Johnson & Johnson is the American company, engaged in the research and development, manufacture and sale of a broad range of health care products. Being a public company, Johnson & Johnson (J&J) is listed on the NYSE and its common stock is a part of the Dow Jones Industrial Average. The list of the products varies, however its main attention is concentrated mainly on H&S goods.
Description of the Organization
The corporation conducts business in 60 countries of the world focusing on the production of the goods related to human health and well-being. With more than 250 subsidiary companies worldwide J&J Corporation employs approximately 118,000 people having the headquarters in New Jersey, United States.
Today the key persons in the life of the company are the chairman of the board, William Weldon, and CEO, Alex Gorsky.
Founded in 1886 by the Johnson’s brothers, the company started with a production of ready-to-use surgical dressings. In 1920s the list of the products expanded when the company begun to manufacture skin and hair care. In 1941 a separate division for surgical products was created, which later became known under the title of Ethicon. In 1970s the corporation launched a line of products for women’s health care needs and toiletries. Later the shelves of the stores all around the world were loaded with baby care goods. And in recent years, J&J has expanded into such areas as biopharmaceuticals, orthopedic devices, nutritionals and internet publishing.
According to J&J official website the sales by international companies were $65.0 billion in 2011, $61.6.0 billion in 2010 and $61.9.4 billion in 2009. This makes an increase of 5.6% in 2011, a decrease of 1.4% in 2010 and increase of 1.0% in 2009 (Johnson and Johnson Annual Report).
The Company is identified to have a tall organisational structure. It is organized into three core business segments: Consumer, Pharmaceutical and Medical Devices and Diagnostics, each of which has more departments in a command.
· Consumer branch includes a broad range of products used in the baby care, skin care, oral care, wound care and women’s health care fields, as well as nutritional and over-the-counter pharmaceutical products and wellness and prevention platforms. These products are marketed to the general public and sold both to retail outlets and distributors throughout the world.
· The Pharmaceutical segment includes products in the following areas: anti-infective, antipsychotic, contraceptive, dermatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management and virology. These products are distributed directly to retailers, wholesalers and health care professionals for prescription use.
· The Medical Devices and Diagnostics segment includes a broad range of products distributed to wholesalers, hospitals and retailers used in the professional fields by physicians, nurses, therapists, hospitals, diagnostic laboratories and clinics. These products include Biosense Webster’s electrophysiology products; Cordis’ circulatory disease management products; DePuy’s orthopaedic joint reconstruction, spinal care, neurological and sports medicine products; Ethicon’s surgical care, aesthetics and women’s health products; Ethicon Endo-Surgery’s minimally invasive surgical products and advanced sterilization products; LifeScan’s blood glucose monitoring and insulin delivery products; Ortho-Clinical Diagnostics’ professional diagnostic products and Vistakon’s disposable contact lenses.
The Company uses financial instruments to manage the impact of foreign exchange rate changes on cash flows. J&J enters into forward foreign exchange contracts to protect the value of certain foreign currency assets and liabilities and to hedge future foreign currency transactions primarily related to product costs (Johnson and Johnson Annual Report). Gains or losses on these contracts are offset by the gains or losses on the underlying transactions. A 10% appreciation of the U.S. Dollar from the January 2, 2011 market rates would increase the unrealized value of the Company’s forward contracts by $239 million. Conversely, a 10% depreciation of the U.S. Dollar from the January 2, 2011 market rates would decrease the unrealized value of the Company’s forward contracts by $292 million. The chief financial officer of J&J, Dominic Caruso in the annual report explained that in either scenario, “the gain or loss on the forward contract would be offset by the gain or loss on the underlying transaction, and therefore, would have no impact on future anticipated earnings and cash flows”.
The Company does not enter into financial instruments for trading or speculative purposes. J&J corporation has a strict policy of only entering into contracts with parties that have at least an “A” (or equivalent) credit rating. The counterparties to these contracts are major financial institutions and there is no significant concentration of exposure with any counterparty. “Management believes the risk of loss is remote” (J&J official website).
Long term vision is very important to the company and hence on the 125th anniversary Johnson and Johnson announced of their ambitious five-year plan which will lead the company to a new sustainable and environmentally friendly direction (PlanetSave.com). The plan itself goes under the name - The Healthy Future 2015. According to the report that was published on the official website, the company tends to create affordable access to HIV and TB treatment in third world nations and less developed countries. Also J&J plans to donate medicine for treating intestinal worms to over 30 countries through the Healthy Future 2015.
During the five year plan the company intends to reduce CO2 emissions, waste disposal and water usage by developing and introducing to the world 60 new sustainable products. It is promised that each of those new products will be "eco-friendly and meet Johnson & Johnson rigorous sustainability innovation criteria" (PlanetSave.com).
Internal and External Environment of Johnson & Johnson
· Offers diversified products including baby cares, women’s sanitary products, orthopedic devices, surgical products as well as internet publishing
· Significant sales and marketing capabilities
· In the process of development of oncology segment
· Global sales of its products
· Brand loyalty and brand image as a result of the corporation being known since 1886
· J&J has successfully differentiated itself from competitors
· J&J has more than 29,925 internet domains
· Receives a support from non-pharmaceutical divisions
· Introduction of Health Future 2015 brings more customers to the till as nowadays more people are aware of health issues.
· 43 children over-the-counter children’s medicines were voluntary recalled, as US revealed: “some products may not fully meet the required manufacturing specifications”
· In 2010 J&J recalled ASP (Articular Surface Replacement) hip prostheses from the market due to the percentage increase in fail prostheses
· The corporation wastes a lot of money and time researching and hunting for information (workers waste time replying cyclical enquiries, according to mba-lectures.com)
· The corporation depends highly on the revenue of Risperdal (medicine for schizophrenia)
· J&J faces strong pressure to reduce prices and preserve copyright expirations
· Acquisition of Pfizer by J&J will help in a further growth and a development of pharmaceutical branch
· J&J can increase market share by product development and product innovation globally
· Expansion and innovation of diagnostics and medical devices
· Acquisition of other pharmaceutical companies which trigger a growth of J&J corporation
· J&J has strong global competitors
· Has a very low market growth rate
· Damage of the brand due to the recalls
· Weaker consumer environment is expected in US (news.com)
· Makes investments into non-core areas, such as social media with Maya’s Mom
Another major social change affecting Johnson & Johnson is the phenomenon of surging rates of various health problems, especially in developed societies but spreading worldwide, from obesity and diabetes to cancer and mental disorders. Though highly problematic for society, companies in medicine-related industries such as Johnson & Johnson are finding themselves with an increasing number of people to treat and cure. As a company that invests heavily in research and development, Johnson & Johnson has the opportunity to lead the way in finding ways to address these serious public health issues. J&J
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.
Impact of the Structure on the performance of the Organization
In the mid of 80s of the last century many companies began experiencing the problems with managing the control over the production. Just like those companies, Johnson and Johnson was utilizing the old system of business management that in 1982 nearly had brought the company to its break down. J&J was relying onto the main four success factors, among which were: size role clarity, control and specialization However very soon the corporation had realized that there was a need to consider a new set of the factors, such as: speed, flexibility, integration and innovation.
Since then, Johnson & Johnson in order to achieve its goals and reach the vision used a Decentralized Management Approach. It is big and small at the same time. For instance each of its operating companies functions as its own small business. They are strongly entrepreneurial in character, and they know that their success depends on anticipating customers’ needs and delivering meaningful, high-quality solutions.
Johnson & Johnson focuses on the fundamentals of the business and makes sure that the companies balance the short-term and the long-term in their strategic planning. The Corporation invests in promising new businesses while maintaining leadership positions in high growth businesses. It is also focused on sustainability, and constantly reviews key economic, environmental, and employee health and safety indicators to ensure that it is on the right path. Over the last year J&J established an internal innovation fund to keep the company at the leading edge of transforming health and well-being.
Johnson and Johnson is recognized to be the sixth largest consumer health company as well as the company that provides the world's largest and most diverse medical and diagnostic devises.
Johnson & Johnson's brands include numerous household names of medications and first aid supplies. Each year the number of employees increases with the same bringing the corporation one level higher. The introduction of the Heath Future 2015 project was another proof for customers that the company cares for the quality of the products and services it delivers every day.
J&J revises its vision on regular bases and expands its production to more and more countries. Such strategy gives the company an opportunity to identify the problems and eventually find a solution to them, with the same building a more trustworthy corporation and bringing more customers to the till all around the globe.
JOHNSON & JOHNSON II.HR
JOHNSON & JOHNSON II.HR