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Strategic Analysis Case Study 2009 Jarryd Phillips, Jermaine West, Spencer Jacoby, Othniel Hyliger, Steven Pelletier 1.

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Presentation on theme: "Strategic Analysis Case Study 2009 Jarryd Phillips, Jermaine West, Spencer Jacoby, Othniel Hyliger, Steven Pelletier 1."— Presentation transcript:

1 Strategic Analysis Case Study 2009 Jarryd Phillips, Jermaine West, Spencer Jacoby, Othniel Hyliger, Steven Pelletier 1

2 Overview Company Overview History Current Vision Statement & Credo Proposed Vision & Mission Statements External Assessment Positioning Map CPM Matrix Opportunities & Threats EFE Matrix Internal Assessment Organizational Chart Financial Ratios Trends Strength & Weaknesses IFE Matrix Strategic Assessment SWOT Matrix Space Matrix Grand Strategy Matrix BCG Matrix IE Matrix Matrix Analysis QSPM Recommendations Objectives Strategic Implementation EPS/EBIT Projected Balance Sheet Projected Income Statement Evaluation Balanced Scorecard Possible Issues Sources Questions 2

3 History 3

4 Timeline 1886- 3 brothers founded Johnson & Johnson in Brunswick, New Jersey. 1888- Pioneered the first commercial First Aid Kit. 1894- Launches first maternity kit to make child birth safer 1898- First to mass produce dental floss. 1921- An employee invents the first BAND-AID 1937- Began international expansion with companies in Argentina & Brazil 1954- Baby shampoo enter the market 1978- The Company begins construction on their new World Headquarters in New Jersey. 1990’s- Ethicon Endo-Surgery pioneers minimally invasive surgery. 2002- Johnson & Johnson acquires Tibotec-Virco BVBA 2006- Johnson & Johnson acquires Pfizer Consumer Healthcare 2009- Acquisition of Mentor Corporation 4

5 2009 Highlights Strengthened core business and invested in new launches Acquired Cougar Biotechnology in July Continued to expand globally 5

6 Current Vision “To maximize the global power of diversity and inclusion to drive superior business results and sustainable competitive advantage.” 6

7 Johnson & Johnson Credo This is a statement of our values and responsibilities that was written more than 60 years ago. It articulates our responsibilities to customers, employees, communities and shareholders. It sets the tone for what is expected at J&J. 7

8 Proposed Mission Statement Our philosophy and core values are centered on our desire to provide the safest and most reliable products and services to our customers, employees, medical professionals, and stockholders (1, 2, 6, and 9). Our consistent market growth and competitive advantage within the world market will ensure profitability and is a tribute to our trained employees, innovation, technology, and market research (3, 4, and 5). In regards to local and domestic communities, it is our goal to ensure that Johnson and Johnson adhere to policies and procedures to be socially responsible and for the betterment of all members of our value chain (7, 8). 1. Customers 2. Products or services 3. Markets 4. Technology. 5. Concern for survival, growth, and profitability 6. Philosophy 7. Self-concept 8. Concern for public image 9. Concern for employees 8

9 Proposed Vision Statement Johnson and Johnson’s vision is to be the most recognized, innovative, and socially responsible name in pharmaceutical, consumer health, medical device, and prescription products in the world. Through this, we will earn our customer’s respect and enthusiasm with continuous improvement that is driven by innovation, integrity, teamwork, and the desire to provide value for the investment. As a result, J&J will gain market share to increase sales and generate dividends for our shareholders. 9

10 Proposed Slogan “Caring for you from the beginning, to the very end!” 10

11 11

12 Number of Stores (High) Number of Stores (Low) Wide Price Competitiveness Narrow Price Competitiveness Position Map 12

13 CPM Matrix 13

14 Opportunities Acquisition of Synthes could enhance J&J’s Failure of prospective products to deliver leadership position in global orthopedics market Leveraging therapeutic coverage of non-prescription pharmaceutical segments could provide cross-selling opportunities Addition of Crucell to broaden J&J’s position in biologics and vaccines market R&D investment will add to the potential growth rate of the company in surrounding markets. Economic recovery will be a boost in income thus company revenue will increase. Global expansion 14

15 Threats Negative Impact of Recent Product Recalls Healthcare regulations Better research and development of competitors Low market growth rate. Strong competition from the generic market. Launch success in that newly launch products are uncertain because of regulatory review, thus making the launch a potential threat if it fails. 15

16 EFE Matrix 16

17 17

18 Organizational Chart 18

19 Financial Ratios 19

20 Financial Trends 20

21 Trends 21

22 Sales by Geographic Region 22

23 Sales by Segment 23

24 24

25 Strengths Diverse business offering Forecast growth despite challenges Significant sales and marketing capabilities Robust financial position They have strong global presence operating in more than 57 countries with 250 subsidiary companies They have successfully employed strategies to differentiation that helps it distinguish itself from its competitors. 25

26 Weaknesses Generic drug's exposure Private label exposure Quality issues in OTC products affecting consumer healthcare product sales Key product demand is shrinking. Theft and counterfeiting of drugs from internal staff as much as this is not isolated to J&J. Pressure to reduce prices in accordance with medical budgets and maintain patent expirations to help generic programs. 26

27 IFE Matrix 27

28 28

29 SWOT Matrix SO Strategies S1, O1: JNJ Should aim to be an industry leader in all its diverse business offerings. S2, O2: With the addition of new products in various departments, JNJ could potentially still predict growth in challenging times. WO Strategies W1, O1: Although there is a wide variety of generic drugs, JNJ should use this as an opportunity to highlight the value and quality of their products and increase R&D in specific segments to increase market share in surrounding markets. W2, O2: OTC sales should be used as a prime opportunity to highlight the value and worth of JNJ`s products. ST Strategies S1, T1: JNJ`s diversity should not be a means for its products to be valued as "average", its diversified range should be known for the high quality. S2, T2: The prediction of increased sales in challenging times should be a testament to JNJ`s value and quality of products. WT Strategies W1, T1: Product recalls can seriously hinder the perceived value and quality of JNJ. W2, T2: Healthcare regulations along with challenging economic times can prove costly to JNJ as a whole. 29

30 Space Matrix 30

31 Grand Strategy Matrix 31

32 BCG Matrix +15 -15 1 0.5 0.0 0 32

33 IE Matrix 33

34 Matrix Analysis 34

35 QSPM 35

36 Recommendations Increase R&D in the pharmaceutical segment by $75 million; will result in 8% projected sales increase Continue to improve on product recalls; this will give a better quality perception to consumers and medical personal Improve cross-sell techniques of diversified products Total cost = $75,000,000 36

37 Objectives We are proud of our 2009 accomplishments, but we recognize there is a great deal more to do. In the near future, we continue to assess what more we can do across our business segments, our supply chain and together with partners, including governments, other companies and social and environmental non-governmental organizations. The people of Johnson & Johnson remain committed to living up to the responsibilities laid out in Our Credo. As our Company approaches our 125-year milestone, improving human health and well-being is still our crucial mission and the ultimate measure of upholding our responsibility now and for generations to come. 37

38 38

39 EPS/EBIT 39

40 Projected Balance Sheet 40

41 Projected Income Statement 41

42 Evaluation 42

43 Balanced Scorecard 43

44 Balanced Scorecard cont. 44

45 Possible Issues Additional product recalls/ lawsuits Another economic downturn Competitor’s gaining market share Federal regulations that affect potential new products and existing processes Litigation from people being hurt through defective products International regulations that limit foreign expansion 45

46 Sources Johnson & Johnson Annual Report. 08B2-4AD4-86AC-5BDB928E5320/JNJ_2009AR.PDF 08B2-4AD4-86AC-5BDB928E5320/JNJ_2009AR.PDF Johnson & Johnson. The Street. 10 Companies that paid the least in taxes. paying-the-least-in-taxes.html paying-the-least-in-taxes.html CBS News. J&J layoffs: the jobs that are the safest and those that aren’t. 42843383/j038j-layoffs-the-jobs-that-are-safest-and-those-that-arent/ 42843383/j038j-layoffs-the-jobs-that-are-safest-and-those-that-arent/ Historical Stock Prices. Competitor Comparisons. Competitive Profile. 46

47 Questions? 47

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