Johnson & Johnson Company Analysis - Example

Johnson & Johnson Company Analysis Name: Course: Tutor: Institution: Date: Introduction The pharmaceutical industry is growing over the years. In this regard, the industry had an overall 3.6% growth rate in USA and 2.5% in five of the major European markets in 2012 (“EFPIA”, 2012). This demonstrates a gradually growing market due to favourable industry and market conditions change. Johnson and Johnson Company set up in 1886 have increased its control and market dominance. Currently, the organization headquartered in New Jersey, USA has in the excess of 257 subsidiaries, with operations in over 57 countries. Moreover, with respect to its market share, the organization supplies its products across 175 nations in the globe. Latest financial statistics on the organization demonstrated that the venture has a 2.3% 5 year growth market share and currently has assets ranking in the estimates of$106.52 per share (“Morning Star”, 2014). This analysis offers a strategic review of the organization both internal, industrial and in the entire market context. Macro-Environmental Analysis Macro environmental factors imply and characterize the external factors in an environment on which an organisational venture has no control over. In this regard, in order to develop a conclusive external factors analysis, this evaluation adopts the political, economic, social, technology. Legal and environmental (PESTLE) analysis tool on Johnson & Johnson external trading environment. Political Factors On one hand, a political factors analysis establishes that the organization enjoys a good political goodwill in the USA through the existence of favourable regulations such as the retention of its Red Cross mark on its products, thus stimulating its overall growth. However, changing economic dynamics such as in India and China that are limiting the amount of imported pharmaceuticals and in turn encouraging local production implicate on its global presence and influence. Economic Factors An economic analysis across the globe indicate growing GDPs for both the developed and developing nations as markets recover from the 2008 global financial crisis (Lardy, 2012, p.23). As such, this indicates increasing consumers’ purchasing powers and ability to purchase the organizational pharmaceutical products. Social Factors The global population structures are changing, especially in the USA and Europe. In this case, the reduced birth rates in the last three decades as population control measures, the nations have a acquired an increased ageing population increased base against few children and middle age population (DiPrete and McManus, 2000, p.345). An ageing population signifies an increased demand for the organizational pharmaceutical products in the respective markets. Technology Factors Technological changes are gradually affecting the nature and trends through which organisations in the global market are incorporating it in their practices. This includes drugs testing approaches. As such, increased drug testing assurance systems increase the overall consumer confidence and trust on the organizational drugs quality. Legal Factors In the USA, the introduction of drugs control and inspection board ensured that the produced pharmaceuticals are of high quality thus increasing the organizational brand image. Moreover, the high standards required reduced the entry of many small producers thus offering the venture an added advantage. Environmental Factors Increased global environmental concerns in the market have resulted to the concept of increasing concern on the production processes implication on the environment has forced organisations to introduce corporate social responsibility programs to counteract the perceived negative effects. Consequently this has increased production costs in the market. Competitive Analysis Porter’s Five Forces A porters fives forces analysis has five key segments namely supplies bargain, buyers bargain, competition, threat of new entrants and threat of substitutes respectively. The chart below offers a strategic summary of the pharmacy industry porters five forces analysis Element Issues Suppliers Bargaining Power Low bargaining power High number of global market suppliers Buyers Bargaining Power Medium bargaining power Government as buyers in the developed nations increases their bargaining power Competition Rivalry High level of competition Established global competitors J&J Company, Pfizer and Novartis Threat of new entrants Low threat of new Entrants High research and design requirements reduce possibility for new entry Increased capital investments pose an additional challenge Threat of Substitutes High risk of substitutes Emerging herbal and natural products in Asia pose a threat Strategic Groups In order to enhance and increase its competition potential in the market, Johnson & Johnson Company established a series of alliances in the industry and across the market to develop edges in areas of its operational weakness and deficiency. In this regard, it has established alliances such as the Harvard Medical school centre for Health and the global environment. Through this partnership the organization supports the centres efforts to promote research and awareness on human r-health environmental pollution implications. Further, the company has alliances with the world resource institute a resource based corporation on health and environment with centres and partners in over 50 countries across the globe (“Johnson& Johnson”, 2014, “Our Environmental Partnerships”). Competitor Analysis The pharmaceutical industry has a wide range of supplies as already stated under the porters five forces analysis. Some of the key industry competitors for Johnson & Johnson Company include Pfizer and Novartis AG. On one hand, the Pfizer Company is a major challenger and competition in the pharmaceutical and consumer products segments. In this case, the organization manufactures and distributes human and veterinary medicines as well as consumer healthcare products. In particular, the organization has established its market base in the Asian market such as in the Indian pharmaceutical industry, thus challenging Johnson & Johnson Company expansion onto these markets (Ong and Chen, 2010, p.149). On the other hand, the Novartis AG organization poses a challenge in the pharmaceutical industry through its wide products base through its manufacturing of pharmaceutical products such as clozapine and Diclofenac that are popular across the globe (“Hoover”, 2014). Consumer Segments The Johnson and Johnson Company derive its key market competitive edge from its developed consumer segments. In this regard, the organisation focuses on three key consumer segment niches namely, consumer products, pharmaceuticals, and the medical devices and diagnostics segments respectively. In managing these respective market segments the organization has adopted the diversification decentralization approach (“Johnson & Johnson”, 2014, “Company Structure”). Under this management approach, each of the market segments is held in autonomy in that it develops its own strategic operational decisions in the market. The approach offers the organization increased flexibility against market competitors such as Pfizer. References DiPrete, T.A. & McManus, P.A. 2000, "Family change, employment transitions, and the welfare state: Household income dynamics in the United States and Germany", American Sociological Review, vol. 65, no. 3, pp. 343-370. EFPIA, 2012, The Pharmaceutical Industry in figures - Edition 2012, [Online] Available at [Accessed October 1, 2014]. Hoovers A D& B Company, 2014, Johnson & Johnson Competition, [Online] Available at [Accessed October 1, 2014]. Johnson & Johnson Company, 2014, Company Structure, [Online] Available at < http://www.jnj.com/about-jnj/company-structure > [Accessed October 1, 2014]. Johnson & Johnson, 2014, Our Environmental Partnerships, [Online] Available at [Accessed October 1, 2014]. Lardy, N. R.,2012, Sustaining China's economic growth after the global financial crisis, Peterson Institute for International Economics, Washington, DC. Morning Star, 2014, Johnson & Johnson, JNJ, [Online] Available at [Accessed October 1, 2014]. Ong, A., & Chen, N. N., 2010, Asian biotech: Ethics and communities of fate, Duke University Press, Durham NC. Read More