Strategic Analysis Case Study
2009
Jarryd Phillips, Jermaine West, Spencer Jacoby,
Othniel Hyliger, Steven Pelletier
1
Overview
Company Overview
History
Current Vision Statement & Credo
Proposed Vision & Mission Statements
External Assessment
Positioning Map
CPM Matrix
Opportunities & Threats
EFE Matrix
Internal Assessment
Organizational Chart
Financial Ratios
Trends
Strength & Weaknesses
IFE Matrix
Strategic Assessment
SWOT Matrix
Space Matrix
Grand Strategy Matrix
BCG Matrix
IE Matrix
Matrix Analysis
QSPM
Recommendations
Objectives
Strategic Implementation
EPS/EBIT
Projected Balance Sheet
Projected Income Statement
Evaluation
Balanced Scorecard
Possible Issues
Sources
Questions
2
History
3
Timeline
 1886- 3 brothers founded Johnson & Johnson in Brunswick, New Jersey.
 1888- Pioneered the first commercial First Aid Kit.
 1894- Launches first maternity kit to make child birth safer
 1898- First to mass produce dental floss.
 1921- An employee invents the first BAND-AID
 1937- Began international expansion with companies in Argentina &
Brazil
 1954- Baby shampoo enter the market
 1978- The Company begins construction on their new World
Headquarters in New Jersey.
 1990’s- Ethicon Endo-Surgery pioneers minimally invasive surgery.
 2002- Johnson & Johnson acquires Tibotec-Virco BVBA
 2006- Johnson & Johnson acquires Pfizer Consumer Healthcare
 2009- Acquisition of Mentor Corporation
4
2009 Highlights
 Strengthened core business and invested in new
launches
 Acquired Cougar Biotechnology in July
 Continued to expand globally
5
Current Vision
“To maximize the global power of diversity and
inclusion to drive superior business results and
sustainable competitive advantage.”
6
Johnson & Johnson Credo
This is a statement of our values and responsibilities
that was written more than 60 years ago. It
articulates our responsibilities to customers,
employees, communities and shareholders. It sets
the tone for what is expected at J&J.
7
Proposed Mission Statement
Our philosophy and core values are centered on our desire to provide
the safest and most reliable products and services to our customers,
employees, medical professionals, and stockholders (1, 2, 6, and 9).
Our consistent market growth and competitive advantage within the
world market will ensure profitability and is a tribute to our trained
employees, innovation, technology, and market research (3, 4, and
5). In regards to local and domestic communities, it is our goal to
ensure that Johnson and Johnson adhere to policies and procedures
to be socially responsible and for the betterment of all members of
our value chain (7, 8).
1. Customers
2. Products or services
3. Markets
4. Technology.
5. Concern for survival, growth,
and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees
8
Proposed Vision Statement
Johnson and Johnson’s vision is to be the most recognized,
innovative, and socially responsible name in pharmaceutical,
consumer health, medical device, and prescription products in
the world. Through this, we will earn our customer’s respect
and enthusiasm with continuous improvement that is driven by
innovation, integrity, teamwork, and the desire to provide value
for the investment. As a result, J&J will gain market share to
increase sales and generate dividends for our shareholders.
9
Proposed Slogan
“Caring for you from the beginning,
to the very end!”
10
11
Position Map
Number of
Stores
(High)
Narrow Price
Competitiveness
Wide Price
Competitiveness
Number of
Stores (Low)
12
CPM Matrix
13
Opportunities
• Acquisition of Synthes could enhance J&J’s Failure of prospective products to
deliver leadership position in global orthopedics market
• Leveraging therapeutic coverage of non-prescription pharmaceutical segments
could provide cross-selling opportunities
• Addition of Crucell to broaden J&J’s position in biologics and vaccines market
• R&D investment will add to the potential growth rate of the company in
surrounding markets.
• Economic recovery will be a boost in income thus company revenue will
increase.
• Global expansion
14
Threats
• Negative Impact of Recent Product Recalls
• Healthcare regulations
• Better research and development of competitors
• Low market growth rate.
• Strong competition from the generic market.
• Launch success in that newly launch products are uncertain because of
regulatory review, thus making the launch a potential threat if it fails.
15
EFE Matrix
16
17
Organizational Chart
18
Financial Ratios
19
Financial Trends
20
Trends
21
Sales by Geographic Region
22
Sales by Segment
23
24
Strengths
• Diverse business offering
• Forecast growth despite challenges
• Significant sales and marketing capabilities
• Robust financial position
• They have strong global presence operating in more than 57 countries
with 250 subsidiary companies
• They have successfully employed strategies to differentiation that helps
it distinguish itself from its competitors.
25
Weaknesses
• Generic drug's exposure
• Private label exposure
• Quality issues in OTC products affecting consumer healthcare product
sales
• Key product demand is shrinking.
• Theft and counterfeiting of drugs from internal staff as much as this is
not isolated to J&J.
• Pressure to reduce prices in accordance with medical budgets and
maintain patent expirations to help generic programs.
26
IFE Matrix
27
28
SWOT Matrix
•
•
•
•
SO Strategies
S1, O1: JNJ Should aim to be an
industry leader in all its diverse
business offerings.
S2, O2: With the addition of new
products in various departments,
JNJ could potentially still predict
growth in challenging times.
ST Strategies
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.
S2, T2: The prediction of increased
sales in challenging times should be a
testament to JNJ`s value and quality
of products.
•
•
•
•
WO Strategies
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 specific segments to increase market
share in surrounding markets.
W2, O2: OTC sales should be used as a
prime opportunity to highlight the value
and worth of JNJ`s products.
WT Strategies
W1, T1: Product recalls can seriously
hinder the perceived value and
quality of JNJ.
W2, T2: Healthcare regulations along
with challenging economic times can
prove costly to JNJ as a whole.
29
Space Matrix
30
Grand Strategy Matrix
31
BCG Matrix
1
0.5
0.0
+15
0
-15
32
IE Matrix
33
Matrix Analysis
34
QSPM
35
Recommendations
 Increase R&D in the pharmaceutical segment by $75
million; will result in 8% projected sales increase
 Continue to improve on product recalls; this will give
a better quality perception to consumers and medical
personal
 Improve cross-sell techniques of diversified products
 Total cost = $75,000,000
36
Objectives
We are proud of our 2009 accomplishments, but we recognize there is a great deal
more to do. In the near future, we continue to assess what more we can do across our
business segments, our supply chain and together with partners, including
governments, other companies and social and environmental non-governmental
organizations.
The people of Johnson & Johnson remain committed to living up to the
responsibilities laid out in Our Credo. As our Company approaches our 125-year
milestone, improving human health and well-being is still our crucial mission and
the ultimate measure of upholding our responsibility now and for generations to
come.
37
38
EPS/EBIT
39
Projected Balance
Sheet
40
Projected Income Statement
41
Evaluation
42
Balanced Scorecard
43
Balanced Scorecard cont.
44
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
45
Sources







Johnson & Johnson Annual Report. http://files.shareholder.com/downloads/JNJ/1782599548x0x359541/6EAF4E1608B2-4AD4-86AC-5BDB928E5320/JNJ_2009AR.PDF
Johnson & Johnson. http://www.jnj.com/connect/
The Street. 10 Companies that paid the least in taxes. http://www.thestreet.com/story/11077452/1/10-companiespaying-the-least-in-taxes.html
CBS News. J&J layoffs: the jobs that are the safest and those that aren’t. http://www.cbsnews.com/8301-505123_16242843383/j038j-layoffs-the-jobs-that-are-safest-and-those-that-arent/
Historical Stock Prices. http://finance.yahoo.com/q/hp?s=JNJ&a=11&b=31&c=2009&d=11&e=31&f=2009&g=d
Competitor Comparisons. http://www.nasdaq.com/symbol/jnj/competitors
Competitive Profile. https://business.missouri.edu/ifmprogram/reports/2010SP/J%26J%20Report.pdf
46
Questions?
47