BPL 5100 Johnson& Johnson case PDF

Preview

Summary

BPL 5100 Johnson& Johnson case
business level...

Description

BPL 5100 Case 19 Johnson & Johnson Essay 4 Business Level Strategy Based on Johnson and Johnson ‘s credo, “By caring, one person at a time, we aspire to help people live longer, healthier lives.” J & J believe that nothing is more important than the health and well-being of those we love. As this principle implies, J&J’s generic strategy is being differentiation for their business level strategy. There are many forms take to differentiation, J&J focus on prestige or brand image, technology, innovation and human resources to create their difference values. In order to earn customer brand loyalty, J&J’s brand recognition for customers is “To build long-term equity of their brand by building sustainable customer loyalty and building shareholder value over time”. Furthermore, J&J gain more economic value through accentuate highest care and quality products. Besides, J&J keep focusing on innovation with technologies in all aspects of product manufacturing and product mix in order to maintain strong competitive advantage with rivals. For human resource management, J&J constantly recruiting successful managers that committed to producing these results. Corporate Level Strategy For a global company like Johnson and Johnson, based on J&J website, they are into diversification category and related diversification strategy, which include 1) three segments: consumer products, medical devices and pharmaceuticals 2) they have purchased 70 different firms in the past decade, and 3) they have forming 250 subsidiaries. J&J also benefit from their related diversification; for example, purchase $20 billions of Synthes, a leading player in trauma surgery and produced therapeutics for viral infections by $1.75 billion acquisition of Alios Bio Pharma.

In order to achieve related diversification, J&J through two ways: economies of scope and market power. First, economies of scope refers to cost savings from leveraging core competencies or sharing related activities among businesses in the corporation. Core competencies reflect the collective learning in organizations, for J&J, the three major segments share similar research and develop, production technologies, raw materials from suppliers, and good reputation. Corporate companies also can achieve synergy by activity sharing. In J&J’s case, the sharing of technology and skills of acquired firms would improve efficiency. Moreover, sharing of facilities and resources would reduce overhead cost and using existing brand’s distribution network would increase sales such as in retailers and hospitals side. Another way to achieve related diversification is market power, also can address that by pooled negotiating power. Similar businesses working together or the affiliation of a business with a strong parent can strengthen an organization’s bargaining position relative to suppliers and customers and enhance its position competitors. For example, J&J’s Band-Aid brand utilized a material developed and used by their hospital supply company for wound care to create their product of Liquid Band-Aid. International Strategy J&J not only maintain their products pretty much similar to what they sell locally but also the advertising strategy deliver the same message and using same commercials worldwide. Therefore, J&J’s type of international strategy is global strategy, which is high pressure to low case and low pressure for local adaption. A global strategy emphasizes economies of scale due to the standardization of products and services and the centralization of operations in a few locations. (P.219,Strategic Management 9th). J&J operates in 60 and sells products in over 200, Divisional expansion into foreign markets, and 55% of J&J’s annual revenue coming from non-

US markets. This strategy reached the desired standardization of products and cost reduction through globalization. Conclusion When look into J&J’s strategies, we can see one of the strengths of J&J is they executive use the adaptation of entrepreneurial values in operating the company. This strongest point helps J&J retain an edge within the marketplace, as it provides a core value for the giant company to operate in coordination around the world. With this advantage also implies J&J is capable to grow an economies of scale in the global market. On the other hand, J&J’s facing challenge on reduction in the market demand for key products has been identified. Based on the current situation, we suggest J&J should pay more attention on realistic decisions. For example, there is high pressure within pharmaceutical markets for J&J. They may need to consider reduce prices in line with medical budgets and maintain patent expirations to ensure generic programs are updated within critical path movements. In addition, J&J should continue and development into new functions of medical devices, which will increase new markets to entry and result in business growth as well.

References Shayon, Sheila. “Diversification Key to Johnson & Johnson's Longevity.” Brandchannel, Interbrand, 15 Sept. 2018, www.brandchannel.com/2018/09/15/diversification-key-to-johnsonjohnson-longevity/. “Corporate Strategy.” Johnson & Johnson, Johnson & Johnson, aileenreilly.sites.gettysburg.edu/about/. “FUNCTION.” Johnson & Johnson, Johnson & Johnson, www-careers-jnjcom.jnjnab25.jnj.com/business-strategy....