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Johnson and Johnson Business Overview

A Business Overview
Adam Clark
MGT 408
Post University
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Johnson and Johnson Business Overview

Introduction

Johnson and Johnson, an American multinational company that was founded in 1886. J&J

primarily operates in the healthcare industry. One of the first products originally produced by

J&J was a thin layer of sterile cotton gauze which could be cut down the size of wounds.

Additionally, they began producing sterile surgical products and antiseptics. The late 1800’s

marked the beginning of a transformation of the healthcare field with Johnson and Johnson at the

front creating products that encouraged new ways of thinking about our health. Not only did

they pioneer “clean” medicine. They also invented industrial sterilization process.

Originally Johnson and Johnson produced medical supplies, but over the course of 130 years

they have expanded into three segments for business. The Pharmaceuticals Segment, Medical

Device Segment, and the Consumer Segment.

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Johnson and Johnson Business Overview
Pharmaceutical Segment

The Pharmaceuticals segment of Johnson and Johnson is broken into five major categories.

Immunology, infectious diseases, neuroscience, oncology, and cardiovascular and metabolic

diseases. This segment distributes products directly to retailers, wholesalers, hospitals, and

healthcare professionals for prescription use. (Benson, 2015)

Medical Devices and Diagnostics Segment

The Medical Devices and Diagnostics Segment includes products used in orthopaedical, surgical

care, specialty surgery, cardiovascular care, diagnostics, diabetes care, and vision care. This

segment distributes products directly to wholesalers, hospitals, and retailers. (Benson, 2015)

Consumer Products

The Consumer products segment deals with products for baby care, oral care, skin care, wound

care, women’s health, nutritionals, and OTC (over the counter). This segment distributes

products through retail outlets, and distributors. (Benson, 2015)

Mission Statement

We believe our first responsibility is to the patients, doctors and nurses, to mothers and fathers

and all others who use our products and services. In meeting their needs everything we do must

be of high quality. We must constantly strive to provide value, reduce our costs and maintain

reasonable prices. Customers' orders must be serviced promptly and accurately. Our business

partners must have an opportunity to make a fair profit.

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Johnson and Johnson Business Overview
We are responsible to our employees who work with us throughout the world. We must provide

an inclusive work environment where each person must be considered as an individual. We must

respect their diversity and dignity and recognize their merit. They must have a sense of security,

fulfillment and purpose in their jobs. Compensation must be fair and adequate and working

conditions clean, orderly and safe. We must support the health and well-being of our employees

and help them fulfill their family and other personal responsibilities. Employees must feel free to

make suggestions and complaints. There must be equal opportunity for employment,

development and advancement for those qualified. We must provide highly capable leaders and

their actions must be just and ethical. 

We are responsible to the communities in which we live and work and to the world community

as well. We must help people be healthier by supporting better access and care in more places

around the world. We must be good citizens — support good works and charities, better health

and education, and bear our fair share of taxes. We must maintain in good order the property we

are privileged to use, protecting the environment and natural resources.

Our final responsibility is to our stockholders. Business must make a sound profit. We must

experiment with new ideas. Research must be carried on, innovative programs developed,

investments made for the future and mistakes paid for. New equipment must be purchased, new

facilities provided, and new products launched. Reserves must be created to provide for adverse

times. When we operate according to these principles, the stockholders should realize a fair

return. (J&J, 2020)

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Johnson and Johnson Business Overview
Value

Johnson and Johnson create value through four categories. Growth and Innovation, investing in

the Future, Global Diversity, Citizenship, and Sustainability, and Developing a diverse, and

Global Supply Base.

Growth and Innovation

Johnson and Johnson “aims to own and shape a diverse supplier base that delivers high quality,

compliant and reliable products and services.” (JNJ, 2020)

Their suppliers are encouraged to source innovative solutions and deliver new business models

that contribute to our mutual objectives for growth and streamlined processes. We embrace new

technology whenever it may help us meet the needs of our patients and consumers.

Investing in the Future

We track new market developments and seek suppliers who understand emerging trends and plan

their business accordingly. We forge long-term relationships with organizations that collaborate

with us to successfully bring their innovations to the marketplace. (JNJ, 2020)

We follow a procurement approach that is rooted in Our Credo. We strive to obtain the highest-

quality products and services at a fair cost, representing the best overall value for our companies.
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Johnson and Johnson Business Overview
Global Diversity, Citizenship, and Sustainability

Embracing our role as an industry leader, Johnson & Johnson shapes and upholds the highest

standards for responsible sourcing and corporate citizenship. (JNJ, 2020)

We further differentiate Johnson & Johnson by working with suppliers to accelerate

environmental and social improvements across the value chain. We anticipate and manage risk

and ensure compliance with all procurement policies and processes.

Develop a Diverse, Global Supply Base

We build and develop a global group of suppliers that reflects the diversity of our patients and

customers, and our commitment to inclusion. The Supplier Diversity Program is designed to

ensure that businesses of diverse backgrounds and ownership have the opportunity to become

valued suppliers. (JNJ, 2020)

Since starting our Supplier Diversity Program in 1998, our total spending with small businesses

and diverse-owned suppliers has been over one billion dollars annually.

Porters Five Forces Analysis

By analyzing the five forces that drive profit at Johnson and Johnson and incorporating the value

building model we can come up with the driving ideas behind how Johnson and Johnson

generate their profits.

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Johnson and Johnson Business Overview
Threats of New Entrants

By innovating new products and services. New products not only bring new customers to the

fold but also give old customer a reason to buy Johnson & Johnson ‘s products. By building

economies of scale so that it can lower the fixed cost per unit. Building capacities and spending

money on research and development. New entrants are less likely to enter a dynamic industry

where the established players such as Johnson & Johnson keep defining the standards regularly.

It significantly reduces the window of extraordinary profits for the new firms thus discourage

new players in the industry. (FU, 2018)

Bargaining Power of Suppliers

By building efficient supply chain with multiple suppliers. By experimenting with product

designs using different materials so that if the prices go up of one raw material then company can

shift to another. Developing dedicated suppliers whose business depends upon the firm. One of

the lessons Johnson & Johnson can learn from Wal-Mart and Nike is how these companies

developed third party manufacturers whose business solely depends on them thus creating a

scenario where these third-party manufacturers have significantly less bargaining power compare

to Wal-Mart and Nike. (FU, 2018)

Bargaining Power of Buyers

By building a large base of customers. This will be helpful in two ways. It will reduce the

bargaining power of the buyers plus it will provide an opportunity to the firm to streamline its

sales and production process. By rapidly innovating new products. Customers often seek

discounts and offerings on established products so if Johnson & Johnson keep on coming up with
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Johnson and Johnson Business Overview
new products then it can limit the bargaining power of buyers. New products will also reduce

the defection of existing customers of Johnson & Johnson to its competitors. (FU, 2018)

Threats of Substitute Products or Services

By being service oriented rather than just product oriented. By understanding the core need of

the customer rather than what the customer is buying. By increasing the switching cost for the

customers. (FU, 2018)

Rivalry among the Existing Competitors

By building a sustainable differentiation. By building scale so that it can compete better.

Collaborating with competitors to increase the market size rather than just competing for small

market. (FU, 2018)

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Johnson and Johnson Business Overview
References

Benson, Mike, 2015. The Market Realist, Analyzing Johnson and Johnson. Article retrieved

from: https://articles2.marketrealist.com/2015/03/johnson-johnson-leading-pharmaceuticals-

company/

JNJ, 2020. Johnson and Johnson, Our Credo. Article retrieved from: https://www.jnj.com/credo/

n.d. 2018. Fern Fort University, Johnson and Johnson Analysis. Article retrieved from:

http://fernfortuniversity.com/term-papers/porter5/analysis/1838-johnson---johnson.php