Introduction
Johnson and Johnson is a multinational company that has carved a niche for itself in the manufacture and production of medical devices, pharmaceuticals, and consumer products. It is located in the United States of America. The multinational company was founded back in 1886, with its headquarters situated in Brunswick. The company has almost two hundred and fifty-five branches in other countries. To balance its short-term and long-term goals, the company majors in sectors that are crucial in the pharmaceutical sector of the economy. The company engages most of its time in research and development, giving them a chance to come up with new business ideas that are beneficial and profitable. It also draws its attention to employees’ well-being, safety precautions, and ethics as they conduct their daily business. As a result, it is among the companies that help with the improvement of quality of life around the world.
The company always carries out research on healthcare products that may cure mothers while also making sure that products are also able to meet the needs of many. This paper aims to look at the company’s background, macro forces that may affect the pharmaceutical giant, and the analysis of SWOT. It will also analyze porter’s five forces and their impact on the company’s level of competition in the pharmaceutical industry, the competitive nature of Johnson and Johnson Company, its research, and recommendations moving forward.
Johnson and Johnson Company Background
The pharmaceutical giant has been in existence since 1886, it was founded by three brothers who wanted to manufacture sterile sutures and bandages to help in the treatment of wounds. Since then the Johnson and Johnson Company has been very broad in health care products manufacturing while still the leading pharmaceutical market provider. The headquarters of the company are situated in Brunswick in New Jersey, the company boasts of close to 150,000 employees in their branches in over 59 countries, this indicates that the company has created a stable brand in some places and is well suited in handling any challenges that may arise in the market (Aniqoh, 2019).
The company’s pharmaceutical sector is responsible for producing cures to some of the world’s deadly diseases. Some of the pharmaceutical products manufactured by the company include pain killers, neurology, anti-psychotic, dermatology, and anti-infective. All these products are distributed to healthcare professionals, retailers, and hospitals for them to be prescribed to patients; the company is committed to making sure that humans live healthier and longer. The commitment has led the company to focus heavily on research aimed at manufacturing drugs that would help in the fight against dangerous diseases. The consumer products found in the company’s health sector include wound care, nutrition products, skincare baby care, and women health care products. The company has made available most of its products in pharmacies, distributor stores, and retail outlets.
The company’s medical devices department has produced some innovative products that are primarily used by professionals in areas such as diagnostics, treatment of diabetes, surgery, and sports medicine. The products from this department are distributed to hospitals, pharmacies, wholesalers, and retailers. The medical devices department is the company’s major revenue earner as it was responsible for almost 40% of the company’s total revenue in the year 2013.
PESTEL Analysis
This is a framework that is strategically used to assess political, social, economic, technological, and legal factors that affect a given industry at a particular time. This is a very effective way of pinpointing out factors that are most likely to have an influence on some strategies in the future. The analysis is crucial for business marketing, product development, and planning departments as it helps them to have an understanding of the market growth, business potential, and the direction taken by various business operations. The industry sometimes experiences some challenges; therefore, it needs PESTEL analysis to help identify the challenges so that they can move and create a contingency plan.
Political Factors
There has been an increase in political attention towards the pharmaceutical industries in the recent past, this is due to an increase in a lot of heath and life-threatening diseases. A few political interests have an influence on the healthcare sector in general, requiring pharmaceutical companies to call on different governments in order to carry out many of their operations. The difficulties these companies face in trying to strike a balance between providing quality medical goods and making enough money have some unintended economic consequences. Pharmaceutical companies must accurately adapt to changes in government policy while still adhering to ethical standards.
Furthermore, in order to compete in the current market, these businesses must be accountable and compliant. The healthcare system has been expensive, resulting in debates in many nations, including the United States and the United Kingdom, on how to build an accessible healthcare system (James et al., 2019). Regulators in the pharmaceutical industry have unfortunately become not only more strict but also more costly, increasing the cost of production and, as a result, raising the cost of healthcare. The Johnson and Johnson Company operates in a number of countries around the world. As a result, it must keep up with changing political conditions in different countries in order to make the required changes.
Social Factors
Many businesses and organizations around the world incorporate environmental and social factors into their operations. They still use this approach when dealing with stakeholders, transforming it into a cooperative social responsibility concept. Pharmaceutical companies have contributed significantly to the modern healthcare system by developing a variety of drugs that are critical in the treatment of harmful and dangerous diseases. To ensure that the company’s activities benefit society, it must ensure that it strictly adheres to corporate and ethical rules while also reacting to recent environmental changes.
Technological Factors
There has been progress made in technological innovation, which has resulted in a number of advancements in the pharmaceutical industry. Due to rapid technological advancements, many major players, such as Johnson and Johnson Company, have adopted new technologies while also investing heavily in research and development. Furthermore, technological advancements have changed the way pharmaceutical firms work. As a result, businesses must continue to update their infrastructure in order to keep up with the rapidly changing technological landscape. Furthermore, emerging innovations have introduced new programs and businesses to the market, such as personalized medicine and social media healthcare, to name a few.
Environmental Factors
Stakeholders in the pharmaceutical sector have become more mindful of the value of ensuring that businesses take a responsible approach to environmental issues. Environmental problems must be taken into account by businesses in their activities. Furthermore, businesses should adhere to sustainability by producing eco-friendly goods and taking environmental concerns into account.
Legal Factors
Pharmaceutical firms are subject to a number of restrictions and must also adhere to legislative guidelines and regulations. Furthermore, because many people demand cheaper and better healthcare, the internet’s breakthrough has changed legislative boundaries. Several pharmaceutical firms make choices based on political and environmental considerations when providing healthcare services in many developed countries. Many regulatory authorities perform product labeling and monitoring to ensure the safety of medicines and food on the market. Various legal changes in a country may have a negative or positive effect on the industry. Companies like Johnson & Johnson must ensure that they comply with recent regulatory reforms in their respective countries.
Strength, Weaknesses, Opportunity, and Threats Analysis
Strengths
The Johnson and Johnson company has built a powerful brand reputation and has aided in the treatment of a variety of health-related problems by supplying drugs to treat a variety of diseases and illnesses. Furthermore, the company has a variety of products to offer, they include sanitary products for women, infant care products, medicinal products, and surgical products.
The company has effective marketing campaigns and significant revenues, allowing it to become one of the world’s leading pharmaceutical companies. The company has nearly 29,950 internet domains (Tan, 2017), allowing them to do business all over the world, giving them an edge over their rivals.
Weaknesses
The business is under pressure from a variety of sources around the world to keep copyrights from expiring and lower costs. Furthermore, the company spends extensively in obtaining knowledge and conducting analysis, resulting in a high total production expense. Furthermore, instead of focusing and advancing just a few segments, Johnson and Johnson Company spends more money seeking to diversify in different fields. As a result, rivals like Pfizer and Abbot Laboratories specialize more than this business because they do not diverge.
Opportunities
Since it has already developed a global reputation, Johnson and Johnson Company has the potential to expand significantly. The organization should focus more on a few goods to ensure that they sell them more effectively while maintaining protection and high quality. Furthermore, the organization wants to expand its presence in rural areas, as this is a region that has historically been underserved (Phadermrod et al., 2019). This business should also concentrate more on technical advancements and inventions.
Threat
The increasing pressure on pricing and global currency fluctuation is a major challenge to this business. Another threat is a recall of the company’s drugs, this would tarnish its name in the industry. The switch increases rivalry, and the company will lose some of its long-term customers to other rivals in the near future.
Porter Five Forces
New Entrants as a Danger
Within the pharmaceutical industry, the likelihood of new competition is extremely low. The high cost of drug discovery and testing serves as a deterrent for many new businesses. Furthermore, many government regulations pertaining to medications, medicines, and other related goods are a barrier to new businesses entering the industry. Since Johnson and Johnson’s company has created a strong brand around the world, a new entrant is not a challenge.
Rivalry Levels between Existing Companies
Within the pharmaceutical industry, there is fierce rivalry, and most firms compete to develop new and more successful medicines. In both the public and private sectors, fierce competition exists, with an emphasis on product value, customer care, and pricing. Owing to the danger of expiration, the majority of the firms have merged. The rivalry has little impact on the Johnson and Johnson Business. Even though there is a growing demand for medical supplies, this has had little impact on costs, and therefore there is little market competition.
Bargaining Power of Buyers
Patients’ bargaining power has been eroded as drug prices have risen, forcing them to purchase the medications that have been prescribed to them. Furthermore, consumers are dispersed around the world and have little control over product pricing. As opposed to when there were just patent medicines, the availability of generics has provided clients with some bargaining power. The majority of customers choose to purchase generic goods because they perform similar functions and are less expensive.
Bargain Power of Suppliers
Since the majority of transactions are with the industry’s top companies, the manufacturers of this industry have no bargaining power. When it comes to choosing vendors for different product types, such as diagnostics and medical equipment, Johnson and Johnson uses a systematic approach. Suppliers, on the other hand, may have a significant impact on consumer prices in a given region.
Substitute Threats
Due to the disparity in pricing, there is a growing need for a substitute in this industry. The majority of people prefer generic drugs to brand-name drugs because they are less expensive.
Companies that make generic drugs don’t have to spend as much on research and development, so they can market their goods for less money. Johnson and Johnson, as a company, faces competition from a variety of sources, including the availability of generic medications and herbal medicine.
Analyzing the Competitive Position of Johnson and Johnson Company
The Johnson and Johnson Company is among the top ten largest health companies in the world. It is also the largest and most varied diagnostic and medicinal device company. Among several healthcare sectors, the organization maintains a leading role. Its various healthcare segments insulate it from several economic downturns, creating emerging defensive opportunities (Maiorescu-Murphy, 2020). Furthermore, due to its specialty drugs, the company has stable pricing power. It has also developed innovative and advanced technology, such as minimally invasive surgical instruments and ceramic orthopedics. Unlike its competitors, Johnson and Johnson faces unpredictable patent losses in the coming years.
Recommendations and Conclusion
Johnson and Johnson is a well-known company with a strong growth and testing team. It also has a strong financial foundation that allows it to perform regular operations globally and, as a result, constantly revise its vision in order to include new services and goods that meet the needs of customers. The company’s approach entails recognizing public health challenges and attempting to provide solutions with the aim of ultimately improving people’s lives within communities.
Furthermore, the company has developed a reputable brand on a global scale. It can, however, pursue untapped market opportunities in developing countries and rural areas, where it can enhance the lives of the people who live in the surrounding areas. They should also provide free vaccines to children living in those areas and develop affordable medications for those who are financially disadvantaged. Finally, the organization can assist in environmental awareness campaigns while avoiding over-diverging and focusing on a few segments.
Reference
Aniqoh, N. A. F. A. (2019). A Strategy Framework for Deciding Between Alliances or Acquisition of Johnson & Johnson Pharmaceutical Company (Case Study: Strategy Framework of Johnson & Johnson and Cipla Inc in The Production of Anti-Infectious Drugs). Journal of Digital Marketing and Halal Industry, 1(1), 25-46. Web.
James, M. M. A., Kee, D. M. H., Xian, T. H., Han, K. C., Ching, K. K., & Alshammari, M. S. (2019). Johnson & Johnson’s Product Safety Issues and Ways the Company Can Address Those Issues. Asia Pacific Journal of Management and Education, 2(3), 7-18.
Maiorescu-Murphy, R. D. (2020). Online Corporate Diversity at Johnson & Johnson. In Corporate Diversity Communication Strategy (pp. 157-171). Palgrave Macmillan, Cham.
Phadermrod, B., Crowder, R. M., & Wills, G. B. (2019). Importance-performance analysis based SWOT analysis. International Journal of Information Management, 44, 194-203.
Tan, L. (2017). Financial Situation Assessment of the Johnson & Johnson Company.