3. STRATEGIC MANAGEMENT
Responsibility to doctors, nurses and patients, mothers,
fathers and all others
Responsibility to employees
Responsible to the communities
Responsible to stockholders
4. EXTERNAL ENVIRONMENT
Five Forces –
- Threat of new entrants is low due to entry barriers such as
regulation
- Bargaining power of buyers is high because the low cost
generics are increasing as patents expire
- Bargaining power of suppliers is low due to strong
relationships and wide range of suppliers
- Threat of substitute products and services is high due to
patent expirations which increases generic rights
- Intensity of rivalry among competitors in an industry is low
because J&J is a giant in different business segments
5. INTERNAL ENVIRONMENT
Strengths
- J&J is one of the most admired companies
- One of the Top 100 Companies for Working
Mothers every years since initiation
- Strong distribution network in all three market
segments in emerging markets
Weaknesses
- Maintaining a global brand with recalls
increasing
- Operations are disturbed by market fluctuations
Opportunities
- Acquisitions of other small companies and
increasing brand presence
- Increasing middle class and emerging markets
in high growth countries
Threats
- Generics for all three market segments
- Substitutions with lower cost
6. Jordan Stone
Chapter 6: Corporate Strategy
Chapter 7: International
Strategy
Chapter 8: Entrepreneurial and
Competitive Dynamics
11. Davina Naylor
Chapter 9: Control Systems, Governance, and Ethics
Chapter 10: Organizational Structure
Chapter 11: Leadership and Ethics
Chapter 12: Innovation
12. CONTROL SYSTEM,
GOVERNANCE, AND ETHICS
• Contemporary, values-driven control
system
• Use of SMART goals when measuring
strategic control
• Rewards are realistic and given when
goals are met
• Success is ultimately dependent upon
executive decisions
13. ORGANIZATIONAL STRUCTURE
ADVANTAGES
• Separate divisions are awarded separate
management controls
• Increased manager focus
• Divisions maintain their own resources
• More career opportunities available
DISADVANTAGES
• Divisions may compete with one another
• Increase in barriers to communication and
sharing of new concepts/ideas
• Expensive to replicate departments
• Focused too much on short-term
performance
14. LEADERSHIP AND ETHICS
• CEO must possess strong leadership qualities
• Awareness of barriers to change in order to
achieve success
• Ability to learn from mistakes
• Three major traits
• Purely technical skills
• Cognitive abilities
• Emotional intelligence
• Leadership Challenges
• Quality control issues
• Adherence to good ethical behavior
• Awareness of stakeholders
15. INNOVATION
• What should a company consider when managing
the innovation process?
• Corporate Culture
• Knowledge of past mistakes
• Different types of innovation
• How should a CEO foster innovation?
• Increase in collaboration
• Factors that influence strategy
17. Human Capital:
- Attracting talented people who possess J&J
DNA
- Continuous development through open
enrollment and functional leadership programs
- Culture, environment, and incentives don’t just
“Attract” the best and brightest, they “Keep”
them
INTELLECTUAL ASSETS
Talent
Management
Recruit
DevelopRetain
18. Business Segments: Consumer, Pharmaceutical, Medical Devices
Broad array of major competitors across all three business segments
Very strong brand recognition based on quality and fulfillment of specific
consumer needs
BUSINESS STRATEGY
Low Cost Leadership Broad Differentiation
Johnson & Johnson
Focused Low Cost Focused Differentiation
Competitive Advantage
19. Improvements Johnson & Johnson
could adopt to achieve greater
success
1. Knowledge Sharing - Tacit Knowledge,
Interdivisional Collaboration
2. Organizational Structure - Sharing
resources and functional departments
3. Leadership Development - Formal
Mentorships/Cross Training
RECOMMENDATIONS
Hello everyone, my name is Jordan Stone and I’m going to speak to you a little bit about J&J’s corporate level strategies and hopefully answer some questions you might have about these specific sections.
In a very general sense, J&J operates with a Concentration strategy; specifically product development strategy where they consistently modify and enhance existing products. Also, it is important to mention horizontal integration because of the mergers and acquisitions that they have done. Synthes is a medical-device maker and an example of an acquisition into a new market. J&J decided to go this route with medical-devices in order to expand its area of operations and have something else they can rely on for income. It has purchased more than 70 different firms in the medical industry in the last decade. Some of these industries fall within their exact product line while others are scattered around the supply-chain. This is an example of vertical integration where they acquire firms throughout the supply chain. A lot of money has been placed into R&D so that they can produce new products and stay at the head of the market. They allow the various branches that exist under their umbrella and also many of the acquired companies to operate on their own agenda.
Though this has created an atmosphere of innovation, it has divided the various chains. Quality is an issue with some of the smaller units that are not up-to-date as most of the company is and has resulted in a lot of recalls. The CEO has had to deal with faulty products off and on for quite some time now.
In order to remain diverse, the company has relied on related diversification where they bought out a competitor in order to pursue the artificial joint industry. Depuy is their branch which dealt with artificial hips and the quality of many of their products for a period of time was very questionable. Individuals ignored issues that could cause severe health problems with patients and decided to manufacture and distribute parts that were faulty. It has created a huge trust issue with the company and now the CEO has to worry about fixing the negative view of the company on top of quality.
The company has to better monitor each individual unit within its control. They have allowed for too much power to be distributed amongst the different branches and no one is being held accountable.
Some of the recent decisions however, have been positive; they decided to take out a lot of the potentially harmful chemicals in some of their products in order to create safe drugs for distribution. Again, the decision to place an emphasis on R&D has allowed progression
Next I am going to speak about the international strategy that J&J has pursued. Acquisitions in various countries around the world have allowed J&J to operate in a few different dimensions. In some throughout the US and Europe, there is little need for localization but a need for cost reduction since the price to ship similar products overseas raises the overall price of the supplies. They operate globally and are able to localize products fairly well tailoring to each region’s demands. Overall, they are operating more on a multidomestic strategy where localization is high and the pressure to lower costs are low. It all really depends which products are being evaluated also because a lot of the surgical supplies or prosthetics may not be able to be distributed cheaply.
Obviously they pursue overseas expansion for the cheap labor and increase in sales but can encounter various issues. On top of tariffs, they must also adhere to FDA standards globally. When producing overseas and distributing in developed countries, many of the products are subject to question. It is harder for the company to ensure everything is on code.
For them to handle adapting to a foreign market is to produce as cheap as possible so to create a pricing structure that is affordable to consumers. The bottom line is that they make medical supplies that saves lives and allows for people to remain healthy. There is no price tag on healthy living and people will most likely pay whatever they can for whatever they need. In some of their countries that might not have FDA rules and regulations like they do in the US, they may be able to get away with cutting some costs.
The next section is the entrepreneurial and competitive dynamics. It is hard to evaluate such a large company and immediately deem it one thing found throughout the textbook. This is the case with most other sections of our PowerPoint presentation. This is a major corporation that has remained the leader by not only innovation but also through acquiring other established corporations. They rely heavily on adaptive new entry where they have been able to improve their existing products so that they serve better in the future.
The company overall does not seem to really interfere with those that they acquire and those that operate underneath the name of J&J. The structure appears to be one similar to that of the US government where the federal government has the overall say in matters but allows local states and counties to preside over matters. This is how they have fostered innovation; by not interfering with R&D departments from the various chains.
Decentralization has been the focus of their company and has allowed for the creation of truly innovative products. It has also been the root of various issues. As I mentioned before, a lack of communication is most likely to blame for a lack of quality. Without leaders communicating effectively, standards have been dismissed and things have slipped. It has the cost the company not only revenue but also a tarnished reputation.
This concludes my section and I am going to turn it over to my next teammate.
