JOHNSON & JOHNSON’S CASE STUDY

I. Executive Summary

Johnson & Johnson Company was founded by three brothers: Robert Wood Johnson I,
James Wood Johnson and Edward Mead Johnson Sr. in New Brunswick, New Jersey in 1886. It
is an investment holding company with interests in health care products. It engages in research and
development, manufacture and sale of personal care hygienic products, pharmaceuticals and
surgical equipment. J&J prides itself on its decentralized operating structure, with the management
teams of its myriad and far-flung operating units having wide latitude to make decisions. Each
company belongs to one of J&J's three broad divisions: The Pharmaceuticals and Medical Devices
segments account for 45% and 35% of sales, respectively, while the Consumer division contributes
about 20% of annual revenues. J&J's diversified business model also allows for some insulation
against troubles in any one market. While it continues to streamline its businesses for optimal
performance, J&J is also keeping pace with its acquisition strategy by pursuing company purchases
both large and small.

Johnson & Johnson faced many problems in their business. It was already alerting investors
that its revenue for 2009 would show drop from the previous year, the first decline the firm has
experienced in its 120-year history. Sales of its consumer’s products were slowing as a result of a
decrease in the disposable income of its customers. Its pharmaceutical business was being affected
by the expiration of patents on some of its best-selling drugs and by the growth of competition
from generic drugs. J&J entails very high overhead costs, they have been losing sales on its best-
selling Cypher, J&J’s important drugs that are under assault from competitors, sales of its
consumer products were slowing as a result of a decrease in the disposable income of its customers,
and is getting much harder for J&J to spot smaller firms with promising drugs and to avoid running
up against other firms. The company need to develop a new product through already acquired
businesses and should minimize the acquisition of new businesses. Johnson & Johnson need to
maintain the stability through Innovation of their existing products especially Pharmaceutical and
Medical Devices to cope up the changing business environment. The company must create new
products through other businesses already acquired because staying ahead of the competition
should always be front of mind for existing companies. New products can give a competitive
advantage over the competition. R&D must be strengthened. Through this, the company will have
a higher chance in succeeding in the global market.

II. Statement of the Problem

It was already alerting investors that J&J’s revenue for 2009 would show a drop from the
previous year, the first decline the firm has experienced in its 120 -year history. This links to the
following factors and causes.
Product concerns and safety
- J&J have also been facing some challenges with sales of its medical devises. It has been
losing sales on its well-selling cypher stents because of concerns over their safety that has
been raised in several studies.
- It’s well known anemia drug Procit has been dealing with rising competition and with
growing safety concerns.
Market competitors

1
 - J&J's important drugs are under assault from competitors.
- There’s a growth in competition from generic drugs on Pharmaceutical products.
- Coated stents have been facing growing competition from other strong rivals.
- Top-selling Risperdal, Duragesic, and Topamax drugs will start facing generic rivals in
2009. Furthermore, a new antipsychosis drug called Invega, recently launched to replace
Risperdal has not been able to meet sales expectations.
Expiration of Patents
- Pharmaceutical business was being affected by the expiration of patents on some of its best
selling drugs
Expenditures
- Business units have given considerable freedom to develop and execute their own
strategies. In addition, these units have been allowed to work with their own resources.
Many of the businesses even have their own finance and human resource departments.
While this degree of decentralization entails relatively high overhead costs, none of the
executives who have run J&J has ever thought that this was too high a price to pay.
- Acquisitions were fast and Research and development expense is continuously increasing
throughout the year.
Consumer Behavior
- Consumer and patients become more frugal.
- Sales of consumer products were slowing as a result of a decrease in the disposable income
of its customers.
Strategy
- Weldon is pursuing to make collaborations among businesses in order to formulate
promising new drugs. Jerry Caccott, managing director of consulting those alliances
"would be challenging in any organization, but particularly in an organization that has been
so successful because of its decentralized culture.
- During the tough environment, Weldon the CEO is still pursuing the collaboration which
only makes the return worse.
Short term problems and Long term problems
- The Short term problems are those that arise in a short run but could be long term problem
if not treated well. The company is now facing a short term problem with regards to its
2009 revenue and could be a long term problem that would affect the revenues on the
succeeding years if not properly addressed. The strategy of the CEO which was the
collaboration of the businesses acquired in order to arrive at new promising products was
not beneficial in the mean time that’s why it causes decline on the company’s revenue. The
business units acquired were not yet ready for collaboration. The threat of competitors was
short term problem as well for a company that is well established for 120 years like
Johnsons and Johnsons.
- The Long term problem that would face by the company will result if it continues the
collaboration of its business units in tough economic environment experiencing by the
company.

2
III. Causes of the Problem

It is getting much harder for J&J to spot smaller firms with promising drugs and to avoid
running up against other firms that want to make the same kinds of deals. IT IS BECAUSE J&J
has relied heavily on acquisitions to enter into and expand into a wide range of businesses that fall
broadly under the category of healthcare. Over the years, it has already acquired almost all of the
leading firms. They acquired Mentor Co., the leading supplier of medical products for the global
aesthetic market, for $1.1 billion. They also bought Pfizer for $16.6 billion, actually the biggest
acquisition In its 120-year history. They have spent over $50 billion on 70 different acquisitions.

J&J was already alerting investors that its revenue for 2009 would show a drop from the
previous year. Sales of its consumer products were slowing as a result of a decrease in the
disposable income of its customers. THE REASON BEHIND THIS IS THAT the business was
being affected by the expiration of patents on some of its best selling drugs and by the growth of
competition from generic drugs.

Several of J&J’s important drugs are under assault from competitors. THE CAUSE OF THIS
PROBLEM IS the company has been focusing on releasing new products to the market. They
forgot they had competitors that may outrun them. Its well-known anemia drug, Procrit, has been
dealing with rising competition and safety concerns. Risperdal, Duragesic, and Topamax drugs
will start facing generic rivals in 2009. Furthermore, Invega, which is supposed to replace
Risperdal, has not been able to meet sales expectations.

J&J has also been facing some challenges with sales of its medical services. It has been losing
sales on its best-selling Cypher. THIS IS BECAUSE there had been lots of concern about the
safety of the products of J&J. The most popular was the case of Tylenol. A promising new stent
from Connor Medsystems had been withdrawn since it failed in trials in summer 2007.

J&J entails very high overhead costs. THE ROOT OF THIS PROBLEM IS THAT since
the firm has acquired too many business units, the latter have been given considerable freedom to
develop and execute their own strategies. These units have been allowed to work with their own
resources and they have their own finance and human resource departments. In short, J&J’s
management is decentralized. The company operates more like a mutual fund than anything else.
Cultivating alliances would be challenging in any organization particularly in an organization that
has been so successful because of its decentralized culture

 APPLICATION OF PORTER’S FIVE FORCES MODEL

- Threat Of New Entrants – High Barriers to Entry

o Extensive Manufacturing Capabilities
o Patents Protection and Research
o Economies of Scale – High Capital Requirement

- The Threats of Substitutes – The Rise of Generics

o Upcoming patent expirations
o Loss of sales

- The Bargaining Power of Buyers – Influence of Generics

o Buyers: Patients, Medical Doctor, Pharmacists, Hospital Boards, Insurance
Companies
o Patients’ switching costs is low. They tend to pay extra money
o J&J’s main tool is brand name
o Other buyers have considerable bargaining power.

3
 - The Degree of Rivalry – Fierce and Changing Competition
o Rivalry is especially intense in saturated markets.
o Innovation is the key driver of competition
o There are increasing number of players: US, Japan, China, and India

 SWOT ANALYSIS (Strength, Weaknesses, Opportunities, Threats)

 STRENGTHS OF JOHNSON & JOHNSON

1. Largest Healthcare provider: From pharmaceutical products to Consumer healthcare

products, J & J is operating in three segments: Consumer Products, Pharmaceuticals, and
Medical Devices and Diagnostics. Johnson & Johnson Family of Companies for over 125
years has committed itself to caring for people. Johnson and Johnson’s corporate structure
is based on a decentralized management philosophy due to which there are low or no
internal management conflict cases in the company till now.

2. Broad brand portfolio: Johnson & Johnson have strong presence within each product
categories. They have deep assortments & large number of brands to choose from which
is helping them to occupy large shelf space of the stores resulting into high visibility in
the market.

3. Trusted brand: Johnson & Johnson is a brand trusted by many medical practitioners &
parents around the world. Johnson & Johnson’s increased focus on tailoring business to
local markets had helped them in being relevant to consumer demand.

4. Strategic merger & acquisition: Through mergers & acquisitions with various
consumer health care & pharmaceuticals companies like Neutrogena, Alza, Scios, Pfizer
consumer healthcare and many more, Johnson & Johnson has created a pool of
technological & operational advancement which is helping the company in its further
growth.

5. Supply chain: It has extensive & robust distribution system meant for making the
products available to retail outlets, super markets & medical stores even in the remotest
rural areas.

6. Brand equity: It is the 79th highest ranked brand in the world in 2016.

 WEAKNESSES OF JOHNSON AND JOHNSON

1. Litigation: Company got involved in litigations over the period of time like in 2010 J &
J board has been sued by shareholders, Boston scientific lawsuit, use of the red cross
symbol. Events like this can affect their brand image and will spread negative word of
mouth.

2. Conflict with partner companies: Handling such a large product portfolio & partner
companies can create mess in the operations of the company, so J & J should think of
before entering into mergers & acquisitions.

3. Dependence upon the Success of Launch Products – Many new launch products are
vulnerable to the uncertainty of regulatory review.

4. Reliance on Small Molecule Drugs – Small molecules is more impacted by generic

competition. Johnson & Johnson’s small molecule drug sales declined in 2008 and 2012.
The necessity of finding replacements for billion dollar products as they mature represents
a daunting task.

4
  OPPORTUNITIES OF JOHNSON AND JOHNSON

1. Wide Range of Potential Cross-selling Opportunities: Johnson & Johnson is in a

position to strategically develop a myriad of cross selling opportunities. Maximizing its
balance between pharmaceuticals, diagnostics, and medical devices could result in
increased revenues.

2. Potential to Exploit Biologics Market: The addition of further biologics (e.g.

therapeutic proteins, antibodies) to its portfolio can serve as a buffer as small molecule
patents expire which will drive the future growth of the company.

3. Changing lifestyle: With the increasing in literacy rate worldwide there is increase in
concern over health & medical issues due to which there is increase in demand of medical
products so J & J will also get benefited from this.

 THREATS OF JOHNSON AND JOHNSON

1. Fight against harmful ingredients – Many times, Johnson and Johnson products have
been found to have ingredients which could be carcinogens. Similarly, these ingredients
have been banned in the US and other countries. Repeatedly, these fight against harmful
ingredients has affected the brand image of Johnson and Johnson.

2. Negative Impact of Product Recalls – Johnson and Johnson has had the misfortune of
having to recall of more than 40 medicines. The company stands to take a hit to its
reputation, competence and integrity.

3. Intense Rivalry: Due to the presence of strong global competitors who provide
alternative & substitute products J & J is facing stiff competition. Also local players who
are offering generic products are also affecting the business.

4. Government regulatory norms: Government regulatory norms over the contents &
export and import tariffs play a critical role in the success of companies in these industries
to which J & J is not an exception.

 PEST ANALYSIS

 Political
- There was a slowdown in government decisions due to political instability.
- There were adverse changes on foreign investment.
- There were corruption and bureaucratic inefficiency.

 Economic
- There were tax issues faced by J&J.
- There had been fluctuation in interest, currency, and inflation rates.

 Social
- Since poverty has a high rate, people are limited to buying pharmaceutical products.
- People in rural areas were less aware of J&J products.
- There were many cases regarding unapproved psychiatric medications about J&J
products.

 Technological
- J&J spends good money on research and development.

5
Conclusion:

The alignment of Johnson & Johnson’s business model and operating model has been key to
company’s 100-plus years of success. J&J’s operating model focused on decentralized
management allows the company to effectively deliver on its business model – one focused on
providing value through a diversified set of products and services to a variety of customers. As a
recent example, decentralization has been critical to J&J’s success in global expansion. The
company’s R&D centers in developing countries have been able to develop products based on
local insights and customer needs, and therefore, is expanding J&J’s current product offering to
meet the unique needs of the emerging market population. With a tightly aligned operating model
and business model, J&J will continue to improve the health and well-being of billions of people
around the world through their diversified products and services.
The goal of the collaboration would be beneficial in the company’s growth but for the
meantime the strategy implementing personnel must consider the factors and causes of the
breakdown in revenue currently experiencing by the firm. In the tough economic environment it
is not helpful for the company to pursue a long term strategy without consideration of the present
dilemma.

6
IV. Alternative Solutions

1. Develop new products after making the company’s profit stable and in an increasing
manner.
Creating new products is good since it will benefit the company. But then before putting
some fund on the development of this product, make sure that the profits and income are stable.
Since there is a declining of profits happening from 2006 up to 2008 in Pharmaceutical division,
it is better to manage it first and put it back to its business line. Therein we can secure the increase
of profits or stableness before using a great amount of money in a new product.
Pros
 Increase market share
Innovating a product that alleviates customer "pain points" and disrupts the target market
can greatly improve market share, which can enable economies of scale and increase a company’s
market power.
 Increase profit
Developing an innovative product that’s unique and superior to what the competition offers
can lead to profit growth. In fact, more than 90% of the world’s 100 most innovative companies
have experienced positive sales growth due to innovation, according to a recent Forbes report.
 Success in Failure
The "failed" result of innovation for one target market can end up being a disruptive and
profitable innovation that can be applied to other markets. Penicillin, plastic, saccharin, WD-40,
and the pacemaker are key examples of “successful” innovation failures/mistakes.

Cons
 Innovation is Costly
While the amount of time and resources invested in product innovation varies, companies
can expect to spend around 3.5% to more than 20% of their total revenue in R&D, with the pharma
and technology industries spending the most to innovate.
 Unwanted Market Cannibalization
Introducing an innovative “new” product to expand market share can backfire if a
company’s product ends up eating into the market share of its other products, which can reduce
product life cycles and lead to little or no sales growth.
 Wasted time and Resources
A company can spend months and a 5- to 7-figure budget developing a new product only
to see it fail because competitors went to market faster or the market was simply uninterested in
the product.
 Employee Dilemmas
Developing an innovative product that improves efficiency and saves costs can also render
employees redundant, leaving companies with the tough dilemma of either having to retrench staff,
or invest time and resources retraining them for other tasks.

2. Establish product line through promotion.

7
 Since competition is getting tough and they are worried that they might lose in their field
of business when 2009 comes, it is good to establish some marketing with their consumers. It is a
good way to surpass their competitors by showing that their products are much greater and more
effective than the others by doing some promotions.
Pros
 Market Share
If you increase advertising and promotion expenditures, you stand a good chance of
capturing market share, especially if your competition is cutting back on ad spending. You let the
buying customer know that you are maintaining a robust effort to remain vital in the marketplace.
 Higher Sales Growth
If you increase advertising and promotion expenditures, you stand a good chance of
capturing market share, especially if your competition is cutting back on ad spending. You let the
buying customer know that you are maintaining a robust effort to remain vital in the marketplace.
 Increasing Value to the Customer
Increasing your advertising and promotions forces to think about offering more value to
the customer, you need something to advertise that is better value. If you can find a way to put
goods and services on sale, bundle services to customers who spend more and promote special
offers, you can increase value to the customer and drive sales higher.
 Improved Reputation
Your visibility through advertising and promotion builds your reputation with the
customer. You draw customers to you, because they read the signal of increased advertising and
promotion as increased success of your business. Although most advertising is through word of
mouth, that word of mouth starts with awareness that customers have gained about you through
your advertising and promotions.
 Innovation
Trying to increase your advertising and promotions can be an inspiration to get more
creative, especially if money is tight. For example, you could add labels to your products with your
contact information. This allows the customer to contact you or pass your name along to potential
customers. You can also write articles online, participate in community fairs and hold drawings.
These relatively inexpensive advertising and promotion methods arise out of your desire to
increase advertising when you don't have the budget for it.

Cons
 Failure
An obvious cons to a promotional strategy is its potential for failure. For example, you
could invest time and money designing and advertising a sale, and sacrifice normal profits during
the promotion, only to achieve moderate results. Worse, your long-term benefits might not offset
the costs of the promotion. Careful research and expert advice from a marketing consultant can
help maximize your chances for success, but nothing’s guaranteed.
 Decreased Value
The longer a sales promotion lasts, the more likely you will decrease the perceived value
of your product or service. For example, if a restaurant offers a steep discount for children’s meals
to attract families, parents might balk at paying more after they get used to the low prices. Keep
promotions short to prevent long-term damage to your overall pricing strategy.
 Predictability

8
 If your promotions occur in a predictable pattern, potential customers might wait for a sale
rather than buy the product or service at full price now. For example, if a retail clothing store offers
a sizable discount on most holidays, sales will be low between holidays, and relatively few
customers will ever pay full price.
 Bargain Hunters
New customers might learn to love your product or service and become long-term clients.
Or they might abandon you as soon as the promotion is over and continue to hunt for bargains.
Converting bargain hunters to permanent customers depends on developing brand loyalty. For
example, if your excellent customer service or high-quality products impress them, they are more
likely to stay with you after prices return to normal levels.
 Celebrity Endorsements
The benefit of using celebrities to endorse your brand is you can capitalize on the goodwill
they elicit from the public. The disadvantage is your brand identity is vulnerable to their public
relations problems. Research celebrities carefully to increase the chances their public images will
always be worth your investment.

3. Strengthen research and development.

Failing of products is quite alarming. They failed two consecutive times and if we’ll think
about it, why are we having some failure? It’s a problem that we need to solve. Is it because there
is a lack of researches and resources? We need to hire better and qualified workers for the job, we
can recruit them from the other companies. We can also have some training in order to enhance
and develop more ideas and skills of the workers. They need to have division of expertise, one for
the new products and another one for developing and upgrading the existing products. In that way
it may be a win-win situation for the company.
Pros
 Tax Breaks
The federal government has allowed businesses to use up to 20 percent of their R&D;
expenses as tax deductions. The company has the option of taking the expense as a lump-sum
deduction in the year in which the research took place, or the write-off can be spread out over the
course of five to 10 years. The company cannot start using the write-off until the first month that
financial gain is realized from the research. Not all R&D; activities are deductible. Activities such
as market research, advertising, quality control and the study of historical information associated
with a current project are not deductible.
 Costs
One way a small business can reduce the cost of manufacturing a product is to use R&D;
to uncover cost-effective manufacturing methods. New ways to manufacture existing popular
products can allow the company to realize the revenue associated with the sales of the product but
reduce the costs of getting the product out to the public.
 Financing
Potential corporate investors are often interested in companies attempting to become
industry leaders. When you invest in an R&D; program, you can start to develop technologies and
solutions that may open up entirely new markets to your organization. This proactive approach to
business can help attract investors and lenders who can supply you with the financing you need to
reach your business goals.
 Recruiting

9
 Developing new technologies can open up new business opportunities within your
organization. The chance to be challenged by a company that is investing in developing new
technologies to reach new markets can help you to attract qualified and talented employees.

Cons
 High Costs
It will be very costly.
 Long time scale
It typically takes long years to bring a new product to market.
 Uncertain Outcomes
There are always uncertainties about whether the product will meet the original brief and
customer requirements. For example, pests may develop resistance to the product over time.
 Difficulties in anticipating conditions
Difficulties in anticipating how conditions will change in the market and whether customer
needs will change during the long R&D process. Competitors may come up with a rival product
that is just as effective.

V. Recommendation, Solution, Implementation and Justification

10
Recommended Plan of Action
Who: Johnson & Johnson Management
When: After the development of existing business lines
What: We recommend the company to focus on developing new products through the businesses
already acquired, Maintain the stability of the products already in existence especially
pharmaceuticals and medical devices and Strengthen research and development for collaboration.

How:
1. To continue developing the acquired existing business lines while establishing
research and development department for collaboration and consider the time
acquisition of new businesses to lessen expenditures.
The company should minimize the acquisition of new business because it can only add on
the overhead cost because it only minimizes the acquired income.
In developing the new product the Company should address first the customer needs; many
products fail because they don't clearly address any particular need or solve any specific problem
in consumers’ lives. Very often, customers are not just looking for trendy new items; they are
looking for a solution. A successful product is one that fills a void in the lives of customers. In
successful marketing, that ‘voids’ needs to be clearly identified and relatable. Idea generation
would take place as a starting point of finding new promising ideas after all ideas are gathered
evaluation and elimination will come into the picture to eliminate ideas which are not needed.
Business analysis would be the final assessment before deciding whether to develop the concept
into a new product or not. Once the product is identified, it's time to introduce the solution which
is the developed product.
A good marketing strategy should be drawn from market research and focus on the right
product mix in order to achieve the maximum profit potential and sustain the business. Also make
sure that the product offers a reasonable price. Even if the company identify a common problem
that no other product on the market addresses and you offer the perfect solution, no one will buy a
product that is not worth the price. If it's unreasonably priced, customers will try to get around
their needs by using products that don't quite fit.
Establish communication with customers, it is almost always worth the cost, since it offers
the company the most important perspective of the new product from the audience that will make
or break your success. Often, asking for customer feedback will lead you to make subtle
adjustments to the product and your marketing efforts, which can lead to increased sales.
Everything about the created product could be perfect, but if it is difficult to acquire,
customers will opt for another solution or avoid the solution altogether. The company need to
carefully consider distribution - where, when and how customers can get their product. No matter
what route you take for distribution, it should be straightforward and hassle-free for consumers.
No one wants to navigate complicated online instructions or numerous telephone transfers just to
get a product. Simple, honest and straightforward routes of obtaining will assure customers that
they have made a good choice and ensure a long-term relationship with the company.
Implementation
Yet the case for creating new products through already acquired businesses is stronger than
ever. It takes so much money to develop new products and to penetrate new markets that few
companies can go it alone in every situation. Few alliances remain win-win undertakings forever.
A partner may be content even as it unknowingly surrenders core skills.
When it’s feasible, it’s great to have your whole team working in a shared physical space,
which helps foster clarity and prevents wasted time and effort. Make the product or service
available to important influencers as a first step. Influencers can be friendly customers, prospects,
or even bloggers who have a sizable online presence. Encourage these people to use your product

11
or service and then write review articles or posts. Brief industry analysts during this early phase as
well. Target people who are naturally eager to learn about your offering. Don’t expect a “big bang”
release unless your product or service is truly revolutionary. Make it easy for people to learn more
about your product and make sure that you have a full knowledge about the new product when the
customers questioned something.
Justification
We choose this recommended plan of action which creating new products through already acquired
businesses because staying ahead of the competition should always be front of mind for existing
companies. New products give you a competitive advantage over your competition. It might be
new sales, more shelf space, consumer impressions or other advantages. Because if you are the
market leader, you want to keep your competitive advantage, if you are not the market leader –
you need a competitive advantage. New products allow you to focus on taking a competitive
leadership position. We based this on Cravens and Piercy (2005) New Product Planning Process
Model.

The first stage is customer needs analysis, to find and identify customer needs and fulfil
them. The second stage idea generation involves the starting point of finding promising new ideas.
The third stage screening and evaluation is used to eliminate unpromising ideas as soon as possible
while keeping the risks of rejecting good ideas at acceptable levels. The fourth stage business
analysis is the final assessment before deciding whether to develop the concept into a new product
or not. The fifth stage product development includes product design, industrial design,
manufacturing process design, packaging design, and outsourcing decisions. The last stages are
marketing strategy, market testing and commercialization which involve developing a strategy,
testing the product and finally coordinating market entry activities, implementing marketing
strategy and monitoring and control of the product launch. (Cravens and Piercy, 2005)

2. Maintaining the stability through Innovation of their existing products especially

Pharmaceutical and Medical Devices
The company should maintain their existing products especially those pharmaceutical and
medical devices through technological-based strategy. They should examine how intense the
competition currently is in the marketplace, which is determined by the number of existing
competitors and what each is capable of doing. They should asses’ competitor’s threats and be
sure that their products are being innovated and not out to date. They should look at the number
of suppliers available. The fewer there are the more power they have. Businesses are in a better
position when there are a multitude of suppliers. Our strategy aims to make the company's
products significantly different from the competition, improving their competitiveness and value

12
to the public. This strategy requires both good research and development and effective sales and
marketing teams.
Investing in technological innovations is a profitable business strategy for a pharmaceutical
business. Trends such as increasing competition, globalization, and shorter product-cycle times
are real challenges for the industry. Technological innovations enable a pharmaceutical company
to deal with these challenges by reaching more consumers and suppliers, receiving instant
feedback at a cheaper cost. One such strategy is using e-detailing, whereby a company
communicates a product’s details on the Internet. Consumers are able to schedule appointments
online and learn about products or have a company address their questions in real time. A
pharmaceutical company can also use a phone application to have consumers check the risks and
benefits of a product on their phones. A technology-based business development strategy boosts
innovations of drug enhancements or production of new drugs.
Implementation
Utilizing basic internal and external SWOT analyses, as well as current marketing trends,
one can distance themselves from the competition by generating ideologies which take
affordability, ROI, and widespread distribution costs into account. Set specific criteria for ideas
that should be continued or dropped. Stick to the agreed upon criteria so poor projects can be sent
back to the idea-hopper early on. Aside from patent research, design due diligence, and other
legalities involved with new product development; knowing where the marketing messages will
work best is often the biggest part of testing the concept. Does the consumer understand, need, or
want the product or service?. During the New Product Development process, build a system of
metrics to monitor progress. Include input metrics, such as average time in each stage, as well as
output metrics that measure the value of launched products, percentage of new product sales and
other figures that provide valuable feedback. It is important for an organization to be in agreement
for these criteria and metrics. At this stage, your new product developments have gone mainstream,
consumers are purchasing your good or service, and technical support is consistently monitoring
progress. Keeping your distribution pipelines loaded with products is an integral part of this
process too, as one prefers not to give physical (or perpetual) shelf space to competition.
Refreshing advertisements during this stage will keep your product’s name firmly supplanted into
the minds of those in the contemplation stages of purchase.
Justification
We recommend the company to maintain stability through innovation of their existing
products for them to cope up the changing business environment. Organizations who see & act
upon the opportunities and possibilities for change through innovation in the current volatile and
uncertain, business environment will not only survive; they will successfully compete and even
flourish in the face of the range of emerging adverse and fluctuating business and economic
conditions. Doing this will ensure that their people develop the creative confidence; the self-
assurance and belief and the ability to come up with creative ideas and the courage to try them out,
and collaborate to affect the desired changes in the world around them. This is based on Michael
Porter’s Five Forces Model.

13
 Porter's Five Forces is a model of analysis that helps to explain why different industries are
able to sustain different levels of profitability. This model was originally published in Porter's
book, "Competitive Strategy: Techniques for Analyzing Industries and Competitors" in 1980. The
model is widely used, worldwide, to analyze the industry structure of a company as well as its
corporate strategy. Porter identified five undeniable forces that play a part in shaping every market
and industry in the world. The forces are frequently used to measure competition intensity,
attractiveness and profitability of an industry or market.
Competition in the Industry
The importance of this force is the number of competitors and their ability to threaten a
company. The larger the number of competitors, along with the number of equivalent products and
services they offer, dictates the power of a company. Suppliers and buyers seek out a company's
competition if they are unable to receive a suitable deal.
Potential of New Entrants Into an Industry
A company's power is also affected by the force of new entrants into its market. The less
money and time it costs for a competitor to enter a company's market and be an effective
competitor, the more a company's position may be significantly weakened.
Power of Suppliers
This force addresses how easily suppliers can drive up the price of goods and services. It
is affected by the number of suppliers of key aspects of a good or service, how unique these aspects
are and how much it would cost a company to switch from one supplier to another. The fewer
number of suppliers, and the more a company depends upon a supplier, the more power a supplier
holds.
Power of Customers
This specifically deals with the ability customers have to drive prices down. It is affected
by how many buyers, or customers, a company has, how significant each customer is and how
much it would cost a customer to switch from one company to another. The smaller and more
powerful a client base, the more power it holds.
Threat of Substitutes
Competitor substitutions that can be used in place of a company's products or services pose
a threat. For example, if customers rely on a company to provide a tool or service that can be
substituted with another tool or service or by performing the task manually and this substitution is
fairly easy and of low cost, a company's power can be weakened.

3. Strengthen research and development

14
 Johnson and Johnson should invest in research and development (R&D) to create new and
innovative products and add features to old products. R&D also connects various parts of a
company's strategy, such as marketing and cost reduction. Specifically, companies should invest
in R&D due to increased market participation, cost management benefits, advancements in
marketing abilities and trend matching abilities.

Market participation refers to a company's ability to attract new customers, win customer
interest and increase its market share. R&D allows a company to come up with innovative new
products or features that increase market share by giving customers something they've never seen
before.

R&D strategies let companies create highly effective marketing strategies around releasing
a new product or an existing product with new features. If a company has a strong marketing
department, it can create innovative marketing campaigns that match the innovative development
and increase market participation. R&D can help a company follow or stay ahead of market trends
and keep the company relevant. If a trend is already happening or is bound to happen, a company's
R&D department can help it take advantage of that new trend.

Implementation
Implementing the Recommended Solution, which may involve communicating decisions
at various levels inside and outside the company (Johnson and Johnson), developing budgets and
schedules, obtaining resources, and assigning responsibilities. Note that for information security,
implementation means much more than instituting the R&D program. The real goal, of course, is
to ensure that solutions are implemented in the surface of planning for new products , not just to
develop technologies and processes for their own sake. Thus implementing the R&D plan will
have to include ensuring the implementation of R&D results.
Accomplishing that goal will require commitment by high-level management,
incorporation of R&D results into ongoing agency programs, and user acceptance of the
technologies and processes developed. It will also depend on raising the transportation
community's awareness of how new approaches and techniques can improve security. Both top-
level officials and by program managers throughout the department will be essential for R&D
investments to be made wisely and their results widely disseminated. Finally, and perhaps most
important, success will depend on ensuring that transportation system owners and operators
endorse and help shape R&D program.
The surface transportation system and its security needs are so wide ranging and diverse that
creating and maintaining a balanced, systematic R&D strategy will be a continuing challenge. The
approach taken should be dynamic and able to evolve over time as the situation changes. Its
perspective should encompass the surface transportation system as a whole, not transportation
modes individually. The strategy should include both near-term and long-term efforts and should
address both point vulnerabilities and system-wide strategic vulnerabilities.

Justification

As a direct result of the fall in new approvals, patents expiring on existing products are not
being replaced by new patented products with comparable commercial prospects. In addition, the
return from each new drug has declined. To meet the global health needs of tomorrow, it is critical
to invest in research and development today so the most effective health solutions are available
when we need them.

Here are five reasons why you should strengthen R&D:

a. Competitive Advantage. Those with constant R&D investments are at a higher chance in
succeeding in the global market. And to attain the best professional advantage, R&D investments
demand to come hand in hand with relevant investments, like market development as well as brand
new business processes.

15
b. Tax Credits. Qualified R&D projects allow you to defray costs relevant with that project with
the help of the Research and Development Relief for Corporation Tax. This option grants your
business’s tax bill a significant reduction or, if you own a small to medium size business, you will
get a tax credit in cash disbursed by HM Revenue and Customs.
c. Growth in Sales. There is an undeniably solid relationship between the amount of effort put into
research and development, and the way a company performs. Corporations that use R&D
investment as the main driver for progress are inclined to achieve better outcomes for investors.
d. Innovation. It is and always will be recognized as an important factor in economic growth and
balance. Emerging with fresh ideas can work as a tool for an entire period of new products and
services that transform the economic system, improving its power and vitality. Innovation does
not happen without Research and Development. R&D can easily lead to highly valued
technologies, strategies and designs for your company that could be the origin of potential value
when considering sustaining a competitive advantage.
e. Promoting Your Mission. Be firm about what you plan to accomplish with your business. Think
about this, if you are just presenting the same product or service with absolutely no interest in
flourishing, your business become stagnant and definitely be left behind. The most successful
businesses are always innovating; they are always finding new ways to build that competitive
advantage. R&D is necessary in boosting your business’s vision and objectives. It might seem
overwhelming at first, but when you utilize the help of experts, you can go miles away from a
simple business idea. Never be reluctant to just take action toward innovation and prosperity.

16