Analytical Essay on Crisis Management in Johnson and Johnson

Introduction:

Crisis Management can be defined as “the identification of threats to an organization and its stakeholders, and the methods used by the organization to deal with these threats.” (Investopedia, 2018).

In October of 1982, Johnson and Johnson came under tremendous scrutiny, as it was reported that seven people in Chicago had died after taking their extra-strength painkiller Tylenol. At this point in time, Tylenol was the USA’s number one painkiller medicine. The report did not mention if the deaths were at the fault of Johnson and Johnson, of if their deaths were because of tampering after the manufacturing and distribution. Tylenol had a huge market share of 37 percent before this crisis emerged. Immediately after the deaths news broke of the travesty, and this resulted in Johnson and Johnsons market share declining to a meagre seven percent. After an investigation, it was confirmed that the tragic deaths were due to an external party poisoning the Tylenol capsules by adding 65 milligrams of deadly cyanide into the Tylenol capsules.

This report will attempt to explain the context behind the Johnson and Johnson case study, as well as analyse the approaches employed by Johnson and Johnson in order to gain an understanding o how and why they were so effective.

Literature Review:

Findings and Conclusions:

Once Tylenol was removed from the market, Johnson and Johnson needed to formulate a plan to restore their product to its former success. There is no quick-fix in this case study, due to the reputation of the brand and the severity of the harm caused. However, Johnson and Johnson employed some effective managerial strategies to negate the damage caused.

Formulate crisis strategy team and initial response:

Johnson and Johnson were alerted to the crisis after a news reporter called asking for comments of the death and their relations to them. Johnson & Johnson’s first response was to form a crisis strategy committee. The committee decided that the safety of their public was their primary concern. Once this was achieved their second task was saving the product. They began their response by alerting consumers throughout the country, using media outlets, to not consume any Tylenol until updated in the future. Johnson & Johnson then conducted a nationwide recall of all Tylenol related products, stopped production and cancelled advertising after finding two more contaminated bottles. The cost of this recall came to around 31 million bottles, which resulted in a loss of over $100 million dollars (Iml.jou.ufl.edu, 2019). Their decision to remove and withdraw every Tylenol product, they proved that the consumer safety was their upmost concern. The likelihood of finding more Cyanide-laced Tylenol capsules was obviously low, as it was more of a regional issue but nevertheless they still did it. This helped them to be viewed by the public as the victim rather than the culprit, which made improvements with their relations to a key stakeholder.

Communications with stakeholders:

As previously mentioned, Johnson and Johnson were late to find out about the Tylenol, and as such the media where quick to point the finger at Johnson and Johnson. They made front page news throughout the country, with media outlets using titles such as: Time Magazine, ‘Poison Madness in the Midwest,’ and The Washington Post, ‘Tylenol, Killer or Cure”. Appendices A1 and A2 are a further illustration of this. This created a negative opinion and was pushed out to millions of consumers. Johnson had to act on this relations breakdown and so they made use of as many media outlets as possible to initially alert consumers on the current danger of Tylenol. This would have cost a hefty sum considering it reached nationwide press, but chairman James Burke and the committee thought it essential to be open to the public. They also opened a phoneline, so they could directly address the concerns of customers giving consumers a more personal response to their own issues.

Remediation:

Remediation can be defined as ‘the process of improving or correcting a situation’ (Dictionary.cambridge.org, 2019). Johnson and Johnson assisted the affected families financially and also offered counselling. This promoted positive feelings amongst the public, as it was clear that even though Johnson and Johnson were not responsible for the deaths, they still claimed full responsibility and were committed to righting all wrongs.

Immediate update of product safety:

Tylenol products were re-introduced to the market after some essential changes were made to the packaging. After the investigation confirmed the deaths were due to external tampering, Johnson and Johnson introduced a special triple-seal tamper resistant packaging that was installed on the product, to give consumers more confidence in purchasing their products. In addition to this, they began promoting the use of caplets, as opposed to capsules, which they believed to be more resistant to tampering.

Motivating their market:

Johnson and Johnson suffered a heavy loss in revenue due to the crisis and needed a way to revive their attractiveness in the eyes of the consumer. In order to achieve this, they offered a coupon of $2.50 off of their product, which could be attained through newspapers and calling a toll-free phone number (Mitchell 1989). Furthermore, they introduced a price scheme for a few of the affected products, offering up to 25% off the product. (Mitchell 1989)

Recommendations and implementation:

Johnson and Johnson handled the case very effectively; after suffering early losses in market share and revenue and then losing more to control and rectify the crisis, their quick actions helped the company recover 70% of its previous market share (Mallen Baker’s Respectful Business Blog, 2008). Furthermore, the lengths they took to rectify the situation, compensate those affected and prevent future crises of a similar nature happening again has to be commended. However, you could argue that the company should have had a positive relationship with the media before the crisis happened. Johnson and Johnson did not actively participate in media coverage, excluding advertising and the likes. As previously mentioned, they found out about the crisis through a news reporter asking them for a response. If the company had a positive relationship with the press they may have been able to keep the crisis from going national if they were notified early, meaning they would have been able to act earlier and identify that the poisoned bottles were only in the Chicago area. Limiting it to this would mean that a national recall would not have been necessary, thus negating the losses.

Analytical Essay on Johnson and Johnson Strategic Capability

Introduction Internal analysis

Strategic capability mentions a business’ aptitude to attach all its skills, resources and capabilities in order to get competitive benefits, and therefore survive and rise its value over the time (Nickols, 2016). While strategic capability took into account the strategies a business can use include the main focuses on the assets of an organization, their resources & their market position, their projection and how well that will be able to employ strategies in upcoming future. There is no single process or any matrix for measuring strategic capability (King, W.R., 1995). This report will focus Johnson and Johnson, which is an important company operating in the consumer goods industry. The report will undertake its internal analysis, as well as the external analysis, as well as TOWS

Johnson and Johnson strategic capability:

Resources are the creative assets both tangible for example, cash and plant machinery are also included in intangible, for example technology, reputation and culture and also human skills, capacity for communicating properly and teamwork and motivation in control by the organization Grant. The main strategic capability of Johnson and Johnson is their pricing strategy which differentiates them with their competitors.

Core competencies:

For Johnson and Johnson, their active competence is established in their achievement rate, related to their procurement along with the profits and new capabilities which are generated as a result. For instance, their price saving practice when obtaining a steady strategy, as well as the comfort with which they infer such interests linked with limited options.

Value chain:

The continuous reformation strategy e impacts the value created by Johnson and Johnson as a company spread well outside its operations. There are many chances to exploit the positive impacts and reduce the risks at each stage of Johnson & Johnson’s value chain. Consequently, the value chain map defines the limits of business impacts, and helps for better understanding and influence opportunities together with the stakeholders. Based upon the business facts, the strengths and weaknesses are assessed as following.

Strength:

  • Universal sales continue to increase with ongoing plans for upcoming further geographic and different market solution growth to increase sales growth.
  • Johnson and Johnson use a comfortable business model that allows to adapt rapidly to market changes and there trends, and also focusing on entrepreneurship, issues solving methods, and innovation.
  • This business model has been led to many creative modern and new innovative medical devices, pharmaceutical medicine, and other consumer healthcare product announcements, further distinguishing the company from its competitors.
  • Most of its portfolio brands are respected by a extensive range of client who frequently return to these products for their reliability and quality and their value.
  • The company has improved its brand worth through awards like the most dependable company and one of the topes companies to work for around the entire world.

Weaknesses

  • Pharmaceutical companies have been evaluated and criticized for their huge prices, which many customers have issue paying so this has run to worries concluded corporate greed.
  • There are some protest occurs against the products of Johnson and Johnson’s products, including its pubic net implants, which have ran to a spoiled there reputation.
  • The company is dependent on sure products and bit niche drugs for the pharmaceutical industry.
  • According to recent reports that employees of this company have taken company secrets and information, which has damaged its hard work to create an ethical dilemma and responsible workplace.

Threat Opportunities

Weakness Strength

TWOS analysis

  • The company’s achievement with any product announcement, like medical devices, and pharmaceuticals and different healthcare products are often tense to governing approval more so than market taking. This can also differ from country to country, which additional confuses the possible for achievement with new products.
  • There are a lot of products recalls, which are threat for the company’s credibility.
  • Generic pharmaceutical products are very low price which are significant threat for Johnson and Johnson.
  • U.S. competition has the awareness of being more dependable than Johnson and Johnson with many others products, particularly in light of product memories and protests about the opposing side effects of some of its products.

Opportunities

  • Cross-selling between medical devices, pharmaceuticals, and diagnostics related to care-giving and specific therapies for oncology, diabetes, and other health issues.
  • There are opportunities for further acquisitions to strengthen its position, further diversify its product portfolio, expand its territories, add to its resource and research capabilities and grow revenue streams.
  • There are new medical therapies and findings that align with some of the company’s core capabilities, providing new opportunities for additional
  • The diagnostic market appears to be growing, which positions Johnson and Johnson as a first mover in many applications.
  • Some countries are now banning generic medicine, which gives Johnson and Johnson an advantage.

Weaknesses

  • Pharmaceutical companies have been evaluated and criticized for their huge prices, which many customers have issue paying so this has run to worries concluded corporate greed.
  • There are some protest occurs against the products of Johnson and Johnson’s products, including its pubic net implants, which have ran to a spoiled there reputation.
  • The company is dependent on sure products and bit niche drugs for the pharmaceutical industry.
  • According to recent reports that employees of this company have taken company secrets and information, which has damaged its hard work to create an ethical dilemma and responsible workplace.

Strengths

  • Universal sales continue to increase with ongoing plans for upcoming further geographic and different market solution growth to increase sales growth.
  • Johnson and Johnson use a comfortable business model that allows to adapt rapidly to market changes and there trends, and also focusing on entrepreneurship, issues solving methods, and innovation.
  • This business model has been led to many creative modern and new innovative medical devices, pharmaceutical medicine, and other consumer healthcare product announcements, further distinguishing the company from its competitors.
  • Most of its portfolio brands are respected by a extensive range of client who frequently return to these products for their reliability and quality and their value.
  • The company has improved its brand worth through awards like the most dependable company and one of the topes companies to work for around the entire world.

Feasibility:

The Director, Feasibility is the foundation of strategic, climbable business operations, feasibility related data and technology, and relationships with internal and external stakeholders. This experienced data, technology, and operations leader will deliver and

This position is a business focused role and is driven by business objectives, with importance to work both independently and collaboratively and will be empowered to identify areas for feasibility capability growth and implement strategies to facilitate that growth. Play a key role on the Feasibility leadership team with special focus on effective product development, training, and launch of enabling technologies, creation and use of a feasibility-specific data library, and coordinated data, process, and tool subject matter expert (SME) relationships.

Firm financial position:

There are a number of reasons that attract investors towards large-cap companies such as Johnson & Johnson with a market cap of $357.56B. One such reason is its ‘too big to fail’ aura which gives it the appearance of a strong and healthy investment. However, investors may not be aware of the metrics used to measure financial health. These factors make a basic understanding of a company’s financial position of utmost importance for a new investor. Here are a few basic checks that are good enough to have a broad overview of the company’s financial strength.

Debt-to-equity ratio standards differ between industries, as some some are more capital-intensive than others, meaning they need more capital to carry out core operations.

Snowf matrix:

It is one of the most important in marketing which clearly define the market position and how to expend the market.

There are four major part of snowf matrix

  • Market development
  • Diversification
  • Market penetration
  • Product development

Market Penetration.

The first part in the Ansoff matrix is market penetration. It is often adopted as a strategy when the organization has an existing product with a known market and needs a growth strategy within that market.

Market Development.

Market development is the second market growth strategy in the Ansoff matrix. This strategy is used when the firm targets a new market with existing products. | For a smaller enterprise, this strategy entails expanding from a current market to another market where its product does not currently compete.

Product Development.

Product development in the Ansoff matrix refers to firms which have a good market share in an existing market and therefore might need to introduce new products for expansion. Product development is needed when the company has a good customer base and knows that the market for its existing product has reached saturation. In this case, the market penetration strategy is no longer practical. A new product development strategy that caters to the existing market is a better approach.

Diversification.

The diversification strategy in the Ansoff matrix applies when the product is completely new and is being introduced into a new market.

  1. King, W.R., 1995. Creating a strategic capabilities architecture. Information System Management, 12(1), pp.67-69.

Johnson & Johnson Tylenol Crisis as a Superb Crisis Management Example

Introduction to Crisis Management and Johnson & Johnson’s Reputation

Crisis is an event that might result in unexpected and unstable situation such as traffic mishaps and earthquake. It often occurs unpredictable even without wrongdoing, and leads to business failure. It reported that almost all crisis lead to a great reputation damage (Dilenschneider, 2000). However, crisis could also be the seed of success when crisis management in position. According to the definition of Wikipedia, crisis management ‘is the process by which an organization deals with a disruptive and unexpected event that threatens to harm the organization or its stakeholders.’ Crisis management is different from risk management since it concentrates on potential threats from the practical process till it occurred. The case shows a superb crisis management example of Johnson and Johnson in 1982 when one of their major product Tylenol involved in a criminal case. While later, Johnson & Johnson had some lapse on consumer’s concern responding.

The Tylenol Crisis: An Overview

Johnson and Johnson (J&J) is a multinational corporation that produce and develop medical devices, pharmaceutical and consumer health products (Wikipedia). Since most of the product of J&J is health-related, the company worked years to cultivate the safety and trustworthy image. In 1955, J&J bought the laboratory that introduce Tylenol, and made it “the largest selling health and beauty aid in drug” 1979 through 20 years heavy advertising. In 1982, Tylenol made up of 35.3% of the over-the-counter analgesic market, 7% of company’s sale and 17% of corporation profit.

Immediate Response and Three-Phase Crisis Management Plan

In Sept. 1982, people were killed because of poisoned Tylenol capsules. Cyanide, a kind of highly toxic chemical, was found in these capsules. When the crisis happened, Johnson & Johnson suddenly made a plan that had 3 phases and hoped that the plan could help Johnson & Johnson to recover the loss and to bring Tylenol back, which are:

  • Phase 1: Figure out what actually happened.
  • Phase 2: Access and contain the damage.
  • Phase 3: Get Tylenol back to market.

Actions of phase 1. Open communication channels. At the very first time, Johnson & Johnson opened its communication channel to the public to make sure the public can get announcements directly from the company, rather than rumors. Investigate the accident. Johnson & Johnson found out that maybe someone bought some Tylenol capsules, poisoned them and returned the bottles to the stores. Johnson & Johnson was cleared of any mistakes so far, but it did not mean the company can ignore the accident because a company needs to do more than being innocent to build reputation and trust.

Actions of phase 2. Recalled products. Simultaneously with phase 1 actions, Johnson & Johnson recalled all Extra-Strength Tylenol capsules across the US, which were 31 million bottles and were worth more than $100m dollars. And the company warned customers do not use Tylenol capsules until the fact came out.

Actions of phase 3. Conduct a market survey. J&J’s surveys showing that though many customers realized the maker of Tylenol was innocent, they still think that Tylenol was involved with troubles so they were not going to buy Tylenol anymore. For breaking through the dilemma, Johnson & Johnson implemented several initiatives. Change packages for safety. New triple-sealed packages were used, with a warning “Do Not Use If Safety Seals Are Broken”. Rebuild the trust with customers. Johnson & Johnson spent lots of money on advertisement and promotion, trying to bring frequent costumers back. The company made TV commercials to explain how much Johnson & Johnson value this brand. The company also distributed coupons to encourage customers purchasing Tylenol tablets, which are more difficult to be poisoned. Focus on distribution channels. This was the company’s original strategy when Tylenol first entered the market. The company offered higher-than-average discounts to retailers, and persuade doctors and pharmacists to recommend Tylenol tablets to their patients and customers.

8 months after the death happened, Tylenol almost regained its market share. However, 4 years later, another accident happened in New York as the same way as the first crisis despite Tylenol had changed to a safer package design, and this time Johnson & Johnson totally abandoned capsules and would only manufacture tablets and caplets. This time Tylenol spent 4 months to recover the market share it lost.

Strategic Actions to Regain Consumer Trust

Based on the company’s reaction, we have identified five significant factors of J&J’s crisis management.

First of all, the company took quick corrective actions. Referring to the above facts, the organization cooperated with the police and recalled all Tylenol cross the country. It was criticized that it was overreaction since the incidents were centralized in Chicago. However, it was the safest way to reduce adverse impacts when the actual cause was not established. By doing so, the organization was able to prevent further temptations and copycat crime. The organization also had massive advertising campaigns offering to replace capsules with the Tylenol tablets at a sizable discount. This action avoided public perception of other units of the brand.

The second move of the firm was effective communications with the general public. 1800 hotlines was opened to the customers in order to fulfill the information vacuum. The hotlines was built not only to answer questions but also update the latest message. The fact is the company side story which was expected by the managements were supposed to deal with the public interest (Berge, 1990). It emphasized that a quick response is an effective approach to control the organization (Carney and Jorden, 1993).

Reach publicity made a significant positive impact on the crisis management which means the company was willing to disclosure the investigation of the criminal incident. In the first days after the early death, CEO James Burke worked with the national news magazines like 60 minutes and talk shows to reach Americans efficiently. Using TV allowed the public to put a face to the problem, shorten the distance some perceived J&J was putting between the company and the crisis.

Although there was a link between Tylenol and injury and death, the company still kept faith in the Tylenol. Due to the high proportion of the company’s profitable capacity, Tylenol can not be abandoned. Otherwise, the market share would be taken by its competitors if the company failed to bring the brand back. Before reintroducing new Tylenol, the company conducted a survey about customers’ attitude towards Tylenol; the company even ran a TV program to regain its loyal customer’s trust. It proves that the customers are biased to revise their initial expectations because of the favorable reputation (Traut-Mattausch et al., 2004).

The company also tried to protect the public image of socially responsible and caring enterprises. Social responsibilities are defined as a sense of responsibility of a firm has for a society that beyond its commitment to maximizing profits.

According to J&J’s credo, the firm’s responsibilities were for customers, medical professionals using its products, employees, the communities where its people work and live, and its stockholders. Therefore, it’s important to keep the safety and health of its general public to safeguard the public image. The responsibility had become the compass which guided the company’s decisions.

To protect public health from further damage, the firm recalled all Tylenol, offered an exchange of tablets, and developed a triple-seal package. To comfort public panic, the company disclosed most current and accurate information, promoted that the firm prioritizes human’s life above short-term profits. With these actions in place as well as its cooperation with authorities, the new industry safety standard for tamper-resistant package had been developed for over-the-counter drugs.

Bringing back the brand is not done by one action; it required the coordination of different departments of the firm. In Johnson&Johnson’s case, good public relations, effective communications, protections of public image, publications of the cause of disasters, and the prevention of further accidents are all essential to save a brand. With these actions in place, aggressive promotional efforts could fuel the recovery.

After discussing the actions Johnson & Johnson did to pull back customers and its brand, the connection between six stages of crisis management and the actions will be compared in this part.

The fist two stages of crisis management are avoiding the crisis and preparing to manage the crisis. These are procedures to be planed before the crisis actually happens. In the process of avoiding the crisis, there is a method called Business Impact Analysis. BIA focuses on the effects or consequences of the interruption to critical business functions and attempts to quantify the financial and non-financial costs associated with a disaster (Rouse, 2019). In the case of Johnson&Johnson, it only mentions the informal meeting held by chairman and president every two months, which cannot provide adequate plans or preparation to withstand disasters. There is no analysis and procedures to examine possible scenarios.

Recognizing the crisis is possibly the most critical and difficult stage. The purpose of this stage is to understand how important the crisis is and how the markets look upon it. Johnson&Johnson did quiet well by conducting survey to see customers’ attitude towards Tylenol and using TV commercials to publish the process of investigations as soon as possible to gain confidence of the public.

Then, the continuing processes are containing and resolving the crisis. Containing basically means take decisive actions to pull back its customers and Resolving is to push the actions and measures continuously. Only by appearing in public view frequently and stating the facts clearly, the efforts can be seen by Public. What Johnson&Johnson did was recall all the products and investigate causes behind the death. Additionally, investigations are disclosed in a timely manner with strengthened package safeguards.

After perfectly following the stages as mentioned previously, companies can profit from those stages such as regaining the trust from the public and rebuilding their brand. Johnson&Johnson’s market share reaches back to 35 percent 8 months after the crisis happen and the consumers are willing to trust the brand again.

Evaluation of Johnson & Johnson’s Crisis Management Effectiveness

Speaking about the advantages of J&J’s crisis management, the following should be highlighted. Firstly, it begin with clear objectives and have a plan. The company objectives during this crisis are to identify the issues, assess and contain the damage and the brand survives. The written phrases included specific actions that would be taken in the event of the crisis. The three phrases clearly pointed out the objectives of the events and revealed the key point which they mostly cared about. According to Barton (2001), the best practice of crisis management contains a precise crisis management plan and pre-draft some crisis messages. It helps to react quickly and handle the rumors effectively.

Secondly, be honest and open. Since generates more negative media coverage than a lack of honesty and transprency. Therefore, being as open and transparent as possible can help stop rumors and defuse a potential media frenzy. This transparency must be projected through all communications channels: news interviews, social media, internal announcements, etc. Weaker attributions of crisis responsibility will result in less reputational damage from the crisis (Coombs and Holladay, 1996, 2002; Klein and Dawar, 2004). In this case, the company turned to the social media and provided the accurate and true information. It showed a positive attitude of problem solving orientation to the public. On the contrary, Woolwooth spokesperson passed the buck to strawberry farmers when responding to the media. However the government posted that it was owe to the responsibiliy of retailers in package process.

Also, update early and often – It is better to over-communicate than to allow rumors to fill the void. Issue summary statements, updated action plans and new developments as early and as often as possible.

Next, cooperation with social media – the social media is one of the most important channels of communications. Be sure to establish a social media team to monitor, post and react to social media activity throughout the crisis.

Then the other one is Keep employees informed – maintaining an informed workforce helps ensure that business continues to flow as smoothly as possible. It also minimizes the internal rumor mill that may lead to employees posting false reports on social media.

Finally, communicate with customers – they do not want customers and suppliers to learn about the crisis through the media. Information on any crisis pertaining to the organization should come from the company first. We can see the company do some research to estimate the remaining market share and gave coupon to customers to recall the previous sold product. It made a sense of responsibility which won trust in customers. Two hot lines approaches also worked well.

In contrast to the crisis management, Johnson & Johnson has been performing poorly in the risk management. Even though it is generally believed that Johnson & Johnson did an excellent job in the crisis management for the Tylenol case, we can’t ignore the fact that the same incident happened again 3 years later, which indicated Johnson & Johnson has negligence in analyzing the risk.

First of all, it is debatable that the contamination in the existing packaging should be recognized as “unforeseen” event considering how easy it could be to open the capsule and replace the content. Whether this crisis is a result of bad risk management in the first place is controversial. Secondly, as we mentioned, up to this day, there is no one responsible for the poisoning. The FDA suspected the it happened in retail; thus J&J changed the packaging and seal. They chose to ignore the chance that the contamination could happen in the manufacturing which underestimate the likelihood of this risk, especially after considering the increasing cost for produce tablet and the amount they spend on crisis management, the company might recognize that making a complete transition from capsule to tablet is not the best decision. However, as J&J’s products were associated with gentleness and safety, one would expect they have more social responsibility in preparing such risk management and identify these risks in a more comprehensive way. If they chose to acknowledge the possible wrongdoings in the manufacturing process and developed this “caplet” form after the first incident, the second one will never happen. It seems like the additional cost is inevitable, and their reputation was damaged again with the cost for the second crisis management.

Apart from this case, the case study also introduced another incident in 1998 due to the lack of warning label in the package, a 5 years old kid died of liver failure because she was overdose in Tylenol. After paying millions of legal settlements, the company redrafting the labelling and include the warning. This is another example that Johnson & Johnson’s risk management is ineffective. They often underestimate or neglect the risk, by ignoring the existence and make no action, or choose not to disclose to the public, and prevent themselves from additional costing or affecting the existing sales. Whether they did it intentionally or not, it has become a habitual behavior when they identify it as unrewarded risk or has adverse publicity. As a large company that manufactures and markets a broad range of health care products, any omissions in the risk identification could result in severe consequence, in the non-financial aspect, it could result in death or health hazards, and loss of the public trust; in the financial aspect, the crisis management is always costly and the company may spend more in lawsuits or settlement. In addition, it will drive down the company’s share price and affect the company’s financial report in long term. As the case introduced, the Tylenol case still got impact in Johnson & Johnson’s financial report 10 years later. The irony is the company is still experiencing the same issues. As doing our research we found that Johnson & Johnson was fined again in August this year because they deceptively marketing an addictive painkiller, and last week they had a recall on their contact lenses as they may contains rough particular that damage the surface of the eye.

We could notice the style of behavior changed after 1989 since it’s the year that James Burke resign the chairmen, these later incidents suggested that Johnson & Johnson was obviously no longer the customer-responsive firm as before, which imply how the change of management level could affect the company’s response and its image to the general public by having different strategies in risk management and crisis management.

Reference

  1. https://en.wikipedia.org/wiki/Crisis_management
  2. https://en.wikipedia.org/wiki/Johnson_%26_Johnson
  3. Dilenschneider, R. L. (2000). The corporate communications bible: Everything you need to know to become a public relations expert. Beverly Hills: New Millennium.
  4. Carney, A., & Jorden, A. (1993, August). Prepare for business-related crises. Public Relations Journal 49, 34–35.
  5. Traut-Mattausch, E., Schulz-Hardt, S., Greitemeyer, T. and Frey, D. (2004), “Expectancy confirmation in spire of disconfirming evidence: the case of price increases due to the introduction of the Euro”, European Journal of Social Psychology, Vol. 34, pp. 739-60.
  6. Rouse 2019, Techtarget, accessed 30 September 2019, https://searchstorage.techtarget.com/definition/business-impact-analysis

Johnson & Johnson Pricing Factor

Johnson and Johnson is a prestigious brand and still it has kept up its valuing to a moderate rate with the goal that the normal man can purchase the items. Johnson and Johnson pursues a very much arranged valuing approach in its showcasing blend estimating technique, principally keeping it in the scope of the shopper value file. As we probably am aware the significant piece of the organization’s market is from customer items so it keeps n mind the moderateness criteria of the shoppers in the market before setting its pries. Johnson and Johnson has likewise pursued a mental valuing system keeping its costs in the products of 99 or 49. In spite of the fact that Johnson and Johnson items are known for its predominant quality with legitimate bundling and so on, the organization has settled on moderate costs.

In its restorative items classification, working alongside government they have valued them thee items at a sensible rate. This additionally delineates the organizations socially mindful expectations. Johnson and Johnson has proficient group delegated for the valuing of the items. This groups consider various components like objective portion, their creation cost, request, supply, and furthermore the capacity to pay of the clients. After all the best possible assessments and estimations, the costs are fixed for the items.

There are sure Johnson and Johnson items like the childcare items and purchaser products where the costs charged are minimal high. This is because individuals purchasing such items are prepared to address even a specific significant expense given great quality and great wellbeing for their family.

Social factors

Most of the companies all over the world intent social and environmental factors in their working and it is also working with their stake holders which is a concept of cooperative social responsibilities. The most significant factor that J&J has adopted is to influence the people with the social factors like we all know that social elements like TV is the most important and approachable thing to be accessed in the era so they adopted their marketing strategy to be all surrounded by advertising their products socially through TV broadcastings and this actually hits the bull eye and we found J&J to be the most vibrant company dealing in healthcare products as well as medical devices.

Technological factors

The incrementing and provoking technological study has noticed many developments in the medicines industry and this is all done with the emergence of new technologies. The new technologies has changed the views of the new researchers and it has also changed the way of traditional thinking of the pharmaceutical companies who are of the view that technology cannot be related with the medical aspects. Therefore, with the help of technology we have found that the solution to many unsolved problems has solved now and pharmacists are now more eager to path ways towards new technology-friendly environment in the industries.

Economic factors

“The medicines companies have seen a lot of the mergers and acquisition of the recent years”. This acquisition helped a lot in the availability of the new products to almost all the people. Many of the companies are been funded through loans and through other means like sales of shares etc. Medicines companies operating world-wide should be well aware of the newest problems they may face and J&J has a very transparent type of investing policies so people would not suffer and this transparency had made their brand a worth believing brand (kate). All pharmaceutical companies should be able to infer the economic challenges they are likely to face and make sure they utilize all opportunity for development when they owe it.

Johnson & Johnson Company Analysis

Johnson & Johnson is an American multinational corporation that was originally founded in 1886 by three brothers: Robert, James and Edward Johnson. Initially they only specialised the first antiseptic wound treatment, the company has since grown and become one of the largest and most well-known companies globally (jnj.com, 2019). Johnson and Johnson has over 250 different companies located in 60 countries around the world, sells products in over 175 countries and employs over 130,000 people. They are currently ranked 37th in the Fortune 500 list and have traded their shares on the NYSE since 1944. The Company has a current market capitalisation of $324.78 billion (jnj.com, 2019), (Fulmer, 2001).

Johnson & Johnson, through all of its operating companies and subsidiaries, it is one of the world’s largest and widely based manufacturers of health care consumer products. However their primary source of revenue comes from the development, manufacture and distribution of pharmaceuticals and medical devices (Revenues & Profits, 2019). In 2014 of the total revenue of $74.3B, $14.5B came from consumer products (19.5%), $32.3B from pharmaceuticals (43.5%) and $27.5B from medical devices (37%). In the following year of 2015 there are similar distributions. A total revenue of $70.1B with $9.5B coming from consumer goods (13.5%), $35.4B from pharmaceuticals (50.5%) and $25.1B from medical devices (36%) (Digital.hbs.edu, 2019).

J&J has grown significantly since 2015 with total revenues in 2018 reaching $81.6 billion. 6.7% more than in 2017 and $11.5 billion more than in 2015 (jnj.com, 2019).

J&J is a leader across the consumer, healthcare and pharmaceutical markets and has developed a business model to provide innovative products to advance the health and well-being of the global population. To do this the company operates in three different segments, each with their own target markets (Revenues & Profits, 2019).

Consumer Healthcare Segment

J&J has a huge variety of consumer health products ranging from baby care, skin/oral care, OTC (over the counter) pharmaceuticals and women’s health. Some well known products include: the Johnson’s baby range, Listerine, Neutrogena, Aveeno and Clean & Clear (jnj.com, 2019). It’s OTC medicines include: Tylenol, Sudafed and Benadryl. These products are marketed to the general public and are sold to retail outlets and distributors across the world. OTC products are able to be sold without the prescription through retail pharmacies (Cleverism, 2019).

Pharmaceutical Segment

J&J runs its pharmaceutical business as Janssen Pharmaceuticals. The Janssen pharmaceuticals company offers products for five major therapeutic areas: oncology, immunology, neuroscience, infectious diseases, cardiovascular and metabolic diseases. Within the pharmaceutical industry, J&J utilises direct and indirect channels to influence the prescribers such as doctors or other HCPs to prescribe new medicines to patients and to get new patients for existing medications by making patients aware about their diseases. Products are sold to wholesalers, hospitals and government agencies (jnj.com, 2019).

Medical Devices Segment

J&J offers a range of innovative medical devices and solutions used mainly by HCPs in the fields of orthopedics, neurology, vision and diabetes care, infection prevention and cardiovascular disease. After getting regulatory clearance, J&J and subsidiaries work to get the procedure approved and then work with wholesalers to influence hospitals and HCPs to buy devices (Cleverism, 2019).

Johnson & Johnson: ‘Credo’

J&J’s model is based around their Credo. The Credo is a management document written by former-chairman, Robert Wood Johnson, over 75 years ago (Yacovone, 2007). The Credo states that the company’s primary responsibility is to the people who use their products, secondary is to their employees, thirdly is their responsibility is to the communities where they operate, and the final responsibility is to their shareholders (Murphy, 2005). And as a result, J&J historically has deployed an operating strategy to invest in people and innovation, both through their own employees and external parties through acquisitions (Fulmer, 2001). The Credo symbolises that the company recognises it responsibilities to its customers, employees, the environment, community and shareholders. It proposes that the company pays its fair share of taxes and does not advocate for tax-dodging or maximizing profits at any cost (Digital.hbs.edu, 2019).

Value

Johnson and Johnson provides value to its customers in the following ways:

  1. Brand reputation and industry standing: Being one of the largest and most well known companies in the world, associated with a range of high profile and quality brands.
  2. The size of its sales and marketing reach, with the company operating extensively throughout the world and collaborating with a network of retailers and distributors to increase its presence.
  3. Commitment to innovation and development, substantial funds are given to aid research and development activities to be able to provide ‘up-to-date’ care to its consumers.
  4. Affordability and Accessibility of its products to people of all backgrounds and classes (jnj.com, 2019), (Cleverism, 2019).

Decentralised Management Approach

A strategy that has allowed J&J to create and sustain a competitive advantage in the healthcare industry is their approach to decentralise management. Once they have acquired a company they allow them to operate on their own except for some minor organisational changes. Overall they seem to take a backseat. This is one of the principles that has allowed this company to honour its business model of providing innovative healthcare products to help the global population (Fulmer, 2001), (Digital.hbs.edu, 2019).

SWOT analysis

Strengths

  1. Trusted brand: J&J is trusted by many medical practitioners and consumers worldwide. Their focus on tailoring business to local markets has helped them to stay relevant and meet consumer demands.
  2. Largest Healthcare provider: From pharmaceutical products to Consumer healthcare products, J&J operates in three segments: consumer goods, pharmaceuticals, and medical devices. Johnson & Johnson has committed itself to caring for people and has earned huge rapport with consumers over the years (Bhasin, 2019).
  3. Supply chain: It has extensive distribution system aimed at making products available to retailers, supermarkets and pharmacies.
  4. Brand Awareness: Johnson & Johnson have strong presence within each product segment. They have a large number of brands/subsidiaries to choose from which is helping them to occupy large shelf space of the stores.
  5. Brand equity: Ranked 79th highest brand in the world in 2016 (SWOT & PESTLE, 2019), (Jacobs, 2019).

Weaknesses

  1. Conflict with partner companies: Due to the nature of their business in merging via acquisitions they have accrued quite the size and a huge product portfolio, which has potential to cause complications in the organisation. This will likely be taken into account when entering into a merger.
  2. Litigation: The company has been involved in many litigations over the years. In 2010 J&J board was sued by shareholders and there was a scandal over the use of the red cross symbol. Litigations such as these can negatively affect their brand image and will spread quickly (SWOT & PESTLE, 2019).
  3. Dependence upon the Success of Launch Products: Newly launched products are vulnerable to the uncertainty of regulatory review.
  4. Reliance on Drug Discovery: J&J is impacted by generic competition and is therefore reliant on the discovery of new drugs to replace those patents which have expired (Jacobs, 2019)..

Opportunities

  1. Wide Range of Cross-selling Opportunities: J&J is in a position to develop a lot of cross selling opportunities. Maximizing the balance between pharmaceuticals, diagnostics, and medical devices could mean increased revenue (Bhasin, 2019).
  2. Potential in Biology: The addition of new biologicals to its portfolio and the current genomic revolution could drive the future growth of the company as small molecule drug patents expire.
  3. Changing lifestyle: With the increase in literacy rate worldwide there is a greater concern over health and issues which therefore means an increased demand for medical products which is beneficial for J&J (SWOT & PESTLE, 2019).

Threats

  1. Intense Rivalry: Due to the presence of strong global competitors such as GlaxoSmithKline, Roche or AstraZeneca which provide alternative or substitute products, J&J is facing heavy competition. Generic competition is increasingly becoming an issue.
  2. Harmful Ingredients: J&J products have been found in the past to have contained ingredients which could be toxic. These ingredients are banned in the US and in other countries. These public scandals have affected the brand image of Johnson and Johnson.
  3. Government Regulation: Government regulatory procedures over the contents & export/import tariffs play a crucial role in the success of companies in these industries to which J&J is no exception (SWOT & PESTLE, 2019).