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Analysis of Business Environment in Johnson and Johnson

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Johnson and Johnson is an American multinational company which specializes in the development and manufacturing of health care products. The company operates within some segments which include pharmaceutical, consumer and medical devices ( (2020). The company was established by Robert Wood Johnson I, Edward Mead Johnson Sr and James Wood Johnson in 1886. The head quarter of the company is situated in New Brunswick, NJ.


The method of analysis of the environment in which a business is operating is known as the industry context of the company. The scanning of the environment has its main focus on the macro environment of the industry that can possible affect the productivity and other related conditions of the operations of the company. By analysing the context, the will also be able to determine the target market and the future trends that it should adopt.

The organisation of Johnson and Johnson is primarily divided into three main segments-

  1. Consumers that will also include the skin care as well as the baby care.
  2. Pharmaceuticals: like the anti viral drugs,
  3. Medical devices as well as the diagnostic segments.

The resource based view of any company enables it to put in a place the resources that it has and the compatibilities it possess so that both can be put together for the more effective productivity. It is to be taken into account that the capabilities and the resources are the main sources of profitability for the company and also analyses the needs for the future resources and competencies that it will need in order to compete with the contemporary market. The Johnson and Johnson company earns its key resources of revenue from the Healthcare as well as the Medical devices. The pharma segment of the company earns 45% of the total revenue for the company, and adds upto 605 of the total value of the company. Most of the extracted revenue comes from the major two divisions under the pharma segment, which are mainly Immunology and Oncology. These two divisions create the quarter of the total segment of the revenue resources for the company.

The productive assets for any company are the tangible and intangible assets of the company. The tangible assets refer to the cash and plant of the company. The total assets of the company was 152.954 USM$ in 2018. And in 2019, it extended to 155MUS$ approximately. The intangible assets of the company are the reputation, culture or the techno logy used in it. The company had earned a good reputation in the medical device and pharma. It is a well known brand all across the world. The company had their dynamic competencies which has been demonstrated in the success rate of the company along with their new techniques in protecting the tangible assets like the cost saving exercises while they are acquiring the firm or the benefits they extrapolates by limiting the culture clashes. The company through Mergers and Acquisitions acquires the main tangible assets of the company. Another way in which the company has achieved the success in their merger and acquisition are their huge successes in the successful acquisition of the MD&D franchise and the DePuy Inc. With the purchase of the Du pey the company has not only been able to acquire a huge brand, but also got hold of the new valuable and innovative technology of the Hip Replacement. The company i this manner had been able to access the $270 billion dollar a year.

Thus, the main resources of Johnson and Johnson are the technologies are thus advertising, reputation, and value of sales, policy choice, technology, and patents.

Advertising: the company has created a content platform and defined their baby products by the well defined audience profile as well as the expectant mothers. The projection of such delicate symbols instantly creates an affinity towards the brand. In recent times, the company has launched the for every face campaign in Indonesia to empower the teen girls. In addition to these, the company also promotes content based advertising strategies in newspaper and the social medias.

Technology: the company focuses on the ERP technology and digital technology in order to contribute more into the sustainable and growth strategy. The company has its reputation of being thirsty for innovations. The company has created the Enterprise Resource Planning in order to manage the inventory and the suppliers and audit trials. They have enhanced their supply chain policies with the collaborations with the in pharma technologists the company has also focused in the pioneering of the hi-tech new strategies and investing in increasing the supply chains. Johnson and Johnson currently make use of the Internet of Things sensors to collect data from the required data. The company also use the concept of analytics system in order to prevent the failures of the machines by predicting the real time modelling and the process range.

Reputation: the reputation of the company had been quite owing to the supplies and range of the medicines and the medical devices. However, in recent times, the company had been battling the reputation crisis because of its involvement in the opioid crisis. The brand position has also suffered a fall because of this issue and now it is in the 57th position straight down from the 8th position.

VRIO Analysis

The brand of Johnson and Johnson is valuable as it mitigates the threat of rivalry by the effective use of the resources. The company makes use of the effective technological devices that has created an important asset for the country. The company uses the technology in gaining data. This helps the company in analysing the present and the future demands of the market. the company also gets a grope in the supply chain policies of the products by the effective use of the recent technologies. This will help the company in being aged of the competitors and the competitors. This will also enable the company in communicating well with the target market and knowing the demands. The advertising strategy of the company is also an important resource for it caters to the innovative level that the target markets seeks for. The promotions through the advertising and social media content help the company in generating the interest of the target market and reaching to a large number of audiences. The rarity factor of the company primarily includes the branding of Johnson and Johnson. The brand image of the company is comparatively high in comparison to other substitutes in the market. With their reputation and their strong customer base the company had been able to create a brand image for itself which cannot be imitated or duplicated. Moreover, the imitation of the service given by the brand is also costly which can be borne by a handful of companies. The company emphasises on their promotion of the tactic of the caring for family, which is also unique to the company and contains the originality. Few companies have a past history and business as Johnson and Johnson and hence cannot imitate their brand image. The tangible assets of the company is also build over the years and this high amount of asset cannot be mitigated by any new entrants in the industry. Patents are also important part of the resources that contributes to the growth of the company. the company’s patent system is complex. Moreover, the suppliers will not jeopardise their relation with the company, which earn them a huge profit.

There are both inward and outer environmental situations that need to be analysed by the company in order to prepare the three years development plan for the company. Johnson and Johnson imparts the costly loyalty trainings to the employees that helps the company in creating the organisational culture that builds the resource competency matrix from the Human Resource point of view. However, the company needs to focus more on its internal environment and not merely depend on the patents for they will not last long. The continuous improvements and experiments with the technologies will help the company in creating a trustworthy and consistent image.


From the above discussion about the forces, that affects the macro environmental context of the company of Johnson and Johnson it is identified that the company has to mainly face the competition from other large companies from the same industry. Moreover, their strategies are quite passive so it do not get easily noticed by the consumers or other related stakeholders. However, the resource based analysis of the company shows that the resources in hand , both tangible and intangible are quite competent in order to cope up with the internal as well as the external adversaries. Thus, the company needs to focus on their strategic implementation in order to keep their resource-competence level in track. 

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