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Johnson & Johnson

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SWOT, Value Chain etc of Johnson & Johnson

Published in: Business, Health & Medicine
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Johnson & Johnson

  1. 1. Global Business Environment Name: Dhruv Modi Student ID: 35954 Higher Diploma in International Management 1
  2. 2. Content Abstract SWOT Analysis Introduction PEST Analysis Strategic Business Unit Value Chain Mergers & Acquisition Analysis & Sales Recommendation Bibliography Market Analysis 2
  3. 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. 3
  4. 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) 4
  5. 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) 5
  6. 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). 6
  7. 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 7
  8. 8. Mergers & Acquisitions (Contd.) Closure Topical wounds 2005 0.4 Peninsula Life- threatening infections 2005 0.3 Consumer health care 2006 16.6 Mentor Corporation Medical products 2008 1.1 Omrix Biosurgery products 2008 0.4 Trauma cure devices 2012 19.7 2013 1.0 Pharmaceuticals Pfizer consumer healthcare Biopharmaceuticals Synthes Inc. Aragon Pharmaceuticals, drugs to treat hormonallyInc. driven cancers (Gaughan, 2012), (Investor Relation Johnson & Johnson, 2012), (Nussbaum & Cortez, 2013) 8
  9. 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 $32.1 billion in 2010. This represents increases of 3.5% in 2012, 12.4% in 2011 and 3.6% in 2010. (Johnson, 2012) 9
  10. 10. Sales (Contd.) . (Johnson & Johnson 2012 – Annual Report) 10
  11. 11. Sales (Contd.) . (Johnson & Johnson 2012 – Annual Report) 11
  12. 12. Market Analysis - Competitor JNJ 253.06 Market Cap: US$ B Employees: 127,600 Qtrly Rev Growth (yoy): 0.09 Revenue (ttm): 69.99B Gross Margin (ttm): 0.69 EBITDA (ttm): 22.74B Operating Margin (ttm): 0.27 Net Income (ttm): 12.86B EPS (ttm): 4.51 P/E (ttm): 19.93 PEG (5 yr expected): 2.71 P/S (ttm): 3.62 COV 28.41B 43,400 0.02 12.14B 0.57 3.33B 0.22 1.90B 3.77 16.40 1.92 2.34 P&G 217.48B 121,000 0.02 84.17B 0.50 18.73B 0.19 11.07B 3.86 20.57 2.21 2.58 JNJ = Johnson & Johnson UN 111.80B 173,000 0.00 66.58B 0.40 10.75B 0.14 6.19B 2.12 18.56 9.59 1.68 P & G = Procter and Gamble COV = Covidien plc NVS 184.02B 131,000 0.01 57.96B 0.68 17.10B 0.21 9.52B 3.86 19.47 3.15 3.17 UN = Unilever NVS = Novartis AG (Yahoo Finance, 2013) 12
  13. 13. SWOT Analysis 13
  14. 14. SWOT Analysis (Contd.) (MBASkool, 2012), (Alex, 2013) 14
  15. 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. 15
  16. 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. 16
  17. 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. 17
  18. 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. 18
  19. 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) 19
  20. 20. Value Chain 20
  21. 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. 21
  22. 22. Sources  Alex, 2013. Johnson & Johnson SWOT & PEST Analysis. [Online]      Available at: http://anelecka.blogspot.sg/2013/01/johnson-johnson-1.html [Accessed 2013 October 2013]. Anand, B., 2012. Timeline: Johnson & Johnson's product recalls. [Online] Available at: http://www.reuters.com/article/2012/02/22/us-johnsonandjohnson-timelineidUSTRE81L01K20120222 [Accessed 18 October 2013]. Gaughan, P. A., 2012. JOHNSON & JOHNSON: GROWTH THROUGH ACQUISITIONS STRATEGY. [Online] Available at: https://www.inkling.com/read/mergers-acquisitions-gaughan-5th/chapter-4/table-a [Accessed 19 October 2013]. Investor Relation Johnson & Johnson, 2012. Johnson & Johnson Synthes. [Online] Available at: http://www.investor.jnj.com/acquisition.cfm [Accessed 19 October 2013]. Jhonson & Jhonson, 2013. Comapny Structure. [Online] Available at: http://www.jnj.com/about-jnj/company-structure [Accessed 12 October 2013]. Johnson & Johnson, 2012. Annual Report, New Brunswick, New Jersey: s.n. 22
  23. 23. Sources  Johnson & Johnson, 2013. Company Structure: Medical Devices & Diagnostics. [Online]      Available at: http://www.jnj.com/about-jnj/company-structure/medical-devices [Accessed 12 October 2013]. Johnson & Johnson, 2013. JNJ Our Products. [Online] Available at: www.jnj.com [Accessed 15 October 2013]. Johnson & Johson Services, 2013. Our Company. [Online] Available at: http://www.jnj.com/about-jnj [Accessed 11 October 2013]. Johnson and Toxin, 2013. Johnson & Johnson Recalls Around the World Continue into 2013. [Online] Available at: http://www.johnsonandtoxin.com/jnj_recalls_continue_into_2013.shtml [Accessed 18 October 2013]. Johnson, J. &., 2012. Annual Report 2012. [Online] Available at: https://www.jnj.com/sites/default/files/pdf/JNJ2012annualreport.pdf [Accessed 16 October 2013]. Johnson, J. &., 2013. Board Of Directors. [Online] Available at: http://www.investor.jnj.com/governance/board.cfm [Accessed 18 October 2013]. 23
  24. 24. Sources  Kumar, N., 2011. Johnson & Johnson-MGT111HN1. [Online]       Available at: http://johnsonandjohnsonmgt111hn1.wikispaces.com/Strengths+and+Weaknesses [Accessed 15 October 2013]. MBASkool, 2012. Johnson & Johnson. [Online] Available at: http://www.mbaskool.com/brandguide/fmcg/3888-johnson-and-johnson.html [Accessed 17 October 2013]. Nussbaum, A. & Cortez, M. F., 2013. J&J to Buy Aragon Pharmaceuticals for Cancer Candidate. [Online] [Accessed 19 October 2013]. Owens, C. L. R., 2009. Johnson and Johnson, s.l.: s.n. Pandey, A., 2011. PESTLE Analysis. [Online] Available at: http://bpmgeek.com/blog/what-pestle-analysis [Accessed 15 October 2013]. Porter, M. E., 1985. competitive Advantage. In: Creating and Sustaining Superior Performance. New York, NY 10020: The Free Press, p. 570. Yahoo Finance, 2013. Johnson & Johnson Competitor. [Online] Available at: http://finance.yahoo.com/q/co?s=JNJ+Competitors [Accessed 17 October 2013]. 24
  25. 25. Questions? 25

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