Question

1. What are the core competencies of Johnson & Johnson ? 2. How would you characterize the organizational structure of J&J? Is decision making centralized? 3. How does J&J create value through diversification? (Economies of scope, market power, corporate parenting, corporate structuring?)

Answer 1

1. Johnson and Johnson (J&J)'s core competencies are: innovation, extensive collaborations, and business culture. J&J has invested extensively on research and development (R&D) for many years, recognizing that investing in technology will improve its leadership position. They are now among the top R&D spenders in the world with about 12 percent of their sales revenue being invested in 9,000 scientists currently working in research labs around the world. In Boston, California, London, and Shanghai, there are actually four technology centers for J&J. Another core competency that lets J&J dominate the healthcare market is comprehensive partnerships. The company was active in other companies ' acquisitions to grow and increase its market share. J&J has acquired more than 70 different firms over the past decades.

2. Like other multinationals, during its first operation, Johnson & Johnson had functional structure type shape. Johnson & Johnson established a divisional organization structure for better control and collaboration as the corporation expanded internationally and engaged in complex product operations. Johnson & Johnson's organization consists of 180 different business units, including McNeil Consumer Products, Tylenol manufacturers; Ortho Pharmaceuticals, which manufactures Retin-A and birth control pills; and J & J Consumer Product, the Johnson Baby Shampoo and Band Aids company, each division is chartered separately, and Johnson & Johnson Family Headquarters will oversee operations.

This decentralized organizational structure helps the workers in the business to establish themselves. It is also beneficial in creativity that allows workers to efficiently use their skills and knowledge to put together various products and technology to meet customer requirements. A good strategy will also be developed in each division as a feedback on customer and market issues. Johnson & Johnson businesses around the world are usually coordinated by local people in particular country because they can understand the needs of that market and use themselves in that market.

3. Over the past decade, Johnson and Johnson's policy has been to buy businesses around the globe. It makes it possible for J&J to provide a wide range of products and services, producing a large company of food, drug and medical / diagnostic products. J&J bought a skin care line called RoC S.A. in the early 1990s (1993). in France. This company produces eye, hand, and body products that are hypoallergenic. Upon buying RoC S.A., J&J purchased the well-known dermatologist-recommended skin and hair care products Neutrogena Corporation. In the late 1990s, further transactions followed as J&J acquired DePuy, Inc. DePuy has been a pioneer in orthopedic products, such as tools for hip replacement. J&J has already sold one of America's leading knee replacement products, making the two firms a good match. On the negative side, after a number of challenges, J&J was forced to undertake a restructuring in 1998.