Johnson and Johnson Case Analysis

Johnson and Johnson Case Analysis

Introduction:

Johnson and Johnson, commonly called J&J for short, is one of the world’s well known, largest, most decentralized and most diversified health care companies. Since 1887, Johnson and Johnson has been producing, manufacturing and selling products related to human health and well-being. Today J&J has over 200 autonomous operating companies and do business globally specializing in consumer products, medical devices and diagnostics, and pharmaceuticals. Consumer products are the company’s most recognizable segment, including popular brands like Tylenol, Johnson and Johnson Baby Shampoo and Band-Aid. The medical devices and diagnostics segment manufactures products including surgical equipment and contact lenses. The largest of the three segments is pharmaceuticals.

Johnson and Johnson is poised for growth on many fronts. Their short-term outlook is bright due to a lead position in the drug-coated stent market. They should also see a substantial increase in prescription drug sales from the recently enacted Medicare regulation, which will grant prescription drug coverage to more Americans. In the long run, J&J should see consistent sales growth fueled by the aging demographics in the United States. Moreover, the medical supplies and services needed by the elderly population will increase simultaneously with the aging of the large baby boomer population. While there is no doubt that J&J is a corporation that has gone a long way and due to its reliability, culture and growth will continue to do well, analyzing the effectiveness of their current strategy is still essential. The question of whether J&J should become more centralized in order to adapt to the changing hospital industry needs to be addressed. Because of the changes in the hospital sector and because of the changes that distributors underwent in order to meet the hospital changes, J&J inevitably needs to change as well and become more centralized. While I do not think it is possible or even necessary for J&J to become completely centralized, J&J should consider the benefits of becoming more centralized. If J&J continues to be as decentralized as they are they will have a hard time adapting to change, communicating within the organization and contact within the organization will decrease as well.

In the recommendation portion of this case analysi...

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... Weakness

With regard to the internal environment, it is important to analyze J&J’s strengths and weakness. After reading J&J’s website, I was overwhelmed with the strengths that J&J possess. J&J is one of the main competitors in the race to produce the best and most widely used stent. They produced Cypher, a device that is implanted in arteries to help keep arteries open and prevent them from getting clogged. J&J currently posses the largest portion of the coronary stent market with their Cypher stent. Approved in April of 2003 and launched in May, Cypher is the only drug-coated stent to be supported by numerous tests, including four large-scale clinical trials involving 1,800 patients. In tests, Cypher proved more effective than bare metal stents at preventing re-blockage. Another strength that J&J possesses is having high barriers to entry. Entrance into the pharmaceutical industry is difficult. Pharmaceutical companies require large fixed costs, large set up costs and large research and development costs. While this does not insure that new companies will not enter their market, it does give J&J some safety measure at being able to prevent and/or compete with new entrants.