SWOT Analysis

Johnson & Johnson’s Strengths

1. Global Dominance
Johnson and Johnson is the leading health care company globally and has more than 265
operating companies in over 60 countries globally. It is a leader in medical devices and
diagnostics, pharmaceutical products, and consumer healthcare products. 
2. Highly Influential : Johnson & Johnson is one of the most influential companies in
the world. It influences the economic wellbeing of many countries, including the US
stocks market. 
3. Highly Experience:With over 130 years of experience, Johnson & Johnson
understands what it takes to fulfill the needs of the target market fully. Having more
experience in matters of health is a major strength and advantage over competitors.
4. Extensive Product Portfolio :From Purell to Tylenol, Listerine, baby products,
Destin, Visine, Clean & Clear, Neutrogena, Band-Aid, Stayfree, and Acuvue Lenses,
all these products enhance the company’s stability and superiority in the market. 
5. Strong Community Engagement :Johnson & Johnson engages fully in international
affairs as a concerned global citizen in matters that affect global health. From the
Healthy Child Initiative with the UN to the malaria campaign with the AU
and combating the virus with the US government, the company is always at the
forefront in matters of global health. 
 6. Robust Supply Chain :Johnson & Johnson has an extensive supply chain that
ensures all raw materials are available, and finished products are distributed
efficiently to retailers, outlets, and pharmacies across the world. 
7. Brilliant Partnerships :Most companies insist on manufacturing each profitable
product themselves, which can be catastrophic. Johnson & Johnson understands the
ineffectiveness of this strategy and opts to partner with leaders in specific regions and
fields of expertise to deliver highly effective products. 
8. Effective Marketing :Johnson & Johnson’s marketing strategy focuses on exploiting
the emotional connection to nurture trust and long-lasting relationships between
mothers and their products. The strategy has effectively marketed the products and
attracted customers globally. 
9. Strategic Acquisitions and Mergers: The quicker a company gets into new and
lucrative markets, the faster it grows. Johnson & Johnson strategically acquires
and merges with big and small companies for quick and profitable expansion. 

Johnson & Johnson’s Weaknesses

1. Unethical Operations
Lawsuits against the negative effects of Johnson & Johnson’s Xarelto, talc-based baby
powder, opium-addictive Norman drug, and many more are projected to cost about $15
billion. Most importantly, each lawsuit erodes trust and taints its reputation. 
2. Lack of Diversification
Johnson & Johnson’s global revenue comes from three major divisions:
pharmaceutical, medical devices and diagnostics, and consumer. There is a lack
of diversification. With all its eggs in a single basket, Johnson & Johnson can incur
catastrophic losses. 
3. Overdependence on Successful Products
Once a product is launched and risen to become a leader in the market, there is nowhere else
to go but down. Johnson & Johnson’s over-dependence on $3.5 billion yearly from Zytiga
until 2018 when a court allowed sales of generic versions of the drug leading to a sharp
decline in sales. 
Johnson & Johnson’s Opportunities
1. Rebalance Portfolio
With medical devices and pharmaceuticals bringing in over 80% of total revenue, Johnson &
Johnson can focus on increasing sales of consumer health products. Rebalancing the
portfolio can increase total revenue. 
2. Expand through Acquisition
Johnson & Johnson’s revenue increased immensely from 2016 to 2020 with acquisitions like
Tylenol. It can expand again, using acquisitions. 
3. Focus on Emerging Markets
About 57% of Johnson & Johnson’s global pharmaceutical sales come from the US. The
company can focus on increasing pharmaceutical sales in Latin America, Africa, and Asia. 
4. Target the Lower-Class
Johnson & Johnson can introduce a cheaper variety or offer discounts for its drugs to target
the lower-class. 

Johnson & Johnson’s Threats

1. Stiff Competition
From Reckitt Benckiser to Unilever, Procter and Gamble, Abbott, and many more, the large
number of strong global players competing against Johnson & Johnson threatens profitability.
If stiff competition stiffens further, Johnson & Johnson will lose a substantial portion of
its market share. 
2. Increase in Generics
Recently, Johnson & Johnson’s revenue dropped after the sales of generic versions of Zytiga
were allowed into the market. If generic drugs increase drastically in the future, the
company’s profitability and sustainability will be threatened further. 
3. Stringent Regulation
Since Johnson & Johnson offers its brands in different markets across the world, it has to
comply with numerous regulations enacted by governments. Its record does not help the
company. 
4. New Technologically Advanced Entrants
Innovative drug manufacturers are emerging rapidly from countries like India. If any
company acquires the technological capacity to develop cheaper and more effective
substitutes, retaining even most customers will be a challenge for Johnson & Johnson. 
5. Intensified Fight against Drug Abuse
The role of drug manufacturers in the opioid epidemic in the US can lead to the enactment of
harsher laws in the future. If governments ban drugs manufactured by Johnson and Johnson,
this will threaten the profitability or even the existence of the company. 

PORTER’S FIVE FORCES MODEL

1.Threat of New Entrants: Low

 High cost for R&D
 High expenses involved in producing/ manufacturing medicines and medical devices.
 High cost to maintain manufacturing as well as establishing name in industry.
 J&J has a recognized brand name in which customer loyalty is high

2. Threat of Substitutes: Low-Moderate
 Few subs available in regards to medicine
  Subs consumer may consider buying can be store bought brands or natural herbs;
select group of people purchase natural herbs/ tend to have high cost.
 More competition with beauty products, competitive brand names established

3. Bargaining Power of Buyers: Low

(Buyers include individual consumers, doctors, wholesalers, retailers, pharmacists, and
insurance companies)
 Few suppliers with established brand name available to wholesalers or retailers.
 J&J already has established name with doctors, physicians, pharmacists, and
insurance companies.
 Switching cost for individual consumers is low but brand name reels buyers in.

4. Bargaining Power of Suppliers: Low

 Suppliers needed for manufacturing of medical equipment as well as medicines.
 Need standardized and customized suppliers so they choose suppliers carefully.
 Contractual agreements maintaining long term relationships.
 Brand name that suppliers want to be involved with knowing the reputation and
stability of the firm.

5. Level of Rivalry Among Existing Players: Moderate

 Not necessarily competing with price but rather stability due to regulations imposed
by governments around the world.
 In this industry, companies perform multiple M&A’s and diversify which J&J has
done, helping it keep up with the competition.