Johnson & Johnson (J&J) had relied heavily on acquisitions to enter and expand into a wide range of health care related businesses. As it grew, J&J developed into a complex enterprise made up of over 250 different businesses, organized into three different divisions: consumer products, pharmaceuticals, and medical devices.

Use the information in the case study and your knowledge from our coursework so far to respond to the following questions. Your answers will be graded on completeness, accuracy, consistency, and analytical rigor according to the prescriptions of the Ten Commandments of case analysis.

1. What cost synergies is the firm able to enjoy thanks to its diversification strategy? Define 'cost synergies' and list three or more sources of cost synergies that Johnson & Johnson can exploit.

1. Can the firm build greater market power thanks to its diversification strategy? Define 'market power' and provide evidence whether Johnson & Johnson can build market power through its diversification strategy.