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Insight Into The Pharmaceutical Giant: Johnson&Johnson. The overall aim is to critically evaluate the strategies that J&J pursues. In addition, by benchmarking key competitor companies, the strategies operating within the industry are assessed. Finally,

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Introduction

Project Aim This project builds on the in-depth analysis of a pharmaceutical giant: Johnson&Johnson (J&J) within the pharmaceutical industry sector carried out in Business Analysis Project 1. The overall aim is to critically evaluate the strategies that J&J pursues. In addition, by benchmarking key competitor companies, the strategies operating within the industry are assessed. Finally, the viable strategic options for J&J in the medium-long term future are predicted. Introduction The project is based on the systematic theory which was developed by Johnson and Scholes (1997) to explore the corporate strategies. On the base of analysis of external environment and industry forces in BAP1, this project first figures out the current situation of J&J in the broad industry environment. By using the tool of SWOT to analyze J&J's internal strategic capability, its current or possible strategies are explained and evaluated. Finally, with the prediction of the industry future development, the author pointed out the probable strategy for J&J in the long run. This article is divided into six parts. Part 1 evaluates J&J's positioning within the external business environment. Part 2 sees through the internal strategic capabilities of the company. In part 3, the author relates the company purposes and stakeholders' expectations with J&J's strategic choices. Part 4 is the current or possible strategies development directions and methods. Part 5 deals with the strategy evaluation and Part 6 points out the future variable strategy options. Brief Summary of Business Analysis Project 1 In BAP 1, the author analyzed the pharmaceutical industry. The pharmaceutical industry manufactures and sells products that can be categorised into four broad classifications: (Slatter, 1977) * Prescription Medicines: Products that have to be prescribed by a qualified medical doctor. * Over-the-Counter (OTC) Products: Products that do not require a prescription and can be purchased in retail pharmacies and other retail outlets by the consumers. * Animal Health Products * Bulk Chemicals, Capsules, etc. ...read more.

Middle

(Drury, 2001) * Human resource. J&J deeply knows the importance of human resource. The company has an effective system of recruiting, developing and rewarding employees. For example, In 1999, J&J launched a new recruiting campaign that not only attracted active job seekers, but also encourage passive job seekers to apply for positions within the company.(Gilbert, 2002). J&J's three leadership development programs: Executive Development Program; Executive Conference ?; Leadership Challenge provides essential leaders to J&J, a rapid growing company. * Acquisition ability. J&J has a strong track record as an acquirer. During 1992 and 2002, 55 companies were purchased. (Barrett, 2002) J&J sees acquisitiveness and its immunity to the not-invented-here syndrome as sources of strength. With its strong balance sheet, high stock price, and AAA credit rating, J&J has enormous buying power, and it is standard practice at J&J to count on acquisitions for 10% or more of annual growth. (Taylor, 2002). By acquisition, J&J expand its product lines and market share. For example, in 2003, J&J purchased the Scios and acquired its product of NATRECOR(r) (nesiritide), the first-new treatment for acute congestive heart failure in more than 15 years. 2.2.2 Potential Resource Weaknesses & Competitive Deficiencies * Decentralized organizational structure. Although the decentralized organizational structure has leveraged the development of J&J in the past years, for the company to thrive for the future, that system will be a weakness in terms of high overhead costs; barrier of information flow and inconsistency of corporation strategy. * Low productivity of R&D. Although J&J invests large amount of money on R&D, however, the outcome is not so cheerful. Among its current seven best selling products, only two of them were developed by its own research center. 2.2.3 Potential Company Opportunities * Expanding to new geographic markets. About 60 percent of worldwide GDP growth through 2020 is expected to occur in emerging markets such as China, Brazil, India, Mexico and Russia. ...read more.

Conclusion

(1997), Exploring Corporate Strategy (4th edition), Prentice Hall, Europe Johnson G. and Scholes K. (1997) Exploring Corporate Strategy (4th edition), Prentice Hall, Europe Kaplan R.S. and Norton D.P., 'The Balanced Scorecard-measures That Drive Performance', Harvard Business Review, 70(1), January-February, 1992, 71-79 Kogan, R.W., "Life, death, and dollars", Medical Marketing and Media, July 1991, pp. 18-2 Lehman Brothers, "The Fruits of Genomics", 2001 Lindquist D., 'Drug Companies' Rx for the Bottom Line', Industry Week, Sept 7,1998. Vol.247, Iss. 16; pg.25, Cleveland Little A.D.'s techniques which was developed in Wright R., A System of Managing Diversity, 1974 and also in Hax A. and Majluf N. Strategic Management: An integrative Approach, Prentice Hall, 1984. Lynch R., Corporate Strategy, (2nd edition), Prentice Hall, 2000 McGee J. and Thomas H., 'Strategic Groups; Theory, Research and Taxonomy', Strategic Management Journal, vol.7, no.2, 1986 Moukheiber Z. and Langreth R., 'J&J an Unfinished Symphony', Forbes, Dec10,2001. Vol.168, Iss.15; pg.062, New York Porter M.E.(1980), Competitive Strategy, Free Press Porter M.E (1985), Competitive Advantage, Free Press Pricewaterhousecoopers, A New Rx for Corporate Disclosure, 2001 Resnick J.T. 'Reputation the inside story', Pharmaceutical Executive, Jun 2003, Vol.23, Iss.6; pg.40 Richardson J. and Bolesh E. 'Toward the See-through Corporation', Pharmaceutical Executive, Nor 2002. Vol.22, Iss. 11; pg.54, Eugene Sellers L.J., "Forth Annual Pharm Exec 50", Pharmaceutical Executive, May, 2003 Schmid E. F. and Smith D. A. 'Is pharmaceutical R&D just a game of chance or can strategy make a difference?' Drug Discovery Today Vol. 9, No. 1 January 2004 Slatter S.ST.P (1977) Competition and Marketing Strategies in the Pharmaceutical Industry, Croom Helm, London Taylor A., 'Can J&J Keep the Magic Going?', Fortune, May 27, 2002, Vol. 145, Iss. 11; pg.117 VFA, German Association of Research-Based Pharmaceutical Companies, Statistics 2003: The Pharmaceutical Industry in Germany, 2003 Zhang Y. (2004) Analysis of the Pharmaceutical Industry Zingales F. 'What's A Company's Reputation Worth?', Global Finance, Feb 1998. Vol.12, Iss.1; pg.17, New York Websites www.jnj.com I-Entry Network. 23 Sept 2003. http://www.webprowire.com/summaries http://www.pharmabiz.com/article/detnews.asp?articleid=16361&sectionid=48 BAP2: Insight Into The Pharmaceutical Giant: Johnson&Johnson 1 ...read more.

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