Johnson & Johnson Company Challenges - Case Study Example

? Case Analysis Introduction This is a case study on Johnson & Johnson Company. This article examines the challenges that J&J has undergone and how they have been solved. Johnson & Johnson Company Johnson & Johnson (henceforth referred to as J&J) has generally been a very successful company since it was started. It has continually expanded its operations around the world in a very successful manner. Its main mode of operation has been and is still is decentralization of decision making processes. This has afforded the company the flexibility required for a company to continue thriving in foreign markets. Nevertheless, the company has been confronted with various challenges which, fortunately, it has handled well. Decentralization of decision making processes is the cornerstone of the success of J&J. It has been observed that decentralization has enabled the company to be quite dynamic and able to operate as a small company which can make decisions very quickly and at the same time as a huge company which has a vast amount of resources at its disposal. The company has given country managers the autonomy to make critical decisions in regard to the operations of units which are under them. It is viewed that the management closest to the customers and competitors is indeed best suited to make the best decisions for the company. It has also been observed that in this manner, the country managers feel being part of the company and take it as a personal responsibility to ensure that the subsidiary under them succeed. Despite decentralization being such a powerful tool for J&J, it has often run the company into trouble with this method. For instance, it was noted that decentralization has led to “inconsistent market development and duplication of efforts” (Case Study, n.d, p. 2). This was illustrated by an over-the-counter pain reliever Tylenol. This drug was launched in 1960 and availed to the local units. However, the Japanese unit only took up the drug in 2000. In this manner, global diffusion of J&J products is slowed down because of decisions such as the one that the Japanese unit made on Tylenol. Some decisions made at unit levels have been a cause of controversy and in some cases even led to early retirement of executives involved. An illustration of this is a 2007 case when the company announced that some foreign units had engaged in improper sale of medical devices. Such kind of retaliatory actions can push executives in charge J&J foreign units to avoid making some decisions which may in turn affect the efficient running of their units. The senior management of J&J has seriously taken these challenges into consideration and sought means to solve them. The main method it is applying is streamlining coordination and control of the company activities. The senior management has centralized some activities and duties which were previously under the dockets of foreign unit managers. This is seen as a move which will free country managers in charge of these units so that they concentrate on the daily running units. The move to transfer some of the duties away from the local country managers where the foreign units operate may have some negative implications on the foreign units. For instance, it is noted that the country managers are consulted on some issues when the company is making decisions but the final decision is not made by the country managers. The country managers also cannot refuse a product which has been rolled out. The risk in carrying out production in this manner is that, some important issues might be overlooked by the decision making body. This will be especially the case if an attempt is made to make products which will generally fit the world market as opposed to regional markets. Thus that ability of J&J to produce customized goods, for instance different sizes of the same product, will be lost. This insensitivity towards different local market needs may sway the market in favor of J&J competitors. On the bright side, coordination has helped to save J&J a lot of money. For instance, it is noted that the company saved approximately $80 million by undertaking a uniform implementation of an updated version of Windows in all its units. This was an immense saving which resulted from centralization of some services which were previously decentralized. However, there are challenges which have been met even with this uniform implementation of technology upgrades. For instance, some of the units have resisted upgrading technology infrastructures to match the corporate standards. The reason has been that the cost is too much for the units to bear. J&J has tried has much as possible to enhance its effectiveness and reduce resistance of units by encouraging communication across the organization. Units which are far-flung are allowed and encouraged to air their views and ideas. The organization has made arrangements for employees who have excelled in their work to share their expertise and experience with other employees in different units. J&J has found strength in its credo. The organization holds people and values in high esteem. The company recognizes that the great products it sells are powered by people and therefore it highly values its employees. The code of conduct of J&J is defined in what it refers to as ‘Our Credo’. The Credo guides all the J&J managers worldwide and directs that the organization has a primary responsibility to doctors, nurses, patients, mothers and fathers. The customers are given the top priority because they sustain the organization. The shareholders, on the other hand, are the last in the priority list. It is argued that if the customers are served first then the shareholders will be served well, that is, their concerns will be taken care of well by giving a higher priority to the customers first. It is noted that foreign units are often run by managers who are citizens of the countries where those units are based. In order to ensure that the company philosophy is not disregarded in foreign units, the Credo has been translated to 36 languages where the foreign J&J units operate. Periodic surveys are also undertaken to find out how J&J employees implement the Credo. Weaknesses noted in these surveys are corrected. Slight adaptations have been made to the Credo to include aspects of caring for the environment and balancing work and family. It is also noted that despite J&J centralizing some of the functions which were previously under foreign units, the company still has a great preference for local people where units are based. The company prefers hiring local people to run units which are in their locality as opposed to hiring people from elsewhere. The company believes that it is the local people who best understand the local market and therefore are in the best position to make the best decisions. Conclusion J&J has been greatly successful in its operations worldwide. It is noted that its decentralization policy has enabled it to penetrate foreign markets and achieve great success. After some internal auditing, the top management opted to centralize some of the roles and duties which were previously under foreign units. J&J has encountered many challenged but most of them have been solved amicably through dialogue. Reference Case Study. (n.d). Organizing “People, Values and Environment” at Johnson & Johnson. 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