Johnson & Johnson Founded in 1886 and based in NewBrunswick, New Jersey, Johnson & Johnson (J&J) produces awide variety of health-care products, ranging from baby powder toListerine to joint replacement parts to pharmaceutical drugs.J&J is a gigantic well-managed company that pays the fifthhighest dividend amount annually of any firm in the world. If youget sick, you likely will begin using J&J products. Thediversified giant operates in three segments through more than 250operating companies located in some 60 countries. The J&JPharmaceuticals division makes drugs (including schizophreniamedication Risperdal and psoriasis drug Remicade) for an array ofailments, such as neurological conditions, blood disorders,autoimmune diseases, and pain. J&J’s Medical Devices andDiagnostics division offers surgical equipment, monitoring devices,orthopaedic products, and contact lenses, among other items. Theconsumer segment makes over-the-counter drugs and products for skinand hair care, oral care, first aid, and women’s health. Among allthe corporations in the world, Fortune magazine rated J&J asnumber 5 on their 2009 “Most Admired Companies” list. J&J’srevenues for 2008 increased from $61 billion to $63 billion whenmost firms endured revenue decreases. Also for calendar 2008,J&J’s net income increased to $12.9 billion from 10.5 billionwhen most firms experienced dramatic losses. Despite this goodfinancial position, the profitability ratio and Net Contribution %of Johnson & Johnson are below the industry average. The stableprofitability in the industry has increased the number of playersin the market over last two years. This has put downward pressureon not only profitability but also on overall sales in theindustry. Growing strengths of local distributors also presents athreat in some markets as the competition is paying higher marginsto the local distributors. The low inflation rate brings howevermore stability in the market, enabling credit at lower interestrate to the customers of all the players in the industry. Newenvironment regulations under Paris agreement (2016) could be athreat to certain existing product categories. Although thepharmaceutical industry is “generally considered a mediumimpactsector” with regard to carbon emissions, there has been a growingrecognition in the past decade that it must do more. The Parisagreement has created a set of new environmental standards andpolicies that companies can benefit from to build a competitiveadvantage and increase market share. New trends in the consumerbehavior can open up new market for the companies in the market. Itprovides a great opportunity for the competing organizations tobuild new revenue streams and diversify into new product categoriestoo. Even though Johnson & Johnson is spending above theindustry average on Research and Development, it has not been ableto compete with the leading players in the industry in terms ofinnovation. Johnson & Johnson Johnson & Johnson isinvesting huge resources in training and development of itsemployees resulting in a workforce that is not only highly skilledbut also motivated to achieve more. This said, in comparison toother organizations in the industry, Johnson & Johnson has ahigher attrition rate and have to spend a lot more compare to itscompetitors on training and development of its employees. Johnson& Johnson has built expertise at entering new markets andmaking success of them. The expansion has helped the organizationto build new revenue stream and diversify the economic cycle riskin the markets it operates in. It has also successfully integrateda number of technology companies in the past few years tostreamline its operations and to build a reliable supply chain.Even though the products sold by J&J are generally a success interms of sales, their positioning and unique selling propositionslack clarity which can lead to the attacks in this segment from thecompetitors. The increasing trend toward isolationism in theAmerican economy can lead to similar reactions from othergovernments, thus negatively impacting the international sales ofUS firms. The adoption of new technology standard and governmentfree trade agreement has however provided the competing companiesin the health care industry an opportunity to enter a new emergingmarket.

Questions 1. Create an IFE and EFE with a minimum of 4 factorsin each quadrant. Interpret your findings.

2. Use one (or more) tool(s) to identify the strategic positionof J&J and identify 2 alternative strategies that the companycould follow.

3. Explain in details the two strategies

4. Create a QSPM to compare and contrast the two strategies andgive your final recommendations