Question

The operating profits from 2017 to 2019 reported by each of Johnson & Johnson's primary business segments are provided below. Sales numbers for each of the segments are provided in ID5.14 (dollars in millions).

INSTRUCTIONS:
a. During 2019, which of the segments is the most profitable as a percentage of sales?
b. Which of the segments reports the fastest growth in profitability?

ID5.14

The following sales information concerning Johnson & Johnson's primary business segments appeared in the company's 2019 SEC Form 10-K (dollars in millions).

 

Answer 1

a.

First of all, Consumer sales gradually decreased in 2019 but its sales were better in 2017, then slightly down in 2018 but in 2019, its sales collapsed and decreased to $2061 which is a major reduction in sales.

Pharmaceutical sales were better in 2018 as compared to 2017 and 2019. Its sales in 2017 were $11,083 then it slightly increased in 2019 but again decreases in 2019 which is a major downturn and decrease in its sales.

 Medical devices have high sales in 2019 as compared to both years 2017 and 2018. Its sales in 2017 were $5,392 then it slightly decreased in 2018 but then its sales rise in 2019 which is $7,286. That means sales growth measures how quickly a company has been growing its sales.

By comparing all of the companies, Medical devices segment is the most profitable as a percentage of sales because their sales are higher in the current year as compared to the other companies. Because of sales, the company made a good profit in the current year 2019.

The strategies to improve sales and profitability are as follows:

Make sure your prices promote an increase in profit margin.

Have clear, well-defined goals.

Communicate more with your customers.

Create more incentive.

Bundle and upsell your products to raise revenue.

Lookout for new distribution channels & opportunities.

Focus on your brand

 b.

The medical devices segments report is the fastest growth in profitability because its sales increased in 2019 as compared to the other segments. There are four key areas that can help drive profitability. These are reducing costs, increasing turnover, increasing productivity, and increasing efficiency.

You can also expand into new market sectors, or develop new products or services.

This guide explains how to assess your business\' profitability, deliver growth for your bottom line, and how to plan and manage change.

Employee engagement and retention and customer focus and engagement also lead to productivity gains and innovation which also leads to profitable growth. The framework outlines how the five factors inter-relate to drive and enable a virtuous circle of profitable growth for an organization.

That’s why medical devices segments report to the fastest growth in profitability as compared to the other segments.

That’s why medical devices segments report to the fastest growth in profitability as compared to the other segments.