Case Study on Johnson & Johnson

Case Study on Johnson & Johnson
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Overview of Johnson &Johnson:
Caring for the world, one person at a time inspires and unites the people of Johnson & Johnson.
They embrace innovation—bringing ideas, products and services to life to advance the health
and well-being of people around the world. They believe in collaboration, and that has led to
breakthrough after breakthrough, from medical miracles that have changed lives, to the simple
consumer products that make every day a little better. Their over 125,000 employees in 60
countries are united in a common mission: To help people everywhere live longer, healthier,
happier lives.
Johnson & Johnson Credo:
They believe their first responsibility is to the doctors, nurses and patients, to mothers and fathers
and all others who use our products and services. In meeting their needs everything they do must
be of high quality. They must constantly strive to reduce our costs in order to maintain
reasonable prices. Customers' orders must be serviced promptly and accurately. Their suppliers
and distributors must have an opportunity to make a fair profit.
They are responsible to our employees, the men and women who work with us throughout the
world. Everyone must be considered as an individual. They must respect their dignity and
recognize their merit. They must have a sense of security in their jobs. Compensation must be
fair and adequate, and working conditions clean, orderly and safe. They must be mindful of ways
to help our employees fulfill their family responsibilities. Employees must feel free to make
suggestions and complaints. There must be equal opportunity for employment, development and
advancement for those qualified. They must provide competent management, and their actions
must be just and ethical.
They are responsible to the communities in which we live and work and to the world community
as well. They must be good citizens – support good works and charities and bear our fair share of
taxes. They must encourage civic improvements and better health and education. They must
maintain in good order the property we are privileged to use, protecting the environment and
natural resources.

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Their final responsibility is to our stockholders. Business must make a sound profit. They must
experiment with new ideas. Research must be carried on, innovative programs developed and
mistakes paid for. New equipment must be purchased, new facilities provided and new products
launched. Reserves must be created to provide for adverse times. When they operate according to
these principles, the stockholders should realize a fair return.
Vision
To continue on the path set forth by the founders of Johnson's Enterprises, by committing
ourselves to our clients and employees and also contributing to the community.
Mission Statement
To provide our clients with the best possible service and product, which meet our demands on
quality and safety regulations, by assuring that our employees have all the necessary tools,
training and expertise to accomplish their given tasks?
Objective:
 To provide the high quality services and products in cure disease.
 To improve the quality of life.
 To be the leaders in the customer satisfaction.
 To motivating peoples for using or attracting their product.
Leadership Team:
Johnson & Johnson is a company of enduring strength. They've been privileged to play a role in
helping millions of people the world over be well and stay well through more than a century of
change. As the science of human health and well-being has grown, we've been able to grow
along with it. Even more important, we've helped shape and define what health and well-being
means in everyday lives. Their products, services, ideas and giving now touch the lives of at least
one billion people every day. They credit our strength and endurance to a consistent approach to
managing our business, and to the character of their people.

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Name & Position Profile
Alex Gorsky
Chairman, Board of Directors and
Chief Executive Officer
Alex Gorsky is Chairman and Chief Executive Officer of
Johnson & Johnson. Alex is the seventh person to serve as
Chairman and CEO of Johnson & Johnson since it became
a publicly traded company in 1944.
Alex began his Johnson & Johnson career as a sales
representative with Janssen Pharmaceutica in 1988. Over
the next 15 years, he advanced through positions of
increasing responsibility in sales, marketing, and
management. In 2001, Alex was appointed President of
Janssen, and in 2003, he was named Company Group
Chairman of Johnson & Johnson’s pharmaceuticals
business in Europe, the Middle East and Africa.
Alex left Johnson & Johnson in 2004 to join the Novartis
Pharmaceuticals Corporation, where he served as head of
the company’s pharmaceuticals business in North America.
He returned to Johnson & Johnson in 2008 as Company
Group Chairman for Ethicon, Inc. In September 2009, he
was appointed Worldwide Chairman of the Medical
Devices segment. In January of 2011, he was named Vice
Chairman of Johnson & Johnson’s Executive Committee.
Alex became Chief Executive Officer on April 26, 2012
and Chairman of the Board on December 28, 2013.
A longtime advocate of diversity and inclusion, Alex has
been named one of the “100 Most Inspiring Leaders” by
Pharma Voice. He is the Executive Sponsor of two Johnson
& Johnson employee resource groups, the Women’s
Leadership Initiative and the Veteran’s Leadership

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Council. Alex is also a member of the Business Council
and the Business Roundtable.
Alex is a member of the Board of Directors of IBM, the
Congressional Medal of Honor Board of Directors, and the
Board of Directors of the National Academy Foundation.
He was recently given the Joseph Wharton Leadership
Award and the CADCA Humanitarian of the Year Award,
as well as an Honorary Doctorate from Thomas Jefferson
University in Philadelphia.
Alex holds a Bachelor of Science degree from the U.S.
Military Academy at West Point, N.Y., and spent six years
in the U.S. Army, finishing his military career with the
rank of Captain. Alex earned a Master of Business
Administration degree from The Wharton School of the
University of Pennsylvania in 1996
Others Member of Management Team:
Name Position
Dominic J. Caruso Executive Vice President, Chief Financial Officer
Joaquin Duato Executive Vice President and Worldwide Chairman,
Pharmaceuticals
Peter Fasolo, Ph.D. Executive Vice President, Chief Human Resources Officer
Jorge Mesquita Executive Vice President, Worldwide Chairman, Consumer
Sandra E. Peterson Executive Vice President, Group Worldwide Chairman
Michael Sneed Worldwide Vice President, Global Corporate Affairs & Chief
Communication Officer
Paul Stoffels, M.D. Executive Vice President, Chief Scientific Officer
Michael Ullmann Executive Vice President, General Counsel

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Kathryn E. Wengel Worldwide Vice President, Johnson & Johnson Supply Chain
Corporate Governance:
Name Position
Alex Gorsky Chairman, Board of Directors and Chief Executive Officer
Mary C. Beckerle Chief Executive Officer and Director, Huntsman Cancer
Institute at the University of Utah; Distinguished Professor of
Biology, College of Science, University of Utah

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D. Scott Davis Former Chairman and Chief Executive Officer, United Parcel
Service, Inc.
Ian E. L. Davis Chairman, Rolls-Royce Holdings plc; Former Chairman and
Worldwide Managing Director, McKinsey & Company
Mark B. McClellan Director, Duke-Robert J. Margolis, MD, Center for Health
Policy
Anne M. Mulcahy Lead Director; Former Chairman and Chief Executive Officer,
Xerox Corporation
William D. Perez Retired President and Chief Executive Officer, Wm. Wrigley Jr.
Company
Charles Prince Retired Chairman and Chief Executive Officer, Citigroup Inc.
A. Eugene Washington Duke University's Chancellor for Health Affairs; President and
Chief Executive Officer, Duke University Health System
Ronald A. Williams Former Chairman and Chief Executive Officer, Aetna Inc.
Current situation
A. Current performance
Johnson & Johnson (NYSE: JNJ) today announced sales of $18.1 billion for the fourth quarter of
2016, an increase of 1.7% as compared to the fourth quarter of 2015. Operational sales results
increased 2.3% and the negative impact of currency was 0.6%. Domestic sales increased 2.6%.
International sales increased 0.6%, reflecting operational growth of 1.9% and a negative
currency impact of 1.3%. As a reminder, there were additional shipping days in the fourth
quarter of 2015 that negatively impacted the current quarter by 480 basis points. Excluding the
net impact of acquisitions, divestitures, hepatitis C, Venezuela, and the additional shipping days
in 2015, on an operational basis, worldwide sales increased 7.6%, domestic sales increased 9.5%
and international sales increased 5.6%.
Worldwide sales for the full-year 2016 were $71.9 billion, an increase of 2.6% versus 2015.
Operational results increased 3.9% and the negative impact of currency was 1.3%. Domestic

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sales increased 6.0%. International sales decreased 0.9%, reflecting operational growth of 1.8%
and a negative currency impact of 2.7%. The additional shipping days in 2015 negatively
impacted the current year by 130 basis points. Excluding the net impact of acquisitions,
divestitures, hepatitis C, Venezuela, and the additional shipping days in 2015, on an operational
basis, worldwide sales increased 7.4%, domestic sales increased 8.9% and international sales
increased 5.7%.
Net earnings and diluted earnings per share for the fourth quarter of 2016 were $3.8 billion and
$1.38, respectively. Fourth-quarter 2016 net earnings included after-tax intangible amortization
expense of approximately $0.3 billion and a net charge for after-tax special items of
approximately $0.3 billion. Fourth-quarter 2015 net earnings included after-tax intangible
amortization expense of approximately $0.2 billion and a net charge for after-tax special items of
approximately $0.6 billion. Excluding after-tax intangible amortization expense and special
items, adjusted net earnings for the current quarter were $4.4 billion and adjusted diluted
earnings per share were $1.58, representing increases of 7.9% and 9.7%, respectively, as
compared to the same period in 2015. On an operational basis, adjusted diluted earnings per
share also increased 10.4%.A reconciliation of non-GAAP financial measures is included as an
accompanying schedule.
Net earnings and diluted earnings per share for the full-year 2016 were $16.5 billion and $5.93,
respectively. Full-year net earnings included after-tax intangible amortization expense of
approximately $0.9 billion and a charge for after-tax special items of approximately $1.3 billion.
Full-year 2015 net earnings included after-tax intangible amortization expense of approximately
$1.1 billion and a charge for after-tax special items of approximately $0.9 billion. Excluding
after-tax intangible amortization expense and special items, adjusted net earnings for the full-
year of 2016 were $18.8 billion and adjusted diluted earnings per share were $6.73, representing
increases of 7.6% and 8.5%, respectively, as compared to the same period in 2015.On an
operational basis, adjusted diluted earnings per share also increased 9.4%.A reconciliation of
non-GAAP financial measures is included as an accompanying schedule.
“We are pleased to report that we accelerated our adjusted growth for 2016 over the prior year,
and delivered a strong total shareholder return of greater than 15 percent. The strong adjusted
sales and EPS growth was driven by the impressive performance of our Pharmaceutical business

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and continued momentum in our Medical Device business and share gains while improving
profitability in our Consumer business,” said Alex Gorsky, Chairman and Chief Executive
Officer. “Looking forward to 2017, we expect to continue driving sustainable, long-term growth
through the new products, science and innovation that our talented colleagues and partners of
Johnson & Johnson are advancing to positively impact human health.”
The Company announced its 2017 full-year guidance for sales of $74.1 billion to $74.8 billion
reflecting expected operational growth in the range of 4.0% to 5.0%. Excluding the impact of
acquisitions and divestitures, operational sales growth is expected to be in the range of 3.0% to
3.5%.Additionally, the Company announced adjusted earnings guidance for full-year 2017 of
$6.93 to $7.08 per share reflecting expected operational growth in the range of 4.8% to
7.0%.Adjusted earnings.
External Environment:
A. General Environment(PEST Analysis):
Johnson & Johnson is a leading company of America that manufactures many healthcare
products in the market. The company is quite popular in the world due to its huge sales of
children healthcare, women healthcare, skin care, along with many other pharmaceutical
products and general public products.
Johnson & Johnson is a well-recognized and reputable brand in the world. It has enough funds to
look after its regular operations to increase its products and services to its customers. It is also
working towards identifying global issues faced by the people and to provide a solution to
improve their way of living. It should also consider on that section that gives it the most profit. It
must not waste time working on that section that does not bring much profit to them.
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.

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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.
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.
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.

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Internal Environment
Corporate structure:
Like other multinational companies, Johnson & Johnson had form functional type of structure
during its first operation. As the company went into globally and involved in complex products
operation, Johnson & Johnson formed a divisional organization structure for better control and
coordination. The structure at Johnson & Johnson consists of 180 separate operating units,
including McNeil Consumer Products, makers of Tylenol; Ortho Pharmaceuticals, which makes
Retin-A and birth control pills; and J & J Consumer Product, the company that brings us
Johnson's Baby Shampoo and Band Aids, each division is a separately chartered and Johnson &
Johnson Family Headquarters will oversees all the operations.
This decentralized structure of organization allows the employees to develop themselves in the
company. It is also helps in innovation which allows the employees use their skills and
knowledge effectively to bring together different products and technologies to meet with the
customer demands. A good strategy also will be constructed as a feedback to customer and
market issues arose in each division. Usually, Johnson & Johnson companies around the world
are coordinated by local people in particular country because they can understand the needs in
those market and utilize themselves in those market.
Corporate culture:
Johnson & Johnson is consistently names as one of the top 10 places to work due to its corporate
culture, which focuses on service and social responsibility. Johnson & Johnson is a for-profit
organization with products such as baby oil and bandages, as well as less identifiable medical
and pharmaceutical products. According to KeeMeng Yeo of J&J University, the strength of the
organization lies in its decentralization policy structure, in which each functional group operates
on its own. Because J&J is a family company, Robert Wood Johnson, affectionately known as
“the General,” is considered a hero, as he embodies the values of the organization. The Johnson
& Johnson credo, which states “We believe our first responsibility is to doctors, nurses, and
patients,” is an example of a formal statement. The J&J credo helps to reinforce the set of values
that the organization believes in to create a clan culture, in which communication, people

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development, and commitment are important. All employees are required to participate in J&J
credo training, which serves as a common purpose, to give everyone an understanding of the
organization’s reason for being. The values of the credo. The demonstration of the vales and
norms exhibited by the organization is known as enacted values. As an organization with
115,000 employees worldwide, J&J is characterized as an organic organization, with its 200
functional units, many teams or task forces, wider span of control, and decentralized hierarchy of
authority. J&J’s exhibits a strength perspective of organizational culture, as its credo focuses on
long-term perspectives for financial success and employees believe in the organization’s
purpose.
Organizational activities analysis of Johnson and Johnson
Marketing of Johnson and Johnson:
In the year 1886, a public company was established by the name of Johnson & Johnson. This
multi-national American company deals in consumer goods as well as pharmaceutical goods.
Johnson & Johnson brand is today associated with qualitative products. In this health conscious
world, the company has earned the trust of its consumers by supplying natural products that do
not have any chemicals. This globally acknowledged brand has targeted every segment of the
society with age being no bar. It has products for babies, children, teenagers and even adults.
The company faces competition from the following-
 Abbott Labs
 Lilly Elli & Co
 Novartis A G
 Hindustan Unilever
 Nivea
 Wipro
 Himalaya
 Procter & Gamble
 Pigeon
 Colgate

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Products in the Marketing mix of Johnson and Johnson
Johnson & Johnson is a well-established brand whose product portfolio is divided into three
segments like consumer products, Pharmaceuticals and equipment related to medical industry.
Its consumer division is one of the most important manufacturers of India and helped in the
steady growth of the company. Most of its items are available in different colors and fragrances.
Its product line includes
 Baby care products like massage oil, toothbrush, shampoo, wipes, nappy pads, powder,
body lotion, soap, cream and hair oil.
 Skin care products like Clean & Clear face wash, Clean & Clear deep action cleanser,
Clean & Clear moisturizer, Shower to shower, Body lotion and Neutrogena skin care
products.
 Wound care like band aid
 Oral care products like mouth wash under the name this is available in three varieties-
mouthwashes, fresh burst and cool mint.
 Nutritional products
 Women’s health care like Stay Free’s sanitary napkins
 Pharmaceutical products– The range of these items is varied and large. They are
generally used for therapeutic uses like Dermatology, Contraceptive, Cardiovascular,
Anti-effective and Anti-fungal.
 Medical equipment that are used by medicinal professionals. This includes products
related to spinal care, circulatory diseases and products for orthopedics. The other
products include disposable contact lens and diabetes testers.

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Place in the Marketing mix of Johnson and Johnson
Johnson & Johnson is a renowned brand name that has two hundred and thirty subsidiary
companies with operations in more than fifty-seven countries. They have the advantage of local
windows of the operating companies to meet the various s customer needs through scientific
developments. The company has set up an executive committee, which is responsible for all its
operations and for its resources allocation. The main responsibility of the company is to
supervise and coordinate the various consumer activities, the medical devices and the diagnostic
business. In most of the cases, the local citizens manage the subsidiaries.
In order to meet the aspirations of the consumers and to fulfill their needs, the company has been
using a well-organized distribution channel. Johnson & Johnson has been using an approach
called decentralized management, where the employees of the company are encouraged to give
their hundred percent with the understanding that they will eventually benefit from this scheme.
They have also utilized the modern technology to their advantage and hence have been selling
their products on various portals and shopping sites on the internet. They have successfully
capitalized the emerging internet market to its full potential. Today the company’s sales figure
through internet is astounding. All Johnson & Johnson items are easily accessible at retail
outlets, wholesalers and modern markets like Metro Cash & Carry, Wal-Mart, Dmart, Reliance
Fresh and Big Bazar.
Price in the Marketing mix of Johnson and Johnson
The quality of every Johnson & Johnson product is very good and even then, the company has
decided on an affordable pricing policy. Many times, its products also use psychological pricing
by keeping the value of the product at multiples of 99 or 49.
The company for all its health care products has tried to retain their increased net prices inside
the CPI or the Consumer Price Index. It is an index in use in USA and it considers the average

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purchase price of a product which the consumer can afford. As Johnson and Johnson is a
consumer product, it takes care of its customers through its pricing policy.
Johnson & Johnson is aware of its responsibility to the society and for this; they have worked
closely with the government to keep prices reasonable for medical items.
In order to determine the value of their product the company has a team of efficient members
that analyses the various factors like the production cost, the targeted segment of the society,
demand, supply and the ability to pay for the product. After proper evaluation, the prices for any
product are determined.
In some cases, the prices are at a little higher rate, for instance on products like consumer goods
and baby care products, where the consumer is willing to give out the extra money for the health
of their family members. In cases of medical equipment, the prices are at affordably priced so
that people can easily buy those products.
Promotions in the Marketing mix of Johnson and Johnson
Johnson & Johnson has realized the advantage of consumer awareness and hence has decided on
promotional activities that are instructive with a strong message as well as are eye-catching.
Good and sensible marketing is very important in order to increase the product visibility and so
the ads are placed on the hoardings, magazines as well as newspapers so that they can be easily
viewed. It is dedicated to the concept of natural and qualitative products and hence has made its
packaging process environmental friendly.
Johnson & Johnson has been associated with promotions that inspire healthy living. Some of the
famous campaigns are “Having a Baby Changes Things” and “The Campaign for Nursing’s
Future”. Famous actor Prachi Desai has been associated with the company and its various
campaigns. The new baby to be involved in the Johnson’s ads is “KhiyaanSinghvi”. The
company has been showing delightful ads featuring babies and children in prime time slots of the
various television channels. Popular cartoons like The Little Mermaid, Pocahontas and Winnie
the Pooh and Pals have also been included in the ads for baby care products making them highly
popular amongst the viewers.

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One of the most loving parts of Johnson and Johnson is the cute and absolutely delightful baby
ads it shows on television. People love such ads. And as the baby is most important to mothers,
the mother and baby connection is shown strongly in the ads by Johnson and Johnson. This is
one of the reasons the company thrives because it has a strong emotional connect with its target
audience.
Johnson & Johnson offers various schemes to its customers at regular intervals like soap free
with every three purchases, hundred-milliliter bottle free with five hundred milliliter product. It
also offers special discounted coupons on products like Stay Free Secure, Baby powder and
Baby soap. Many hospitals have been giving out special baby product kits to the new mothers
who leave the hospitals with their babies. This is a very smart scheme as the products gain the
trust of mothers at an early stage and hence the mothers generally continue with the products of
this company.
Market Analysis:
J&J COV P & G NVS UN
Market Cap: US$ 253.06B 28.41B 217.48B 184.02B 111.80B
Employees: 127,600 43,400 121,000 131,000 173,000
Qtrly Rev Growth
(yoy):
0.09 0.02 0.02 0.01 0.00
Revenue (ttm): 69.99B 12.14B 84.17B 57.96B 66.58B
Gross Margin (ttm): 0.69 0.57 0.50 0.68 0.40
EBITDA (ttm): 22.74B 3.33B 18.73B 17.10B 10.75B
Operating Margin
(ttm):
0.27 0.22 0.19 0.21 0.14
Net Income (ttm): 12.86B 1.90B 11.07B 9.52B 6.19B
EPS (ttm): 4.51 3.77 3.86 3.86 2.12
P/E (ttm): 19.93 16.40 20.57 19.47 18.56
PEG (5 yr
expected):
2.71 1.92 2.21 3.15 9.59
P/S (ttm): 3.62 2.34 2.58 3.17 1.68

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Finance:
As of the latest quarter, the company operated in three segments: Consumer (23 percent of sales
and 12 percent of profits), Pharmaceutical (37 percent of sales and 47 percent of profits) and
Medical Devices and Diagnostics (40 percent of sales and 41 percent of profits). Roughly 53
percent of sales came from abroad.
Competitive advantage:
Product: The first competitive advantage for JNJ lies in its product itself which has "NO MORE
TEARS" formula patent. Safety, comfort, and gentleness have always been a top most priority in
its products. Instead of soap or alcohol it uses various harmless chemicals, and its products go
through rigorous clinical testing to ensure the highest standards in baby care. Johnson's baby
shampoos and soaps has been a trusted product for the parents who rinses very quickly and
cleanly, and doesn't cause irritation to skin, eyes and scalp unlike other's products. They have got
most number of patented products.
Brand: J&J has a history of 120 years of operations which has been trusted by doctors, nurses
and parents around the world, now operating across 57 countries with more than 250 operating
companies. In 2008, its brand value was worth of $3,582 million, ranking 92 in the world. The
company has been involved in many CSR activities like - supporting International Youth
Foundation for HIV/AIDS prevention program in Africa, child center in India, educating the
people and providing handful tips regarding healthy and safety living, caring babies, and healthy
environment.
Innovation: It is interesting to see innovation in terms of its products and processes as well in
J&J, and every year it comes up with innovative products. Recently they have introduced new
night time product which has been clinically proved to help babies fall asleep well and
throughout the night. J&J has strong and well-equipped R&D network, state-of-art technology,
huge investment capacity, world-class research facilities, highly productive small team settings,
and sound scientific methods. Every year J&J invests billions of dollars in R&D, in 2008, it had

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invested 11.9% of its total sales (total sales figure was $7,577 million), ranking 7 in the world's
top companies spending in R&D, and topmost in its industry.
Extensive collaboration: J&J has been exclusively involved in selective licensing, acquiring
and forming joint ventures for growth and expansion. Every year they enter in to 100's of
strategic alliances and they have acquired more than 35 companies through the world so as to
share best practices, acquire and develop cooperative talent, share research initiative, group
purchasing and others. For example, in 2006, it acquired consumer section of Pfizer Consumer
Healthcare (PCH), which added diverse portfolio in nine additional categories. In same year, it
acquired Group Vendome, a reputed company in France involved in adult and baby skin product,
and now J&J is selling product in their brand name in market of France.
The ability to work across company and countries has helped J&J to produce most
comprehensive and broad health care products, which has made them unique in the market. Their
diversification is within the industry has made possible for cross business collaboration to
address unmet health care needs.
Research & Development:
For a big pharmacy company like Johnson & Johnson, research and development, or R&D, plays
a vital role in maintaining a healthy revenue stream. These expenses relate to the process of
discovering, testing, and developing new products and improving the existing range of products.

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These expenses also ensure product efficacy and regulatory compliances before the launch.
The above chart compares the R&D expenses for Johnson & Johnson, Pfizer (PFE), Merck & Co.
(MRK), Eli Lily and Company (LLY), and Bristol-Myers Squibb Co. (BMY). As a percentage of
sales, the R&D expenses for Johnson & Johnson were around 11.4% in 2014. For the
Pharmaceuticals segment, the R&D expenses were about 8.3%. For the Consumer Products
segment, the expenses were nearly 0.85%. For the Medical Devices and Diagnostics
segment, the expenses were about 2.2%.
The company has its own R&D centers strategically located in Asia-Pacific, Boston, California,
and London. It offer entrepreneurs quick access to all of the resources for the Johnson & Johnson
Family of Companies.
The company invests in R&D to ensure the delivery of high quality and innovative products.
It develops new drugs through R&D to be ready with new products and patents by the time
existing patents expire. This is a constant process. As a result, R&D is important for any
company’s growth. The in-process R&D, or IPR&D, refers to recently discontinued or delayed
development projects.

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Porter’s Five Forces:
1. Threat of new entrants: Threat of new entrants is Low, due to entry barriers such as
investment cap and tuff regulations.
2. The substitute's threat is High: The substitute's threat is High, Example of Risperdal, latent
expired in 2007 and became available in generic form.
3. Buyer’s bargaining power: Buyer’s bargaining power is Low cost than the original version
of the drug gives consumers more capacity than company.
4. Industry Competition is Low: Industry Competition is Low, because of diversification and
lack of giant companies.
5. Bargaining power of suppliers: Bargaining power of suppliers, diverse and wide range of
lots of drugs and pharmaceutical products supplier
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.

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Infrastructure:
The DePuy Synthes Institute at Mahindra World City, Chennai is a 30,000 square foot facility
equipped with every infrastructure required to cater to the continuing education needs of
healthcare providers in India. The DePuy Synthes Institute houses an auditorium with seating
capacity of 100, a 40-seater classroom, conference rooms, reading room, office space and
cafeteria facilities. State-of-the-art communications and audio-visual equipment facilitates
intensive program delivery and world-wide broadcast. A laboratory space designed to
accommodate more than 10 stations and equipped with the most cutting-edge instrument sets
enables hands-on training. A well-stocked reading room creates an environment that fosters
learning and knowledge sharing. In addition, the DePuy Synthes Institute has ongoing
partnerships with other leading teaching facilities, to enable access to cadaveric and other
facilities that can enhance the quality of education.

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Human Resource Management:
Johnson & Johnson (NYSE: JNJ) is a global American pharmaceutical, medical devices 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.
1. Increase in business competition from newly industrialized countries in Asia, as well as China.
2. The depletion of managerial and professional talent because of the uncertainty before the
handover.
3. Labor turnover is rising due to tight labor market that added to recruitment and other
employment costs.
4. Growing tensions between employers and employees due to the rising expectations from the
workforce on issues like compensation and benefits, equality and rights and better organizes and
visible union activities.
Technology Management:
Information Technology professionals within the Johnson & Johnson Family of Companies play
a critical role in enabling and guiding teams that drive product and process innovation, business
analytics, and organizational collaboration. They have exceptional project management,
interpersonal, and presentation skills, and they apply their expertise to add real business value.
They also have many opportunities for professional development and career moves along
technology or leadership pathways.
Procurement:
The success of our business depends on our ability to collaborate with suppliers that not only
provide the highest quality products and services, but are philosophically and strategically
aligned with our commitment to our social and environmental responsibilities.
CPM (Competitive Profile Matrix):
We know CPM identifies a firm’s major competitors and its strength and weakness. For
understanding the external environment and the competition in a particular industry, they use
CPM. It finds out firm’s key competitors and then compares with firm’s critical success factors.
Like advertising, product quality, market share etc. As it compares the strengths and weakness,

22 | P a g e
firm should know which area they need to improve and which need to protect. In CPM rating
refers to strength and weakness where,
a) 4= major strength
b) 3= minor strength
c) 2= minor weakness
d) 1= major weakness
In this case we found Johnson & Johnson main competitor is Pfizer. They have other competitors
like Procter & Gamble, Unilever, Novartis AG and Covidien plc.
Now we are going to make CPM between Johnson &Johnson,Pfizer.
Critical success
factor
Johnson & Johnson Pfizer
Weight Rating Score Rating Score
Advertisement 0.06 3 0.18 2 0.12
Product Quality 0.09 3 0.27 3 0.27
Price Competitiveness 0.07 3 0.21 2 0.14
Management 0.12 4 0.48 4 0.48
Financial Position 0.08 4 0.32 3 0.24
Customers Loyalty 0.06 3 0.18 3 0.18
Global Expansion 0.10 3 0.30 4 0.40
Market Share 0.08 4 0.32 3 0.24
Research &
Development
0.17 4 0.68 4 0.68
Employee Turnover 0.07 2 0.14 2 0.14
Brand 0.10 3 0.30 3 0.30
Total 1.00 3.38 3.19

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SWOT Analysis:
Strengths:
 A Substantial Marketing Arsenal – Can call upon a network of subsidiaries with
significant sales and marketing prowess, as well as expertise in a number of therapy
areas. The company possesses a global sales force which serves to attract joint venture
possibilities.
 Strategic Acquisitions –Maintained a stable financial position by utilising cash reserves
to finance corporate acquisitions.
 Product Diversification –The pharmaceutical, Medical Devices & Diagnostics and
Consumer Health division’s act to reduce dependence upon any one area and allows a
wider range of choice when pursuing opportunities with the greatest growth prospects.
 Positive Revenue Growth Projections –The potential of an impressive number of new
product launches and the promise of achieving forecast sales is said to bode well for
Johnson & Johnson.
Weaknesses:
 Dependence upon the Success of Launch Products –Many new launch products are
vulnerable to the uncertainty of regulatory review.
 Reliance on Small Molecule Drugs – Small molecules are more impacted by generic
competition. Johnson & Johnson’s small molecule drug sales declined in 2008 and are
forecast to fall further into 2012. The necessity of finding replacements for billion dollar
products as they mature represents a daunting task.
Opportunities:
 Wide Range of Potential Cross-selling Opportunities –Johnson & Johnson is in a
position to strategically develop a myriad of cross selling opportunities. Maximizing its
balance between pharmaceuticals, diagnostics, and medical devices could result in
increased revenues.

24 | P a g e
 Potential to Exploit Biologics Market –The addition of further biologics (e.g.
therapeutic proteins, antibodies) to its portfolio can serve as a buffer as small molecule
patents expire.
Threats:
 Dependence on the Success of Launch Products –Many new launch products are
vulnerable to the uncertainty of regulatory review, therefore, reliance upon launch
products potentially represents a threat to Johnson & Johnson’s outlook.
 Negative Impact of Recent Product Recalls –Johnson and Johnson has had the
misfortune of having to recall of more than 40 medicines recently. The company stands
to take a hit to its reputation, competence and integrity.
External Factors Analysis(EFA):
The purpose of an external factors analysis is to find out the list of opportunities that could
benefit a firm and threats that should be avoided.
Opportunity:
1. Acquisition of Synthesis could enhance J&J’s Failure of prospective products to deliver
leadership position in global orthopedics market.
2. Leveraging therapeutic coverage of non-prescription pharmaceutical segments could
provide cross-selling opportunities.
3. Addition of Crucell to broaden J&J’s position in biologics and vaccines market.
4. R&D investment will add to the potential growth rate of the company in surrounding
markets.
5. Economic recovery will be a boost in income thus company revenue will increase.
6. Global expansion.
Threats:
1. Negative Impact of Recent Product Recalls.
2. Healthcare regulations.
3. Better research and development of competitors.

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4. Low market growth rate.
5. Strong competition from the generic market.
6. Launch success in that newly launch products are uncertain because of regulatory review,
thus making the launch a potential threat if it fails.
External Factor Evaluation (EFE) Matrix:
We know External Factor Evaluation Matrix allows summarize and evaluate a firm external
opportunities and threats. Here we evaluate the Johnson & Johnson external opportunities and
threats:-
Key External Factors Weight Rating Weighted
Score
External Opportunities
1. Acquisition of Synthesis could chance J & J failure of
prospective products to deliver leadership position in global
orthopedics market.
0.07 2 0.14
2. Leveraging therapeutic coverage of non-prescription
pharmaceutical segments could provide cross selling
opportunities.
0.09 2 0.18
3. Addition of Crucell to broden J & J position in biologics and
vaccines market.
0.11 3 0.33
4. R & D investment will add to the potential growth rate of the
company in surrounding markets.
0.07 2 0.14
5. Economic recovery will be a boost in income thus company
revenue will increase.
0.10 3 0.3
6. Global Expansion 0.06 4 0.24
External Threats
1. Negative impact of recent product recalls 0.09 3 0.27
2. Healthcare regulations 0.09 2 0.18
3. Better research and development of competitors 0.08 2 0.16

26 | P a g e
4. Low market growth rate. 0.06 2 0.12
5. Strong competition from generic market. 0.10 3 0.3
6. Launch success in that newly launch products are uncertain
because of regulatory review, thus making the launch a potential
threat if it fails.
0.08 3 0.24
Total 1.00 2.60
Internal Factors Evaluation (IFE) Matrix:
We know Internal Factors Evaluation (IFE) Matrix helps to evaluate the major strengths and
weaknesses in the functional areas of a business.
Strengths:
1. Diverse business offering.
2. Forecast growth despite challenges.
3. Significant sales and marketing capabilities.
4. Robust financial position.
5. They have strong global presence operating in more than 57 countries with 250
subsidiary companies.
6. They have successfully employed strategies to differentiation that helps it distinguish
itself from its competitors.
Weaknesses:
1. Generic drug's exposure
2. Private label exposure
3. Quality issues in OTC products affecting consumer healthcare product sales
4. Key product demand is shrinking.
5. Theft and counterfeiting of drugs from internal staff as much as this is not isolated to
J&J.
6. Pressure to reduce prices in accordance with medical budgets and maintain patent
expirations to help generic programs.

27 | P a g e
Internal Factors Evaluation (IFE) Matrix:
We know Internal Factors Evaluation (IFE) Matrix allows summarize and evaluate a firm
external strengths and weaknesses. Here we evaluate the Johnson & Johnsoninternal strengths
and weaknesses:
Key Internal Factors Weight Rating Weighted
Score
Internal Strengths
1. Diverse business offering 0.09 3 0.27
2. Forecast growth despite challenges. 0.08 3 0.24
3. Significant sales and marketing capability. 0.1 3 0.3
4. Robust financial position. 0.1 4 0.4
5. They gave strong global prescience operating in more than 57
countries with 250 subsidiaries companies.
0.08 4 0.32
6. They have successfully employed strategies to differentiation
that helps it distinguish its self competitors.
0.08 4 0.32
Internal Weakness
1. Generic drug’s exposure. 0.08 2 0.16
2. Private label exposure. 0.08 2 0.16
3. Quality issues in OTC products affecting consumer healthcare
product.
0.07 2 0.14
4. Key product demand is shrinking. 0.07 1 0.07
5. Theft and countering drugs from internal staff as much as this
is not isolated.
0.09 2 0.18
6. Pressure to reduce prices in accordance with medical budgets
and maintain patent expirations to help generic programs.
0.08 2 0.16
Total 1.00 2.72

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TWOS Matrix:
We know the Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix is an important
matching tool that helps managers develop four types of strategies those are- SO (Strengths-
Opportunities), WO (Weaknesses-Opportunities), ST (Strengths-Threats), and WT (Weaknesses-
Threats) strategies.
Strengths
1. Diverse business offering.
2. Forecast growth despite
challenges.
3. Significant sales and
marketing capabilities.
4. Robust financial position.
5. They have strong global
presence operating in more
than 57 countries with 250
subsidiary companies.
6. They have successfully
employed strategies to
differentiation that helps it
distinguish itself from its
competitors.
Weaknesses
1. Generic drug’s exposure
2. Private label exposure
3.Quality issues in OTC
products affecting consumer
healthcare product sales
4. Key product demand is
shrinking.
5.Theft and counterfeiting of
drugs from internal staff as
much as this is not isolated to
J&J.
6. Pressure to reduce prices in
accordance with medical
budgets and maintain patent
expirations to help generic
programs.
Opportunities
1. Acquisition of Synthesis
could enhance J&J’s Failure
of prospective products to
deliver leadership position in
global orthopedics market
2. Leveraging therapeutic
SO Strategies
1. S1, O1: JNJ Should aim to
be an industry leader in all its
diverse business offerings.
2. S2, O2: With the addition
of new products in various
departments, JNJ could
WO Strategies
1.W1, O1: Although there is a
wide variety of generic drugs,
JNJ should use this as an
opportunity to highlight the
value and quality of their
products and increase R&D in

29 | P a g e
coverage of non-prescription
pharmaceutical segments
could provide cross-selling
opportunities
3. Addition of Crucell to
broaden J&J’s position in
biologics and vaccines market
4. R&D investment will add to
the potential growth rate of the
company in surrounding
markets.
5. Economic recovery will be
a boost in income thus
company revenue will
increase.
6. Global expansion
potentially still predict growth
in challenging times.
specific segments to increase
market share in surrounding
markets.
2. W2, O2: OTC sales should
be used as a prime opportunity
to highlight the value and
worth of JNJ`s products.
Threats
1. Negative Impact of Recent
Product Recalls
2. Healthcare regulations
3.Better research and
development of competitors
4. Low market growth rate.
5. Strong competition from the
generic market.
6. Launch success in that
newly launch products are
uncertain because of
regulatory review, thus
making the launch a potential
threat if it fails.
ST Strategies
1. S1, T1: JNJ`s diversity
should not be a means for its
products to be valued as
"average", its diversified range
should be known for the high
quality.
2. S2, T2: The prediction of
increased sales in challenging
times should be a testament to
JNJ`s value and quality of
products.
WT Strategies
1. W1, T1: Product recalls can
seriously hinder the perceived
value and quality of JNJ.
2. W2, T2: Healthcare
regulations along with
challenging economic times
can prove costly to JNJ as a
whole.

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Strategic Decision
Alternative Strategy 1:
J&J should aim to be an industry leader in all its diverse business offerings. With the addition of
new products in various departments, JNJ could potentially still predict growth in challenging
times.
Although there is a wide variety of generic drugs, JNJ should use this as an opportunity to
highlight the value and quality of their products and increase R&D in specific segments to
increase market share in surrounding markets.OTC sales should be used as a prime opportunity
to highlight the value and worth of JNJ`s products.
JNJ`s diversity should not be a means for its products to be valued as "average", its diversified
range should be known for the high quality. The prediction of increased sales in challenging
times should be a testament to JNJ`s value and quality of products.
Product recalls can seriously hinder the perceived value and quality of JNJ. Healthcare
regulations along with challenging economic times can prove costly to JNJ as a whole.
Advantages of Alternative Strategy 1:
 Addition of new products in various departments
 High quality
Disadvantages of Alternative Strategy 1:
 Very challenging
 High cost

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Advantages of Alternative Strategy 2:
 increasing R&D
 increasing market share
Disadvantages of Alternative Strategy 2:
 challenging economic
 Maintain rules and regulation
Recommendation:
J&J should take alternative strategy 1 and 2.If they take this strategy than they can marge With
the addition of new products in various departments, JNJ could potentially still predict growth in
challenging times. And if they take alternative 2 than increase R&D in specific segments to
increase market share in surrounding markets.OTC sales should be used as a prime opportunity
to highlight the value and worth of JNJ`s products.
Evaluation & Control:
Area of objective Short Term Responsibility
Customers
1. Image Well-recognized in their pharmaceuticals division
and process from there.
Marketing
2. Customer relation Customer should feel they have more of an
influence and say over the J&J products and
expectation.
Public Relations
3. Increase OTC sales Will help boost sales Sales
Learning & growth
1. System Important to maintain and continuously be running IT department

32 | P a g e
maintenance upgrades the latest and up to date technology.
2.Training &
development
Train new employees and update experienced
workers.
Managers
3. Funding allocation Important to wisely select division which need
more funding than others.
Managers
Operation/Internal process
1. Controlling and
managing materials
Should be controlled and well organized for
distribution
Managers/Employees
2. Procurement of
materials
Manager should make sure they are getting
materials and equipment for best possible cost.
Management
3. Distribution of
materials
Delivery time-frame should be met within
specified days.
Management
Financial
1.Decrease R&D
expense
Decrease R&D expense as a whole but fund certain
division more than others for the time being.
Management
2. Increase net sales Conservative approach, yet avoid defensive
strategy
Management/Sales
Department
Possible Issues:
 Additional product recalls/ lawsuits.
 Another economic downturn.
 Competitor’s gaining market share.
 Federal regulations that affect potential new products and existing processes.
 Litigation from people being hurt through defective products.
 International regulations that limit foreign expansion.

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CONCLUSION
The “Johnson & Johnson” company is so omnipresent in the market that without it even the
world of the baby products and health care product sounds incomplete. They believe their first
responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use
Johnson and Johnson products and services. In meeting their needs everything they do are in
high quality. When we talk about baby products Johnson and Johnson products is what comes
first in our mind. Everything related to the brand, be its advertisements, products, after sale
services are all example of perfect excellence. The company has rooted itself as much stronger
than it did when it first entered the Market. Every time they make an advertisement they make it
sure that it leaves a long lasting impact on the users, and the company is always successful in
doing so. The taglines of the company always leave a lasting impression on the viewers. The
sequences they show are so similar to our daily lives that people can easily connect to it. The
catchy slogans have always helped the company to enhance it brand quality and brand loyalty.
Johnson and Johnson deal with all kind of baby care products, cosmetic products etc. The
marketing strategy of such a global company is real vast and global in nature. The company very
well knows that different countries have different people who again have different set of minds,
so they built marketing strategies based on the people they deal with. The company for several
years has been the favorite amongst nursing mothers and now is continuing its position amongst
the mothers. The main area of concern is cosmetic products, health care products and oral care
products though the company is ace in manufacturing and trading its products, cosmetics, oral
and health care products have constantly failed to find consumers in the market.
The company has been taking several steps to enhance its sales of cosmetics and health care
products. The sales report of the company has shown increase in the sales of such products
though not in vast quantity. The company still is struggling to set its base in India for its health
care, oral and cosmetic products. Johnson and Johnson have successfully transformed its brand
image globally amongst different types of people by convincing people that the service they
provide is best and superior to any of their present competitors. This has led to a major thrust in
increasing the number of distributors and retailers across the country with the result that Johnson
and Johnson products are available in every medicine, cosmetics and grocery shops of the
market.

Case Study on Johnson & Johnson

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Case Study on Johnson & Johnson