an analysis of the
competitive strength of the organization. Therefore, it evaluates
which value each particular activity adds to the organizations
products or services.
(Porter, 1985)
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21. Analysis & Recommendation
Now several decades later, J&J’s Consumer Product Division
has put the company and its reputation in jeopardy by its slow
and ineffective response to a series of ongoing problem that
center on inadequate quality control inside some of the
manufacturing plants and slow, reluctant, and ineffective
corrective action FDA concerns. The end result is the broken
once pristine reputation of J & J.
Johnson and Johnson has been the exemplar of superb
ethical behavior in light. It can work forward in improving the
responses from slow and ineffective pace to quick redressal for
bringing back its sterling reputation.
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