Strategic Analysis Case Study 2009Jarryd Phillips, Jermaine West, Spencer Jacoby,Othniel Hyliger, Steven Pelletier

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OverviewCompany OverviewHistoryCurrent Vision Statement & CredoProposed Vision & Mission StatementsExternal AssessmentPositioning MapCPM MatrixOpportunities & ThreatsEFE MatrixInternal AssessmentOrganizational ChartFinancial RatiosTrendsStrength & WeaknessesIFE Matrix

Strategic AssessmentSWOT MatrixSpace MatrixGrand Strategy MatrixBCG MatrixIE MatrixMatrix AnalysisQSPMRecommendationsObjectivesStrategic ImplementationEPS/EBITProjected Balance SheetProjected Income StatementEvaluationBalanced ScorecardPossible IssuesSourcesQuestions

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Timeline 1886- 3 brothers founded Johnson & Johnson in Brunswick, New

Jersey. 1888- Pioneered the first commercial First Aid Kit. 1894- Launches first maternity kit to make child birth safer 1898- First to mass produce dental floss. 1921- An employee invents the first BAND-AID 1937- Began international expansion with companies in Argentina &

Brazil 1954- Baby shampoo enter the market 1978- The Company begins construction on their new World

Headquarters in New Jersey. 1990’s- Ethicon Endo-Surgery pioneers minimally invasive surgery. 2002- Johnson & Johnson acquires Tibotec-Virco BVBA 2006- Johnson & Johnson acquires Pfizer Consumer Healthcare 2009- Acquisition of Mentor Corporation

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2009 Highlights

Strengthened core business and invested in new launches

Acquired Cougar Biotechnology in JulyContinued to expand globally

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Current Vision

“To maximize the global power of diversity and inclusion to drive superior business results and sustainable competitive advantage.”

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Johnson & Johnson CredoThis is a statement of our values and responsibilities that was written more than 60 years ago. It articulates our responsibilities to customers, employees, communities and shareholders. It sets the tone for what is expected at J&J.

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Our philosophy and core values are centered on our desire to provide the safest and most reliable products and services to our customers, employees, medical professionals, and stockholders (1, 2, 6, and 9). Our consistent market growth and competitive advantage within the world market will ensure profitability and is a tribute to our trained employees, innovation, technology, and market research (3, 4, and 5). In regards to local and domestic communities, it is our goal to ensure that Johnson and Johnson adhere to policies and procedures to be socially responsible and for the betterment of all members of our value chain (7, 8).

1. Customers2. Products or services3. Markets4. Technology. 5. Concern for survival, growth, and profitability6. Philosophy7. Self-concept8. Concern for public image 9. Concern for employees

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Johnson and Johnson’s vision is to be the most recognized, innovative, and socially responsible name in pharmaceutical, consumer health, medical device, and prescription products in the world. Through this, we will earn our customer’s respect and enthusiasm with continuous improvement that is driven by innovation, integrity, teamwork, and the desire to provide value for the investment. As a result, J&J will gain market share to increase sales and generate dividends for our shareholders.

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Opportunities• Acquisition of Synthes could enhance J&J’s Failure of prospective

products to deliver leadership position in global orthopedics market

• Leveraging therapeutic coverage of non-prescription pharmaceutical segments could provide cross-selling opportunities

• Addition of Crucell to broaden J&J’s position in biologics and vaccines market

• R&D investment will add to the potential growth rate of the company in surrounding markets.

• Economic recovery will be a boost in income thus company revenue will increase.

• Global expansion

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Threats• Negative Impact of Recent Product Recalls• Healthcare regulations• Better research and development of competitors• Low market growth rate.• Strong competition from the generic market.• Launch success in that newly launch products are uncertain

because of regulatory review, thus making the launch a potential threat if it fails.

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Strengths• Diverse business offering • Forecast growth despite challenges • Significant sales and marketing capabilities• Robust financial position• They have strong global presence operating in more than

57 countries with 250 subsidiary companies• They have successfully employed strategies to

differentiation that helps it distinguish itself from its competitors.

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Weaknesses• Generic drug's exposure• Private label exposure• Quality issues in OTC products affecting consumer

healthcare product sales• Key product demand is shrinking.• Theft and counterfeiting of drugs from internal staff as

much as this is not isolated to J&J.• Pressure to reduce prices in accordance with medical

budgets and maintain patent expirations to help generic programs.

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SO Strategies•S1, O1: JNJ Should aim to be an industry leader in all its diverse business offerings.•S2, O2: With the addition of new products in various departments, JNJ could potentially still predict growth in challenging times.

WO Strategies•W1, O1: Although there is a wide variety of generic drugs, JNJ should use this as an opportunity to highlight the value and quality of their products and increase R&D in specific segments to increase market share in surrounding markets.•W2, O2: OTC sales should be used as a prime opportunity to highlight the value and worth of JNJ`s products.

ST Strategies•S1, T1: JNJ`s diversity should not be a means for its products to be valued as "average", its diversified range should be known for the high quality.•S2, T2: The prediction of increased sales in challenging times should be a testament to JNJ`s value and quality of products.

WT Strategies•W1, T1: Product recalls can seriously hinder the perceived value and quality of JNJ.•W2, T2: Healthcare regulations along with challenging economic times can prove costly to JNJ as a whole.

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Recommendations

Increase R&D in the pharmaceutical segment by $75 million; will result in 8% projected sales increaseContinue to improve on product recalls; this will give a better quality perception to consumers and medical personal Improve cross-sell techniques of diversified productsTotal cost = $75,000,000

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We are proud of our 2009 accomplishments, but we recognize there is a great deal more to do. In the near future, we continue to assess what more we can do across our business segments, our supply chain and together with partners, including governments, other companies and social and environmental non-governmental organizations.

The people of Johnson & Johnson remain committed to living up to the responsibilities laid out in Our Credo. As our Company approaches our 125-year milestone, improving human health and well-being is still our crucial mission and the ultimate measure of upholding our responsibility now and for generations to come.

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Projected Balance Sheet

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Possible IssuesAdditional product recalls/ lawsuitsAnother economic downturnCompetitor’s gaining market shareFederal regulations that affect potential new products

and existing processesLitigation from people being hurt through defective

products International regulations that limit foreign expansion

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Sources Johnson & Johnson Annual Report.

http://files.shareholder.com/downloads/JNJ/1782599548x0x359541/6EAF4E16-08B2-4AD4-86AC-5BDB928E5320/JNJ_2009AR.PDF

Johnson & Johnson. http://www.jnj.com/connect/ The Street. 10 Companies that paid the least in taxes.

http://www.thestreet.com/story/11077452/1/10-companies-paying-the-least-in-taxes.html CBS News. J&J layoffs: the jobs that are the safest and those that aren’t.

http://www.cbsnews.com/8301-505123_162-42843383/j038j-layoffs-the-jobs-that-are-safest-and-those-that-arent/

Historical Stock Prices. http://finance.yahoo.com/q/hp?s=JNJ&a=11&b=31&c=2009&d=11&e=31&f=2009&g=d

Competitor Comparisons. http://www.nasdaq.com/symbol/jnj/competitors Competitive Profile. https://business.missouri.edu/ifmprogram/reports/2010SP/J%26J%20Report.pdf

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Questions?

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