Johnson & Johnson: Strategic Management Analysis and Strategies

This report provides a comprehensive analysis of Johnson & Johnson's strategic management practices. It begins with an introduction to the company, its global presence, and its operational structure, including its three main divisions: consumer healthcare, pharmaceutical, and medical devices. The report explores J&J's business strategies, such as diversification, internationalization, mergers and acquisitions (M&A), organic development, and backward integration. It delves into the benefits and challenges associated with these strategies, including market share gains, economies of scale, and the impact of competition and changing consumer demands. The report further examines specific corporate strategies, emphasizing product diversification and internationalization, and analyzes the advantages and disadvantages of these approaches. Finally, the report identifies and discusses J&J's current growth strategy, highlighting its advantages in terms of market share, cost reduction, and revenue generation. The report concludes by emphasizing the importance of adapting to environmental changes and contributing to the well-being of the nation.

Running head: STRATEGIC MANAGEMENT OF JOHNSON AND JOHNSON
STRATEGIC MANAGEMENT OF JOHNSON AND JOHNSON
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Introduction
Part 1:
Johnson & Johnson is one of the oldest company who has its presence across global
and is operating at 60 countries with a huge assortment of products and goods (Content Lab
U.S., 2020). The distribution strategy of the company depends on the norms, values and
culture of the country it operates in.
There is a huge segment of products and Johnson & Johnson is solely responsible for
the manufacturing, making marketing strategies and also distributing the product. The
company has three main division namely the consumer healthcare, pharmaceutical and
medical devices, and the major revenue is earned through the pharmaceutical division which
contributes about 45% of the company’s total revenue.
The business strategies incorporated by JOHNSON AND JOHNSON are:
 Diversification
 Related diversification
 Power of the market
 Internationalization
 Organic development
The company follows backward integration which means that manufacturer is doing the
job of the retailer (Rothaermel, 2016).

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The main focus of this integration is to make diversified products. This integration has
also helped the company to have a greater authority and control at the starting phase of the
production.
The company has formulated many strategies for growth, and the most common strategy
used by most of the conglomerate is M&A; mergers and acquisition helps in offering a wider
range of products and services and a there is wide area of exploration also (Malik, 2014).
There is an availability of getting increased market share through M&A. it plays an important
role and forms a strategic part for the growth of the company. JOHNSON AND JOHNSON
merged an acquired many companies including Neutrogena, Aveeno when these companies
were tiny and JOHNSON AND JOHNSON helped in growing these.
When acquisition with small companies the chance of growth becomes high and failing
becomes low and vice versa.
Making alliances helps to encourage collaboration and also there is a better management of
the stakeholders (Išoraitė, 2014). The recent alliance that JOHNSON AND JOHNSON has
made is with the Boston University which is also the member of Association of American
Universities. The initiative taken is to develop a solution that would help in preventing,
intercepting and curing lung cancer.
This would help JOHNSON AND JOHNSON in sharing of knowledge to the
consumers and keep them aware. It would also help in building a relationship among the
business thus leading to sharing of objectives including both short and long-terms.
Internal or organic development of the JOHNSON AND JOHNSON was very
important as it helped in developing the resources internally and adapt the change prevailing
in the environment.

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This strategy also helped in stabilizing the units that were created and also retention of
these units were done (Quirke, 2017).
The factors such as, existing competition’s nature, uncertainty of the demand in the
market from consumer’s side, power of bargain of both the customers and suppliers and
many more were responsible in effecting the integration of the company (Banker, Byzalov
and Plehn-Dujowich, 2014). The increased competition has become a major issue and
uncertainty in demand in the market has left the company and consumers in dilemma,
because following the market trend is very important for the organization and the taste and
preference of the customer changes with change in time.
A consistency must be maintained in order to sustain the market and competition.
The term business portfolio refers as to what are the investments made by the
company, what are the products and brand that the company is associated with, even the
holdings of the company are defined within the business portfolio (Bear et al. 2016). It is very
important to have a diversification in product foe all the organizations at one point or the
other. It allows the organization to have a deep assortment of the products and services and if
the diversification is properly, there is a greater chance of the brand image to boost thus
increasing the profitability of the organization.
Besides, if diversification of the product is done, it also helps in protecting the
organization from the competition in the market that is already existing. JOHNSON AND
JOHNSON is heavily diversified providing a product range that caters the need of many
consumers all from various segments.
There are many benefits when a company undergoes internationalization (Chiva, Ghauri and
Alegre, 2014. It provides a greater platform for the company to operate therefore it results in
the rise of wider area of operation.

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This helps in improving the image of the company. There has been a positive impact
of internationalization of JOHNSON AND JOHNSON as it helped in accelerating the efforts
of moving the company more into the value-added activities.
This technique has helped the company to have a broad idea of the economic
strategies and is one of the important element for the good functioning of the same in present
as well as for the future. However, there are many downsides of this as a lot of problem arises
due to barriers in communication, satisfying customers at various countries depending upon
their culture and values and many more.
When a company expands, there are several benefits associated which includes:
Attracting new customers: expansion helps in exploring a new segment or a set of new
customers of the market. The opportunity of adding new customers is always there as there is
an involvement of new products and services that attracts customers.
Economies of scale: expansion helps in maintaining a regulative economy of the
organization it provides incentives and discounts as the order is made in large quantity.
Generation of various streams of revenue: as expansion helps in diversifying the product
thus a new channel of revenue is experienced by many companies and more inflow of money
takes place.
Opportunities of branding: there is an opportunity of creating greater brand image.
Branding helps in retaining as well as acquiring new customers that helps in developing new
marketing strategies for the company.
Attempts must be made in order to influence policies made by government so as to
make favorable conditions for firms. CPA also helps in improving the performance of the

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business and helps it to alter laws and policies. It helps in maintaining the policy regulated by
the government (Hohenthal, Johanson and Johanson, 2015).
Part 2:
Business strategies:
It can be defined as the approach made by an organization to compete successfully in
the market and strengthen the performance while drawing attention of the customers to meet
the organizational goals and objectives. It is the layout which the company follows so that the
desired results or ends can be obtained. Creating a vision for the company is very important
as it helps in giving a direction to the company in the way it operates.
Product diversification and internalization are taken here to discuss as the two
corporate strategies of the business conglomerate JOHNSON AND JOHNSON.
There is a huge variety of products and JOHNSON AND JOHNSON has a greater
diversity of products catering needs of its consumer (Hashai, 2015). JOHNSON AND
JOHNSON being one of the biggest conglomerate of the world serves three segments that
includes consumer segment, pharmaceutical segment and medical devices system, the
distribution varying with several countries and culture.
The company believes in creating a solution by anticipating and catering the needs of
the consumer. The consumer segment deals with the baby care, skin care, and various
healthcare products. The pharmaceutical segment deals with advanced biological treatments
by identifying their needs accordingly.
Medical devices segment believes in making science and technological network
helping people to live longer and stay fit. When new features, distinctive attributes and
ensured USP is introduced to a product, it leads to product differentiation. It helps the

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company to have a competitive advantage over others as their products becomes unique and
hard to copy. Moreover, this strategy helps in improving the decision-making of consumers.
The main advantage of this strategy is that it provides a bunch of economic benefits to
the organization and helps in increasing the sales of the company (Su and Tsang, 2015). Also,
it helps to achieve a price that is higher for the product to the company and helps the
consumers to maintain a brand loyalty for the same because customers are now more satisfied
with the products provided by the company (Batsakis and Mohr, 2017). However, there are
certain loopholes of using these strategy that includes declination of the perceived value
chain and no guarantee of increasing the revenue. In fact, there can be shrinkage and straining
of resources that are available within the organization.
When it comes to internalization, it is very important that one knows about what it
really means and it actually is. Internationalization is the expansion of the brand across
countries and eventually across globe (Knight and Liesch, 2016). Through this strategy, a
company is able to have a broader aspect of the business which can also be done by
facilitating expansion in national as well as international markets. This strategy helps in
giving a clear picture of the competitive position of the firm in the market in local as well as
international level which also helps in understanding the trends going on in the market and
tells about the necessity of the firm being dynamic and economically stable (Mitani, 2014).
The capacity of producing goods for consumers also increases through this technique and
also there is an efficiency in the production of the firm. However, there are times that it
becomes complicated for small and medium companies which could not recover themselves
and fail to understand the requirements and take decision accordingly.
Most of the companies are now getting associated with the government and doing
various social services for the locality and the country as well. It helps in developing a better

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and enhanced relationship with its consumer thus it effects and has a positive effect on the
organization (Ral-Trebacz and Eckert, 2016). The organization must change and adapt the
changes of the environment and must contribute to the well-being of the nation. When this
technique is implemented, it is observed that there is a better inflow of cash and revenue also
an opportunity gets better for the organization. It also helps the organization in learning a new
culture of that particular country where the organization is operating. Also a better
availability of market reach is witnessed and many development of foreign investment
opportunities is also expected to be seen.
There is an improvement in the reputation of the company and accessibility of talent
becomes more after using this corporate strategy as one of the method for growing of any
firm or organization (Yamin, Sinkovics and Williamson, 2015).
Part 3:
The current business strategy used by the business conglomerate JOHNSON AND
JOHNSON is GROWTH STRATEGY. This strategy can be defined as the action that helps
the business to capture a large market share as many determinants determine the factors
which include segmentation and targeting market and the type of industry they occupy.
This strategies helps and allows businesses to grow and have a greater exposure of the
market and maintain a competitive advantage as many small businesses are not able to predict
the changes that are observed in the market. The main advantages related to this strategy is to
capitalize the economy of scale by increasing output and reduce the cost per unit ad achieve
savings. This strategy helps in achieving greater profits to the business. There are also many
other advantages which includes increment of the stocks and resources of the organization.
Even the money discovered can put back and generation of sales can e increased. The

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financial viability of the business can also be expanded through this method. If plays a major
role in influencing the price in the markets of the products accordingly.
Consequently, the other side of the strategy is a bit darker one as many disadvantages
are also associated with the strategy used which includes shortfall of cash, many a times it
has been found that the organization had to borrow cash from different companies in order to
cope up with the shortage faced by the organization. There are times when the quality of the
products gets decreased as a result of which the consumers are not mostly attracted towards
the products and the sales of the company goes down. A loss in control power is also seen
and the shifting of position prevailing in the market gets hampered sometimes due to the
division of workloads between several locations of the sector.
There is an increased requirements of the capital which also means that greater the
workforce more will be the investment and facilities of the business. It is also seen that there
is an increased turnover arte of employees. When too much pressure is given to the
employees it is seen that there is a drop in the moral of the employees thus resulting in a drop
of productivity, even the employees sometimes leaves the business due to all these reasons.
Therefore, it becomes difficult for the company to maintain a consistency and serve the
consumers in a better way providing better quality products, helping the organization to grow
an perform better.
There are certain steps that needs to be recognized and kept in mind before
formulating any strategy. The five basic steps include: knowledge of various sections namely
understanding how and where the brand stands, the existing competitors in the market their
business strategies and many more. It is important to have a knowledge of these things as it
helps in understanding the circumstances that are already existing. Second, comes the plan
that the organization makes and executes. It helps in getting a better knowledge of the

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market. Third is the identification part which deals with the identifying of strategies needs to
be formulated in order to discover the influences. Fourth. Is activating the share ability of the
organization. It helps in consumer engagement more. And the final one is to protect the
factors or determinants.
Identification of information is very important as any misguidance of information
may lead to a loss of formulating strategy (Gassmann, Frankenberger and Csik, 2014). There
are certain recommendations to be made for the strategy formulation. The company should
understand the need and wants of the customers and then apply for catering the need of the
consumers (Hill, Jones and Schilling, 2014). This helps in providing customers with a greater
flexibility and they can customize their products according to the needs of the customers. The
company should make ways to have a better pace of communication with the employees as it
would help the organization to make the products according to the needs and demands of the
customers. New technologies must be adapted by the company.
The world is going digital now hence it would be a better option if the company tries
something with the digital market as well as it would provide a wider market coverage.
Options of personalising products must be made so that many more customers gets attracted
by the same and have an urge and intensity to buy the product or make an impulse purchase.
It is very important that an organization have a particular business model and flows it
as it would help in the company’s growth ad establishment (Gassmann, Frankenberger and
Csik, 2014). For the successfulness of any business it is very important to have a model that
is specific enough to meet the requirements by identifying the sources, the base of the
consumer, and the details of financing.
Business models tell us what and how an organization wants, the reach out of the
several products and services to the customers, what strategies the company will follow in

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order to have a competitive advantage in the market. And how the company will anticipate
the cost and required functions. The business model used here is the ‘manufacturer business
model’ (Tongur and Engwall, 2014). This model helps in utilizing the raw materials and to
produce a final product from the same. It requires the involvement of combining all the
components that are fabricated prior to the process and which can be used in making a new
product or goods. The main function of this model is to reach out the consumers directly thus
resulting in profits and more savings to the consumers. This model helps in earning a lot of
revenue for the company (Hill, 2017). This model helps in getting a knowledge of the target
audience as to whom they need to provide the products and also the problems that the
consumers face during a purchase. What kind of value is created to the customers and is the
product worth the money the consumer spends (Chong and Preece, 2014). Benefits that are
associated with the products in terms of its attributes and features. The revenue generation
system of the company.
However, there are certain reasons and changes must be made in the business model
for the company to be effective in the market very frequently. When a similar model is used
for the organization, there is a possibility that the organization faces monotonicity thus
resulting in decreased performance.it sometimes happen that there is an inability to reach to
the certain end of consumers and fail to create value for money thus resulting in less growth
and reduced scalability of the business (Chong and Preece, 2014). As there is a continuous
change in changing environment it is very important that the focus made must be broad and
narrow depending upon the changes occurring. Intentions must be broad and not specific or
focused as it would limit the expansion and this would result in improperness of the
organization. The most important reason to change the business model is when the business is
not increasing rather it is experiencing a downfall. A business model must always look

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forward to grow and expand. Hence, it is very important that the business model chosen must
evolve with the evolution in the market and surrounding.