Strategic Analysis Case Study 2009 Jarryd Phillips, Jermaine West, Spencer Jacoby,

1. Strategic Analysis Case Study 2009 Jarryd Phillips, Jermaine West, Spencer Jacoby, OthnielHyliger, Steven Pelletier

2. Overview Strategic Assessment SWOT Matrix Space Matrix Grand Strategy Matrix BCG Matrix IE Matrix Matrix Analysis QSPM Recommendations Objectives Strategic Implementation EPS/EBIT Projected Balance Sheet Projected Income Statement Evaluation Balanced Scorecard Possible Issues Sources Questions Company Overview History Current Vision Statement & Credo Proposed Vision & Mission Statements External Assessment Positioning Map CPM Matrix Opportunities & Threats EFE Matrix Internal Assessment Organizational Chart Financial Ratios Trends Strength & Weaknesses IFE Matrix

3. History

4. 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

5. 2009 Highlights • Strengthened core business and invested in new launches • Acquired Cougar Biotechnology in July • Continued to expand globally

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

7. Johnson & Johnson Credo This 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.

8. Proposed Mission Statement 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. Customers 2. Products or services 3. Markets 4. Technology. 5. Concern for survival, growth, and profitability 6. Philosophy 7. Self-concept 8. Concern for public image 9. Concern for employees

9. Proposed Vision Statement 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.

10. Proposed Slogan “Caring for you from the beginning, to the very end!”

11. External Assessment

12. Position Map Number of Stores (High) Narrow Price Competitiveness Wide Price Competitiveness Number of Stores (Low)

13. CPM Matrix

14. 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

15. 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.

16. EFE Matrix

17. Internal Assessment

18. Organizational Chart

19. Financial Ratios

20. Financial Trends

21. Trends

22. Sales by Geographic Region

23. Sales by Segment

25. 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.

26. 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.

27. IFE Matrix

28. Strategic Formulation

29. SWOT Matrix • 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.

30. Space Matrix

31. Grand Strategy Matrix

32. BCG Matrix 1 0.5 0.0 +15 0 -15

33. IE Matrix

34. Matrix Analysis

35. QSPM

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

37. Objectives 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.

38. Strategic Implementation

39. EPS/EBIT

40. Projected Balance Sheet

41. Projected Income Statement

42. Evaluation

43. Balanced Scorecard

44. Balanced Scorecard cont.

45. Possible Issues • Additional product recalls/ lawsuits • Another economic downturn • Competitor’s gaining market share • Federal regulations that affect potential new products and existing processes • Litigation from people being hurt through defective products • International regulations that limit foreign expansion

46. 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

47. Questions?