Macro & Micro Environment Analysis
Johnson & Johnson was founded more than 120 years ago on a revolutionary idea that doctors and nurses should use sterile sutures, dressings and bandages to treat peoples’ wounds. Since then, Johnson ;amp; Johnson have brought to the world, new ideas and products that have transformed human health and well-being.
Johnson ;amp; Johnson family of companies comprises: The world’s premier consumer health company •The world’s largest and most diverse medical devices and diagnostics company •The world’s fourth-largest biologics company •And the world’s eighth-largest pharmaceuticals companyBriefing about this world class company, we can have a glimpse on the following points:- •Global Manufacturer of Pharmaceuticals, Consumer Products and Medical Devices. •Listed in Fortune 500 Companies •Ranked 1st among 50 top Pharmaceutical companies •25 0 subsidiary companies with operations in over 57coun ries. Well-known consumer products are theBAND-A ID Brand line of bandages, Tylenol •Medications , JOHNSON’S BABY Products . HISTORY •Founded in 1886 in New Brunswick, New Jersey by Robert Wood Johnson, later he was joined by his brothers James Wood Johnson and Edward Mead Johnson to create a line of ready-to-use surgical dressings in 1885. •The company produced its first products in 1886 and incorporated in 1887. Robert Wood Johnson served as the first president of the company.
•Upon his death in 1910, he was succeeded in the presidency by his brother James Wood Johnson until 1932, and then by his son, Robert Wood Johnson II. Since the 1900s, the company has pursued steady diversification. •It added consumer products in the 1920s and created a separate division for surgical products in 1941 which became Ethicon. • It expanded into pharmaceuticals with the purchase of McNeil Laboratories, Inc. , Cilag, and Janssen Pharmaceutical, and into women’s sanitary products and toiletries in the 1970s and 1980s.
In recent years, Johnson ;amp; Johnson has expanded into such diverse areas as biopharmaceuticals, orthopedic devices, and Internet publishing. Key Members of the company are:- •William C. Weldon:- Chairman ,Board of Directors; Chairman ,Executive Committee; Chief Executive Officer . •Christine A. Poon:- Vice-Chairman ,Board of Directors; Member ,Executive Committee •Dominic J.
Caruso: – Member, Executive Committee; Vice President, Finance; Chief Financial Office. J;amp;J in INDIA Johnson ;amp; Johnson spread its roots to the world’s largest democracy, India, during the endemic post-independence turmoil of 1947. It was Mr. Patrick Whaley who set about with confidence and determination during this period of turbulence to begin the wok of establishing Johnson & Johnson in the subcontinent. ?Things progressed quickly and by 1948, Johnson’s Baby Powder was being manufactured by British Drug House in Prabhadevi, Bombay, and marketed by the company and over the time, other products were introduced like toothbrushes, Johnson’s Baby Cream and Prickly Heat Powder.
? However, highly specialized products like Belladonna plasters, pharmaceuticals and Permacel Tapes were imported from the parent ompany. It was only ten years later in 1957 that the company began to manufacture its own products in India. ?And today Johnson and Johnson India is one of the leading players in the Indian pharmaceutical and consumer products business. It has employee strength of over 1,800. ?Johnson & Johnson India has gained a reputation for delivering high-quality products at competitive prices.
Today J&J India is a household name with several popular brands like Band-Aid, J&J Baby Powder, Avucue Contact lenses and Prickly Heat Powder.J&J India is considered one of the best places to work and has many achievements to its credit: •J&J became the first company in India to successfully eliminate CFCs from its manufacturing operations that required the company to modify the sterilization processes at its Ethicon suture finishing plant. •Johnson & Johnson Consumer Products was awarded “Six Sigma” by the Indian Statistical Institute and the National Institute of Quality & Reliability. Vision and Mission At Johnson & Johnson there is no mission statement that hangs on the wall.Instead, for more than 60 years, a simple, one-page document – Our Credo – has guided the actions in fulfilling the responsibilities to customers, employees and the community.
The worldwide Family of Companies shares this value system in 36 languages spreading across Africa, Asia Pacific, Eastern Europe, Europe, Latin America, Middle East and North America. The English version of the Credo is below: Factors for success In India Johnson & Johnson Limited India has been ranked as the Best Company to Work for amongst Healthcare companies in India and as one of the top 10 MNCs in India.The Company got an overall ranking of 22 in a study by the Great Places to Work Institute in partnership with The Economic Times, India’s No 1 business daily. This was the biggest study of 2009 and more than 373 companies participated in it. Only 50 made it to the Best Companies to Work for list, making it one of the toughest contests of this kind globally.
This is a tribute to all J;amp;J India Employees and stands testimony to the strong CREDO culture and HR programs. Around 360 employees participated in the Survey conducted by the Great Places to Work Institute. The main reasons for success of Johnson ;amp; Johnson in India are as follows: Ethical practices leading to a strong brand * Focus on customers * Decentralized organization * Focus on product development * Good working environment * IT for business processes enhancement Leveraging the India Advantage * J;amp;J India is at the leading edge of global product launches. In some cases J;amp;J India has launched new products in India even before in the US (for example, the cipher stent). Indian doctors’ ability to quickly learn and apply new techniques provides the company with quick feedback and faster launches.
* The Indian R;amp;D and testing centers provide services to J;amp;J worldwide.Jansen Cilag (the pharmaceutical division of J;amp;J) has a stability centre in India. Indian managers are constantly promoted to overseas operations. An Indian team is also managing the supply chain planning for the Asia-Pacific region. * J;amp;J India is manufacturing baby soaps for other countries. Some specialty soaps for the US too are manufactured in India.
Micro-Environment Factors These are the factors close to the organization and have direct affect on its ability to serve its customers. Customers * Kids * Teenagers * Women * People conscious about healthcare products. * Hospitals. Segment of BusinessJohnson and Johnson is organized in three business segments. * Consumer. * Pharmaceuticals.
* Medical Devices and Diagnostics. Product Mix J;amp;J is known not only for the quality service ;amp; types of products but also for the variety ;amp; range of products. It has a huge list of Product Lines with enormous depth in each line. It also has a tremendous width ;amp; depth in its Product Mix. Its Product Lines are in the following segments:- * Baby ;amp; Child Care. * Skin Care.
* Wound Care. * Women’s Health Care * Nutritional and Over-the-counter. * Pharmaceutical Products. * Medical Devices and Equipment.Some of the Products in the Product Line of Baby ;amp; Child Care are as:- * Baby Shampoo.
* Baby Powder. * Baby Soap. * Baby Hair Oil. * Baby Body Oil * Baby Lotion * Baby cream. * Baby Top-to-Toe * Baby Soft care wipes. J;amp;J has done the Brand Line extension in the products like Hair Oil, Soap, Cream, Massage Oil, and Powder ;amp; Shampoo by launching these products in various fragrance ;amp; colors.
In today’s changing times, where people have become more conscious towards their health ;amp; thus moving towards natural products, they prefer using J;amp;J products over other Brands.J;amp;J has captured the customers by positioning itself as a Company providing Natural products devoid of chemicals. Thus its graph of Customer Confidence Index is high as compared to other Brands. Not only the Kids ;amp; New Born, but also the teenagers ;amp; upper age group customers have been the Target of J;amp;J. It has its products flowing for every age group ;amp; in every segment. Some of the products in the product line of Skin Care are:- * Clean ;amp; Clear Cream * Clean ;amp; Clear Cleansing Milk * Neutrogena (Brand for Skin ;amp; Hair Care products) Wound care product includes two main brands Band – Aid * Savlon Savlon brand consists of Savlon soap, antiseptic liquid and hand wash while Band-Aid has two main variants Wash- proof and Flexi.
Women Health care products include sanitary pads with brand Stay free. Over the counter (OTC) products include the following * Caladryl for itch –related skin care. * Nizoral Shampoo for dandruff problems. * Benadryl for cough related problems. Product Line Length of J;amp;J in Pharmaceuticals is huge. The products are for various Therapeutic uses such as:- * Anti-epileptic drug.
* Dermatology / * Oncology – Durogesic for induced anemia. * Primary careBrand included in anti -epileptic drugs are Topmac, Risperdal and Risperdal Consta. Deramatology includes brands –Nizral, Retino A and Sporanox. Oncology brands are cancer pain management and Eprex for chemotherapy. Primary care product includes brand Stugeron for Vertigo Management as well as Sibelium for Migraine Management coupled with the aggression of creating brand leaders in a short span of time as exemplified by Ultracet, which dominates the Pain Market.
Product line of J;amp;J in Medical Devices and Equipments is quite impressive * It includes a broad range of products distributed to Wholesalers, Hospitals ;amp;Retailers. Used principally in the professional fields by Physicians, Nurses, Therapists, Hospitals. * Diagnostic Laboratories and Clinics. * Products include Cordis’ circulatory disease management products, D ePuy ‘s orthopedic joint reconstruction and spinal care products. * Vistakon’s ACUVUE Disposable Contact Lens. * One Touch Brand Blood Glucose Meters from LifeScan, Inc.
* P. F. C. Sigma Knee System from DePuy, Inc. Employees Employing the correct staff and keeping these staff motivated is an essential part of the strategic planning process of an organization.Training and development plays an essential role particular in service sector marketing in-order to gain a competitive edge.
J;amp;J employees more than 1lakh people globally and in India the employee strength is more than 2000. COMPETITORS SWOT Analysis Strength: * Excellent research and development base which is its strength for surviving in the pharmaceutical as well as consumer product industry. * Successfully employed a joint strategy of differentiation that’s helps it distinguish itself from its competitors. Employed a business model that primarily focuses and is based on entrepreneurial values which adds to its competitiveness in market. * Uses innovative and new methods and varying techniques for problem solving and challenges the standard conventional practices.
It takes advantage of on emerging markets which enables further growth opportunities * Johnson & Johnson has earned a reputation in the health care industry in India. * Johnson & Johnson has well diversified portfolio. Johnson & Johnson has a number of products under its belt, which help it to extend the relationship with the customers. Johnson & Johnson is known for its aggressive marketing of its products. This gives the corporation an edge over its competitors. Weakness: * There is a constant pressure within health care sector to reduce prices in accordance with medical budgets and maintain patent expirations to ensure updated generic programmes.
* High reliance upon small molecule drugs, increasing exposure to generic erosion. * Limited output from in-house R&D. Opportunities * Leverage therapeutic coverage of Medical Devices & Diagnostics and Consumer Health divisions Expand experience in biologics * With the development of WTO rules, to prevent the availability of affordable generic drugs, there is an opportunity to reduce the effect of lost sales and profits to generic introductions as patents expire. This will also help Johnson & Johnson where they possess the brands and are looking to capitalize on introducing generic drugs. Threats * Besides high risk in the pharmaceutical industry, there is a high level of competition for the generics markets where patents expire and it is the first to entry that determines the success of a company. A similar threat of substitutes is possible in the medical device industry as well, although currently, the generic medical device industry is in its infancy.
One reason for this is that while most drug compounds are easily copied, there is considerable engineering and technical know how required to manufacture medical devices and diagnostic equipment. * The current Technological developments with bio-tech concepts as well as development of medicinal technology, the traditional pharmaceutical methods will be soon out of the market place.In the long term however, the economists argue that these methods can prevail alongside the newly developed technologies. MACRO/Mega environment PESTLE ANALYSIS To understand the implications of the environment on any industry it is imperative to study the four cardinal influencers on the industry namely Political, Economic, Social and Technological factors. It is rather unfortunate that in India these factors have a rather disproportionate influence on the functioning of a commercial organization.From the days of independence the business environment has been overly regulated by a handful of bureaucrats, middlemen, businessmen and politicians.
Its only a decade since the country has seen an emergence of a political thought that encourages free enterprise. Political Factors 1. More stringent price control have been imposed by the ministry of India threatening the investments. 2. Effective from January, 2005 the country goes in for the IPR (Intellectual Property Rights) regime, popularly known as the Patent Act. This Act will impact the Consumer as well as Health Care Industry the most.
3.In Health care industry there is a huge PSU segment which is chronically sick and highly inefficient. The Government puts the surpluses generated by efficient units into the price equalization account of inefficient units thereby unduly subsidizing them. On a long term basis this has made practically everybody inefficient. 4. Effective from January, 2005 the Government has shifted from charging the Excise Duty on the cost of manufacturing to the MRP thereby making the finished products more costly.
Just for a few extra bucks the current government has made many a life saving drugs unaffordable to the poor. . The Government provides extra drawbacks to some units located in specified area, providing them with subsidies that are unfair to the rest of the industry, bringing in a skewed development of the industry. As a result, Health Care units have come up at place unsuitable for a best cost manufacturing activity. Economic Factors 1.
India spends a very small proportion of its GDP on healthcare (mere 1%). This has stunted the demand and therefore the growth of the industry. 2. Per capita income of an average Indian is low (Rs. 12,890), therefore, spending on the healthcare takes a low priority.
An Indian would visit a doctor only when there is an emergency. This has led to a mushrooming of unqualified doctors and spread of non-standardized medication. 3. The incidence of Taxes is very high. There is Excise Duty ( State & Central), Custom Duty, Service Tax, Profession Tax, License Fees, Royalty, Pollution Clearance Tax, Hazardous substance (Storage & Handling) license, income tax, Stamp Duty and a host of other levies and charges to be paid.
On an average it amounts to no less than 40-45% of the costs. 4. India has poor roads and rail network. Therefore, the transportation time is higher.This calls for higher inventory carrying costs and longer delivery time.
All this adds to the invisible costs. It’s only during the last couple of years that good quality highways have been constructed. Socio-Cultural: * Culture, traditions, beliefs, values and lifestyles of the people in a given society constitute the socio cultural environment. These elements decide to a large extent, what the people will consume and how they will buy. * Culture is the combined result of factors like religion, language, education and up-bringing. Cultural shifts carry with them marketing opportunities as well as threats.
Social class is determined by income, occupation, location of residence, etc. of its members India being a land of religions, languages and cultures, therefore in order to serve all the customers J;amp;J India advertised in almost all the languages so that the customers can better understand the attributes the product is carrying. It also focused on the consumption habits, lifestyles and buying behaviour of the people while deciding about their product mix. So that they can better serve the people and can stand at the edge over the other competitors.Technological Factors 1. Advanced automated machines have increased the output and reduced the cost.
Computerization has increased the efficiency of the Pharma Industry. 2. Newer medication, molecules and active ingredients are being discovered. As of January 2005, the Government of India has more than 10,000 substances for patenting. 3.
Advances in Bio-technology, Stem-cell research have given India a step forward. 4. Humano-Insulin, Hepatitis B vaccines, AIDS drugs and many such molecules have given the industry a pioneering status. 5.Newer drug delivery systems are the innovations of the day. 6.
The huge unemployment in India prevents industries from going fully automatic as the Government as well as the Labor Unions voice complains against. Legal Environment 1. The health care and consumer goods industry is a highly regulated and compliance enforcing industry. As a result there is immense legal, regulatory and compliance overheads which the industry has to absorb. 2. Medicines in India are regulated by CDSCO – Central Drugs Standard Control Organization under Ministry of Health and Family Welfare.
Headed by Directorate General of Health Services CDSCO regulates the Pharmaceutical Products through DCGI – Drugs Controller General of India at Chair. Environment: * It covers aspects like extent of endowment of the natural resources of the country, ecology, climate etc. * Natural resources- Business firms depends on natural resources for their raw materials. Firms are concerned with the availability, shortage and also the trends governing the costs of raw materials. They also focus on the energy and its cost. Ecology- Issues like environmental pollution, protection of wildlife and ocean wealth.
* Climate- products whose demand depends on climate and firms depending on climate dependent raw materials will be particularly concerned with this factor With regard to environment J;amp;JIndia, focused on natural resources like Demographic: Several factors relating to population such as size, growth rate, age distribution, religious composition and literacy levels along with household patterns, regional characteristics are need to be focused as they all are part of demographic environment.India is the 2nd largest market after china with a population of over 2 billion, which in turn provides J;amp;J huge market for their consumer products. J;amp;J focused on the composition of the population of india and came up with their products for kids, adolescents etc. Some of the products offered to different age groups include ‘No more tears’ aiming kids as the customers, Savlon, Band-Aid.