BSA-5201

Mgt 108 (Business Policy and Strategy)

Mrs. Mary Grace T. Mandane

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.

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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
- 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

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 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.

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

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 - 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.

- 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

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 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.

 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

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 - 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.

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.

IV. Decision Criteria and 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.

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  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.
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.

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  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
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.

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 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
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.

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  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

Recommended Plan of Action
Who: Johnson & Johnson Management
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.
When: After the development of existing business lines
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

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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 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

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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 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

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 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.

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

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 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

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

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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.
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.

VI. External Sourcing

Epstein, Marc (2017). “Implementing Corporate Sustainability: Measuring and Managing
Social and Environmental Impacts.” Strategic Finance. Retrieved from:
http://www.imanet.org/pdf/01-08-epstein.pdf
Forbes (2016). Johnson& Johnson Company. Retrieved from:
http://www.forbes.com/companies/johnson-johnson/
Johnson & Johnson (2009). Sustainability Report 2008. Retrieved from:
http://www.jnj.com/connect/caring/?flash=true
Kimes, M. (2010). J & J CEO Bill Weldon’s painful year. CNNMoney. Retrieved from:
http://money.cnn.com/2010news/companies/J_and_J_Bill_Weldon_Bad_Year.fort

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Litigation and Settlement News (2011). Johnson & Johnson set aside almost $1billion
for replacement litigation. Retrieved from http://litigationandsettlementnews.com/?
p=164.

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