Running Head: STRATEGIC AUDIT
Strategic Audit
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Table of Content
Table of Content ............................................................................................................................. 1
Executive Summary ........................................................................................................................ 2
Strategic Issues and Recommendations .......................................................................................... 2
SWOT Analysis .............................................................................................................................. 7
Balanced Strategy Scorecard ........................................................................................................ 12
Organizational Assessment ........................................................................................................... 14
External Environment Scan and Five-Force Analysis .................................................................. 21
Market Position Analysis .............................................................................................................. 24
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Johnson & Johnson Strategic Audit
Executive Summary
The strategic audit undertaken in Johnson & Johnson organization reflects the
organization is relatively in line towards its strategic goals. The organization has been able to
achieve a number of strategic objectives and build a strong internal environment towards its
future sustainability. However, a number of internal weaknesses and external environment
threats have been identified capable of hurting the strategic goals of Johnson & Johnson
organization. Accordingly, a number of strategic issues have been reviewed in determining the
actions the organization should consider undertaking to cushion the external threats and
eliminate the internal weaknesses. The strategic issues reviewed have been derived from the
SWOT analysis undertaken and the review of the five market forces an organization is likely to
face. Thus, the strategic issues reviewed are critical in enabling the organization to enhance its
alignment to the strategic goals. Accordingly, a number of recommendations have been given
and discussed, which the management of the organization can implement. The implementation of
the proposed recommendations will help the organization to achieve its strategic goals
effectively and efficiently.
Strategic Issues and Recommendations
Product portfolio
Product portfolio is one of the strategic issues, which the management of Johnson &
Johnson organization needs to consider improving for the company to remain competitive. The
term product portfolio implies the array of various products an organization sells. Even through
product portfolio has been vital in enabling Johnson & Johnson to maximize revenue generation
through wide customer reach, changes in product positioning of its brands has threatened the
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continued market confidence on its products. The recent recall of Baby Shampoo due to pressure
by consumers’ groups has seen reputation of the organization damaged. The Baby Shampoo
product was found to contain the lethal formaldehyde-releasing preservative, which is harmful to
children (Katie, 2014). At the time, the Baby Shampoo was positioned as a sudsy lather brand
due to its ability to prevent irritation on child’s eyes causing tears.
However, the revelation by the consumer groups the products of Johnson & Johnson
organization are not as they are reflected to be, as eroded the positioning of its product portfolio.
Thus, it is vital for the management of Johnson & Johnson organization to review the position of
its product to ensure it retains its consumer confidence in the competitive market. The increased
fear by the consumers that the products of Johnson & Johnson may be containing harmful
chemicals has the potential of eroding its present market presence, which is crucial for its
financial performance. Consequently, it is recommended for the management of Johnson &
Johnson organization to review the brand names of the brands, which have been recalled from
the market recently. The change of the brand names should be followed by extensive marketing
campaign to regain the market confidence. The change in brand name has the potential of
reflecting to the consumers the harmful products have been removed. Similarly, carrying out a
marketing campaign demonstrating the company has removed the suspicious brand from the
market due to its caring slogan will help in convincing the consumers the organization assurance
to quality and safety has been catered. Consequently, Johnson & Johnson organization will be
able to regain its positive product positioning and consumer confidence significantly.
Structure
The alignment and configuration of the organizational responsibilities and roles, and
decision-making authority towards supporting the strategy of the company is another strategic
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issue, which needs to be catered by the organization. The extent to which the responsibilities and
roles, and decision-making structures are configured and aligned with the organization strategy
determines the efficiency and ease of realizing the strategic goals. An organization where
responsibilities and roles shared among individuals and departments are not aligned and
configured in the organization’s strategy faces loss of focus because the persons responsible with
the role of implementing the strategy plan have no strategy clarity. Similarly, a decision-making
criterion, which is not configured and aligned to the strategy of the organization, has the risk of
causing decisions, which are not compatible with the strategy plan. Accordingly, there is need
for Johnson & Johnson organization to ensure the responsibilities and roles, and decision-making
structure are aligned and configured with the organizational strategy. The recommendation
proposed for the organization to align and configure the decision-making, and responsibilities
and roles structure with the organization strategy is introducing a formal communication-sharing
environment between different departments and employees to top leadership. A formal
communication platform is vital in ensuring the structure of the organization is aligned and
configured to the organization strategy because responsibilities and roles will be well known
across the organization. Thus, the roles and responsibilities directed to certain players will be
aligned with the organization to ensure they are able to respond effectively. Similarly,
introducing a formal communication platform will ensure the rightful people makes their
respective decisions in line with the organization strategy. Consequently, the organization will be
able to operate smoothly towards strategy goal realization.
Organization culture/behavior
The organizational culture of Johnson & Johnson organization has been cited to be one of
the motivating factors behind the employee morale exhibited. However, the extent to which the
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mission of the organization is instilled in the organization culture, determines the extent to which
the employees believes and acts according to its meaning. An organization mission statement is a
vital aspect of the organization culture due to the role it plays in reinforcing good relation
between employees and the way employees serves the consumers. Accordingly, a close analysis
of the organization culture reflects the organization mission has not been instilled clearly to a
significant number of the organization community. A number of Johnson & Johnson employees
do not have a clear understanding behind the mission statement of the organization in reinforcing
the strategic objective of creating a high market share. The inadequacy of the organization
culture in instilling the mission statement to the employees implies the organization management
needs to enhance its organization culture coverage. Accordingly, it is recommended for the
organization to consider integrating the mission statement exposure as part of the employees’
training program. The training program to an extent should draw the employees to the mission
statement to reflect on its meaning when performing the duties. Thus, the employees will be able
to reflect the meaning of the mission statement in their respective duties when serving the
interests of the organization. The action will enable the organization to reinforce the organization
culture in helping the organization to achieve its strategic goals optimally.
Value chain activities
The value chain of an organization is critical in ensuring the organization is able to
source raw materials, process the raw materials, and distribute the final products to the
expectations of the consumers. Accordingly, an organization should ensure its value chain is able
to manage vital information shared by the various players across the supply chain in responding
to the needs effectively. The extent of managing the new information from each value chain end
ensures the potential threats by consumers, new entrants, and suppliers in relating with the
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organization are adequately resolved. Accordingly, an analysis of the value chain of Johnson &
Johnson organization reveals it has a weakness of managing shared information optimally. The
information originating from the various value chain ends in the organization is shared through
informal means. The informal sharing of information across the value chain has the risk of
denying the organization to realize the emerging issues optimally in its value chain activities
(Overbeck, 2009). Thus, there is need for the Johnson & Johnson organization to review the
information sharing in its value chain activities. The recommendation proposed is for the
organization to structure a formal management of value chain activities information. A clearly
defined of platform of receiving and disseminating the value chain information should be
introduced by the management. Consequently, the organization will be able to respond to the
threat of suppliers shifting their loyalty and new entrants outmatching the expectation of the
consumers in the industry when market intelligence information is shared formally across the
supply value chain.
Performance measures
Performance measures employed an organization are crucial in enabling the management
to ensure the organization’s activities are geared towards the organization strategy. Indeed, the
performance measures of an organization evaluates if the organization is achieving the key
strategic goals. Accordingly, Johnson & Jonson organization employs the balance scorecard as
the performance measure of its activities towards the strategic goals. The balanced scorecard
employed by Johnson & Johnson organization significantly ties the strategy to essential specific
operating activities. The performance measures employed in the balanced scorecard of Johnson
& Johnson organization dwell on performance indicators reflecting incremental progress in
achieving the strategic goals. Accordingly, the performance measures of the organization are
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able to reflect if the organization is trending towards the strategic financial goals, learning and
growth objective, customer expectations, and internal process adequacy. Consequently, it is
recommended for the management of Johnson & Johnson to raise the targets of each
performance measure in the future. The action of raising the performance measure target will
enable the organization to raise its performance in attempt to achieve the targets. Thus, the
organization will be able to respond to the industry threats and internal weaknesses adequately in
reaching and sustaining the strategic goals in the future.
SWOT Analysis
Strengths
Threats
1. Product quality
1. Supplier loyalty shift
2. Huge asset resources
2. Product recall reputation
3. Market reputation
3. Product launch failure
4. Employee morale
4. Experienced and skilled employees exit
5. Strategic acquisitions
Opportunities
Weaknesses
1. Diversifying to emerging markets
1. Information sharing
2. Diversifying to health service
2. Operational costs
operations
3. Use of social media and internet
3. Weak global market network
4. Pricing strategy
marketing
The SWOT analysis matrix above depicts the current internal and external scenarios
facing the Johnson & Johnson organization. The positive product quality and market reputation
are instrumental assets of the firm due their ability of promoting the ability of the organization to
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penetrate the market and generate huge sales volume at ease. Indeed, consumers are attracted and
retained due to the ability of the products to be of quality they expect from the sellers. Similarly,
the huge asset resources of the organization is an essential strength because it helps the
organization in undertaking strategic operations without facing financial constrains. The firm is
able to finance the strategic acquisitions and developments, which are crucial in enhancing its
competitiveness at ease (Snelling, 2012). Thus, the organization is able to remain competitive in
the market effectively. Furthermore, the morale exhibited by the employees is critical asset due
to its extent of ensuring the workforce remains committed in implementing the objective of the
organization when serving consumers. Thus, the employees’ morale is crucial in enhancing
consumer retention. Moreover, the strategic acquisition the organization has been able to
undertake in its operational systems is a crucial asset in assuring quality of the products it sells.
The acquisitions will ensure the company is able to meet the needs of the consumers effectively
through the high quality of the final products.
However, the various internal weaknesses identified have the potential of derailing the
business objectives of Johnson & Johnson Company. The informal sharing of information in the
organization is a critical weakness because it hinders effective response to the issue been raised
by the various players. Thus, it has potential of causing the organization to fail in optimally using
the rich information. Similarly, the high operational costs been experienced by Johnson &
Johnson organization is a major internal weakness because it implies the organization is
managing costs poorly. Thus, it has the potential of causing the profitability of the organization
to slow down in the future. Furthermore, the high prices of the organization’s products compared
to competitors are a weakness due to its potential of hindering the organization to penetrate the
market effectively. Consumers have the tendency of being price sensitive in deciding the product
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to buy in the market. Moreover, the organization has a shallow global network where it has
concentrated active operations in developed markets. Thus, the global network strategy hinders
the organization from reaching the global consumers effectively.
Nevertheless, a number of opportunities are available to allow the organization to
advance its business objectives in the future. Diversifying to emerging markets in the
contemporary globalized market is a crucial opportunity due to the huge market population and
increasing purchasing power of the populate. Thus, the organization will be able to generate huge
sales volume and global market share by penetrating the market. Similarly, Johnson & Johnson
has the opportunity of diversifying to medical services due to the reputation it has in producing
medical devices. The reputation the organization has in manufacturing of medical devices has the
potential of convincing the consumers the organizational is capable of giving satisfying medical
services. Furthermore, the use of internet and social media marketing in the contemporary world
is another opportunity the organization can employ to reach markets it has not established active
operations. The concentration of internet in the modern world has seen information been shared
across the world at press of button.
Johnson & Johnson organization also, faces threats, which might hurt its ambitions in the
future. The potential of the raw materials supplier to shift their loyalty to a competing
organization is a major threat to Johnson & Johnson operations because it will be unable to
secure the quality inputs it has been accessing. Thus, the quality assurance to the consumers
through the final products will be hurt. Similarly, the possibility of its products in the market to
be recalled is a critical threat due to the damage it will cause on the organization’s image in the
market. The impression consumers have on the accuracy and excellence of the organization in
assuring safety and health of consumers is not compromised will be hurt. Furthermore, the
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potential of experienced and skilled employees to shift to a competitor is a threat due to the loss
of human resource in ensuring quality of final products. In additions, the employees will transfer
the knowledge to the competitor, which will threaten the superiority of Johnson & Johnson in
giving quality products. Moreover, the threat of product launching failure is critical due to the
huge investment cost the organization will incur. The product launching in the various markets
the organization targets incurs huge sum of money, which might cause huge losses for the firm if
it fails.
Action Plan
Owing to the weaknesses and threats identified in Johnson & Johnson organization, an
action plan has been proposed to exploit the opportunities and enhancing the strengths. The
action plan will ensure the weaknesses are overcome and threats met effectively. Thus, one of
the undertakings the management of Johnson & Johnson should observe is exploiting the
opportunity of social media and internet to resolve the weak global network. The ability of the
social media and internet to converge people from different global regions should be employed
by the organization to enhance its global network. Thus, the management should undertake the
action of establishing an active social media and online platform to interact with people from
different global regions. Furthermore, the active social media and global network can be
exploited by the management in collecting and sharing crucial information across the supply
chain. Thus, it will help to direct the information collected into an identifiable channel where the
various players are able to respond to the information effectively. Similarly, the management of
the organization should exploit the opportunity posed by emerging markets to reduce the
operational costs significantly. The extent of the organization to diversify operations in emerging
markets with lower wage rates and huge raw materials availability will reduce the operation costs
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significantly. Furthermore, the action will help the organization to reduce prices of its products
sue to lower production cost. Thus, the profitability of the organization will be able to expand
due to the low operation costs while the sales revenue increases once price weakness is resolved
by the organization.
The threats the organization faces can also, be met by enhancing the strengths the
company possess. Accordingly, the threat of suppliers shifting their loyalty to the competitors
can be met by utilizing the huge resources effectively to please the suppliers. Promising the
suppliers, a higher return for their supplies in the future due to the financial capability of the firm
will ensure the supplier remains loyal to the organization. Similarly, the management of the
organization should enhance the market reputation strength to cushion the threat of product
launch failure. The threat of product launch failure is highly caused by fear and dissatisfaction of
the consumers the new product will meet their problems. Accordingly, enhancing the market
reputation strength will ensure the organization is able to prevent future product launch failure
because consumers trust the organization in meeting their problems. Furthermore, the threat of
product recall should be prevented by advancing the strategic acquisitions. The extent of the
company in ensuring the acquisitions been made are capable of detecting any product failure or
risks will prevent any product recall in the future. Moreover, the employees’ morale strength of
the company should be enhanced to prevent the threat of employees shifting to competitors. The
employees have tendency of been loyal to their organization when their welfare are adequately
met (Buller & McEvoy, 2012). Thus, the management of Johnson and Johnson should ensure the
morale of the employees is enhanced by catering for their social and economic welfare to prevent
the potential of shifting to competitors in the market.
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Balanced Strategy Scorecard
A balanced scorecard is one of the instrumental tools of assessing the potential of an
organization to achieve its business objectives sufficiently. A balanced scorecard is a
management and strategic planning system, which is employed in aligning the business strategy
and vision of an organization, improving external and internal communication, and monitoring
organization performance touching strategic goals (Kaplan & Norton, 2001). Accordingly, the
balanced scorecard has been employed in analyzing if the performance of Johnson & Johnson
organization has been able to accomplish its strategic goals. The strategic and vision goals of the
organization are reflected in the balanced score card below.
Balanced Scorecard Perspectives
Finance
Measures
1. Return on capital
2. Financial results trend (Quarterly and
annually)
Learning & Growth
1. Expertise level for the jobs
2. Training opportunities
3. Employee turnover
4. Job satisfaction
Internal business process
1. Process alignment
2. Duplication of function activities
Customer
1. Customer satisfaction rate
2. Customer delivery performance
3. Customer retention rate
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The balanced scorecard template reflected above is best suited in analyzing if Johnson &
Johnson Company has been able to realize its strategic goals. Accordingly, the perspective of
finance reflected above has been relatively been met using the measures employed. The financial
performance of the Johnson & Johnson organization has been expanding significantly in the past
years through the net income expansion. Consequently, the return on capital employed and the
financial results have been on a positive trend. The perspective of the learning and growth on the
scorecard has also, been relatively achieved. Johnson & Johnson organization has been able to
achieve its learning and growth objective by investing heavily in expertise skills development
across its value chain.
The substantial investment the organization has undertaken in expertise investment has
seen training opportunities for the employees enhanced to improve their future career
opportunities. Consequently, job satisfaction at Johnson & Johnson organization has been ranked
among the highest in the personal product industry. The high job satisfaction has seen
employees’ turnover increasing significantly over the years. Consequently, the learning and
growth objective has been realized significantly. However, the perspective of internal business
process has shown signs of achievement deficiencies. A number of the organization’s function
activities are not allocated with clear clarity, which has seen a level of activity duplications. The
presence of activity duplications has caused some internal process bottlenecks due to conflicts
between the persons and departments undertaking similar tasks. Nevertheless, the process
alignment perspective in the organization has been managed adequately across its value chain
management. Johnson & Johnson has been able to align its process well in ensuring the sourcing,
processing, and output of the final products responds to the needs of the targeted consumers in
the diverse markets.
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Similarly, the consumer perspective is another area where the organization has been able
to drive towards strategic goals. The customer satisfaction rate of the customer perspective has
been high due to the increasing market share of the organization compared to competitors. The
increasing market share of Johnson & Johnson organization is a testimony the customer
satisfaction with the products supplied is high. Furthermore, the customer delivery performance
has been increasing through technology delivery investments, which helps consumers to order
products at their convenient place and time while the product is delivered at their preferred time
and place. Consequently, the customer retention rate at Johnson & Johnson organization has
been high.
Organizational Assessment
Internal Environment Scan
Internal environment is one of the instrumental dimensions one should evaluate in
assessing the strategic and operational strength of an organization. The internal environment
helps in understanding if an organization is able to approach the external environment
competitively. Accordingly, an internal environment scan of the Johnson & Johnson Corporation
has been undertaken in the paper.
Mission, vision, and values
Mission, values, and values of an organization are reflection of the ambition and
objectives of an organization in undertaking its operations. Thus, the mission, vision, and values
statement shared by an organization to the inner and outer audiences reflects the path of
achieving the business objectives of the organization. However, there is possibility the
organization may be misunderstanding the aspect of the mission, vision, and values when related
with the business strategy. The extent of the business strategy of an organization to be opposite
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of the mission, vision, and values has the danger of confusing the line managers and supervisors
in executing the organization’s policies due to differing signals towards achieving the objectives
of the organization. Thus, a consensus on the Johnson & Johnson’s mission, vision, and values
with the business strategy has been assessed. Similarly, the extent of the mission, vision, and
values of the organization to concur has been assessed. The mission statement of Johnson &
Johnson organization is “We will delight our consumers, treating each person who contacts us
as if they are our only consumer, providing them with a response which is evidence of our
interest and that leaves them with the clear understanding that they are important to us”
(Johnson&Johnson, 2015). The mission statement of the organization reflects the consumer
satisfaction is the core aspect of attaining the objectives of the organization. In contrast, the
vision statement of the organization is attracting, developing, and retaining employees reflecting
the diverse nature of consumers the organization serves in ensuring the organization is
successful. Similarly, the value statement of the Johnson & Johnson organization is to put the
patients and consumers first (Johnson&Johnson, 2015). The value statement of the organization
implies the organization is focused at ensuring the fears and expectations of the consumers
override other priorities in developing the products of the organization. The mission, vision, and
value statements of the organization are all directed at maximizing the satisfaction and
expectations of the consumers through the service delivery, employees, and prioritizing resource
utilization.
Accordingly, the mission, vision, and values of the Johnson & Johnson Corporation
concur in enhancing the satisfaction of the consumers targeted to ensure the business is
successful in the future. The extent of the three dimensions to have a consensus is crucial in
ensuring the approaches employed by the diverse line managers are same. Similarly, the business
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strategies of the organization should conform to the mission, vision, and values objective for the
organization to pursue its business objectives and interests with harmony. Thus, the strategies
employed by the organization should be in line with consumer satisfaction and retention
strategies. The business strategy of Jonson & Johnson organization is reflected in the diagram
below.
Source (Johnson&Johnson, 2015).
The business strategy employed by Johnson & Johnson organization reflected above depicts it
is related with the mission, vision, and values of the organization. The extent of the business
strategy to recognize its people and values reflects consumers are at the center of the business
strategy. Furthermore, the business strategy has integrated global reach and local focus in its
operations, which are instrumental in discovering the expectations of the consumers in
considering consuming the products the organization supplies. Consequently, the business
strategy coincides with the mission, vision, and values statements of the organization.
Strategy clarification
Strategy clarification is another vital internal strength of an organization in determining
the ability of the organization’s implementers in attaining the business objective. The strategy
clarification implies the extent to which the executives of an organization understand inherently
the business strategies of an organization. The extent to which the executives of an organization
understand the strategies of a business is crucial in determining how they implement the ideas
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and policies of the organization effectively. Accordingly, a strategy clarification assessment of
the organization’s executives has been undertaken by interviewing mid-level manager of the
organization. The mid-level manager interviewed in the assessment is involved in the product
research and development. Thus, the mid-level manager interviewed is expected to have a better
understanding of the organization’s business strategies in formulating product development
effectively.
The views reflected by the mid-level manager depicts he has right understanding of the
organization’s market position, competitive advantage, and value proposition. The mid-level
manager understands the market position of Johnson & Johnson organization depends on its
extent of satisfying the needs and expectations of the consumers. Accordingly, the executives of
the organization seem to have an understanding of the business strategy because it understands
the business strategy is pegged on consumer satisfaction. Similarly, the mid-level manager
reflects the competitive advantage of Johnson & Johnson organization has been enabled by
responding to the expectations and needs of the consumers in product development and
marketing. Furthermore, the mid-level manager reflects he has a clear understanding on the value
proposition of the organization. Value proposition implies the value promise of delivering value
to consumers and the customers acknowledging and believing the experience of value delivered
by the organization. Accordingly, the mid-level manager reflects the Johnson & Johnson
organization has been able to achieve value proposition due to the positive experiences and
believe the consumers shares for using is products. Similarly, the mid-level manager understands
the company is able to promise and deliver value to the consumers due to the intensive value
creation through innovation reflected in the business strategy. Consequently, the mid-level
manager demonstrates the business strategy of Johnson & Johnson organization is highly
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clarified to the executives and line managers in delivering their duties. Accordingly, the strategy
clarification implies the Johnson & Johnson organization has the capability of achieving the
business objectives competitively.
Cultural assessment
Johnson & Johnson organization has unwritten rules and shared valued, which are crucial
in governing behaviors of an organization. The unwritten rules and shared values of the
organization entail how employees relate with their supervisors and communicate their
grievances. Accordingly, the organization community of Johnson & Johnson organization has
devised a culture mutual relation with the employees in proposing and implementing new ideas
in the organization. Similarly, Johnson & Johnson organization is one of the organizations,
which has been able to avoid industrial disputes due to the culture of the organization in
employees’ union to share and arbitrate employees’ concerns with the management amicably and
honestly.
Furthermore, the organization has the culture of sharing crucial information across the
supply chain and regional operational markets and collaborating to ensure the organization is
able to respond to emerging issues and challenges effectively and efficiently (Roh, Hong, &
Park, 2008). Consequently, the culture of the organization has been enabler to strategy
implementation. The extent of the organization’s culture to see junior employees coordinating
with their supervisors ensures the business strategy of satisfying the consumers is promoted by
ensuring the final product and service delivery is well structured. Similarly, the culture of
resolving issues amicably and honestly ensures the business strategy is not jeopardized or
derailed due to organization wrangles. Furthermore, the sharing of crucial information and
collaboration across the supply chain and regional markets promotes the business strategy
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because it ensures the organization is able to respond to the consumer challenges and product
quality effectively (Roh, Hong, & Park, 2008). Consequently, the culture of the organization is
an enabler of the organization’s business strategy.
Value chain analysis
Value chain management is a crucial integral aspect of an organization due to the role it
plays in ensuring delivery of valuable products to the market. Accordingly, the value chain of
Johnson & Johnson organization has been analyzed using the Porter’s generic value chain
reflected in the diagram below.
Source (Bosch & Man, 2013).
The inbound logistics implies the processes employed to receive, store, and distribute
supplies internally (Bosch & Man, 2013). Consequently, the relationship with the suppliers is
crucial in creating value of the products produced by an organization. The value chain of
Johnson & Johnson organization has advanced its inbound logistics end by formulating a close
relation with the suppliers in the development of the raw materials. Thus, the inbound logistics
has ensured the quality of the products produced by the company is high and capable of meeting
the expectations of the consumers. Operations aspect of the value chain involves the activities of
transforming the inputs to products distributed to the consumers (Becher, 2005). Thus, the
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operation systems an organization employs in the operations aspect are crucial in determining the
value creation.
Accordingly, Johnson & Johnson organization has advanced its operation system by
employing quality and safety test systems. The quality and safety test systems has been able to
ensure quality and safety of the final products are guaranteed in meeting needs of the targeted
consumers. Outbound logistics are the activities employed by an organization in delivering the
products to the consumers. Accordingly, Johnson & Johnson organization has been able to
promote value under the outbound aspect by establishing wide distribution infrastructure across
the global market. In addition, the company has employed the services of agencies to reach
markets where it does not have operational structures. Thus, the outbound logistics of the
company have been able to ensure the consumers are able to access and buy the products of the
organization at ease. The marketing and sales dimension of the value chain involves the
strategies an organization in attracting and persuading the consumers to purchase its products
over those of competitors. Accordingly, Johnson & Johnson organization has been persuading its
consumers by demonstrating the benefits consumers stand to gain by considering to buy its
products. The strategy has been able to attract and retain loyal consumers for the company due to
the superior benefits they are promised over the competitors’ products. Finally, the service aspect
of the value chain is the activities an organization undertakes the product value is maintained
once the customers purchase the product (Weele, 2010). Accordingly, Johnson & Johnson
Corporation has established customer care service, which offers after sale services to consumers
once they buy its products.
Furthermore, the organization has established a market intelligence team, which advices
the organization on the challenges and difficulties consumers are facing in using their products.
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Consequently, the organization’s value chain has been able to create value by ensuring
consumers’ concerns are handled promptly and effectively after, they have bought the products.
External Environment Scan and Five-Force Analysis
Remote Environment Analysis
A remote environment analysis has been conducted to establish factors beyond the
operating situation of Johnson & Johnson Corporation in determining the opportunities and
threats a firm may be facing (David & David, 2013). One of the remote environment factors
influencing the external environment of Johnson & Johnson Company is the economic factor.
The economic factors are critical in determining the opportunities and threats facing the
organization because it determines the extent of the consumers to consume the products the
organization is offering. Accordingly, the emerging economies in Asia, Latin America, and
Africa give Johnson & Johnson organization an excellent opportunity of expanding its operating
markets in the future. The improving purchasing power of huge population in emerging
economies will give the organization a wide opportunity of increasing its sales volume
significantly.
Another remote factor facing the organization is the social factors. The social factors
entail the lifestyle, opinion, values, beliefs, and attitudes of the individuals targeted by an
organization in the external environment. Accordingly, the social factor of lifestyle and values in
the modern global society gives Johnson & Johnson organization an opportunity to penetrate the
external environment effectively. The changing lifestyle and values of society has seen persons
consuming personal products to enhance their health and appearance in the society. Thus, more
individuals will be willing to buy the products the organization supplies to enhance their health
and physical appearance.
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Similarly, political factors are another remote environment, which influences the
opportunities and threats of the organization. The political stability and direction of the emerging
economies is vital in formulation and implementation of the organization’s strategies.
Accordingly, the relative unstable democracies in Asia, South America, and African markets
threatens the extent of the organization in establishing operating stations in the lucrative
emerging economies. The unstable political environment has potential of causing chaos in the
future, which will disrupt operations and destroy properties causing massive losses.
However, the technological factors of the remote environment demonstrate the
organization has the opportunity of enhancing its profitability in the future. The improving
technology environment in the modern environment promises efficient utilization of resources
and sharing of information, which are vital in promoting profitability of the organization.
Consequently, the remote environment has opportunities and threats to the survival and
competitiveness of Johnson & Johnson Company in the future.
Industrial Environment Analysis
Similarly, an industrial environment analysis has been undertaken to understand the
competitive pressure Johnson & Johnson Company faces in the industry it operates. Accordingly,
the industrial environment analysis of the organization is hinged on five factors of industry
rivalry, bargaining power of consumers, bargaining power of suppliers, threat of new entrants,
and threat of substitute products (Tomomi, 2010). The industry rivalry in the personal product
industry, which Johnson & Johnson operates, has been intensifying in the recent times due to the
high number of players and selective consumer behavior. Thus, Johnson & Johnson organization
is facing stiff competition in the industry. Similarly, the bargaining power of the consumers is
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high in the industry due to the price sensitiveness of consumers in considering the brand to
purchase.
The bargaining power of raw material suppliers in the industry is also, high due to the
wide players in the industry. Thus, the suppliers have a higher bargaining power since the
demand of their raw materials is high in the industry (Tomomi, 2010). However, the threat of
new entrants in the industry is low because it requires huge investment for new entrants to
compete effectively in the industry. Furthermore, the consumers of the personal products are
reluctant to shift to new entrants due to sensitivity of the products in risking their health and
physical appearance. Similarly, the threat of substitute products is low because consumers are
risk sensitive of low quality personal products in harming their health and physical appearance.
Factors and Trends Affecting Opportunities and Threats
A number of factors and trends affect the opportunities and threats of Johnson & Johnson
organization in the external environment. One of the factors affecting the opportunities and
threats of the organization in the external environment is the increasing regulatory measures by
the authority. The increasing regulatory measures on the contents of personal products in the
industry have the potential of threatening the ability of the organization to differentiate its brands
optimally from the rival competitors. Another factor and trend affecting the opportunities and
threats facing the Johnson & Johnson organization is the invention of social media and its
embracement.
The social media technology factor and increasing trend of consumers in interacting with
corporations through the social media has enhanced the opportunity of Johnson & Johnson
organization in attracting more consumers. The platform has opened an efficient and effective
avenue for the organization to demonstrate its products’ superiority to the consumers in the
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24
market. Similarly, the trend of improving living standard of the modern generation has enhanced
the opportunities of Johnson & Johnson organization. The improving living standard of the
consumers has seen them opting for high quality personal product brands like those of Johnson
& Johnson in enhancing their personal and family health and physical appearance. Thus, Johnson
& Johnson has the opportunity of increasing its sales revenue exponentially in the future due to
improving living standards. Furthermore, the availability of quality raw materials is another
factor affecting the opportunities and threats of Johnson & Johnson organization. The extent to
which the organization is able to ensure the raw materials employed are able to produce high
quality final products determines its opportunity and threat of penetrating the market.
Market Position Analysis
Johnson & Johnson organization highly targets the young women buyers in the market
seeking skin and hair care products. The young women buyers in the market are the target of
Johnson and Johnson organization due to their tendency of seeking skin and hair enhancing
products compared to male consumers. Accordingly, the selective buying behavior of young
women in choosing the skin and hair care products to buy is employed by Johnson and Johnson
in promoting its hair and skin products in the market. The marketing strategy of promoting the
hair and skin products to the targeted customers has been shaped to depict how the diverse hair
and skin products provided by the company caters for the diverse human skins and hair (Roberts
& Alpert, 2010). Thus, the targeted young women are able to select a hair or skin product of their
body type as promoted by the organization. Similarly, young parents are another target for
Johnson and Johnson organization in selling its consumer care products in the market.
According, to the deputy sales manager of Johnson and Johnson organization, young parents are
targeted by the organization due to the sensitive characteristics in buying baby care products.
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25
Accordingly, the buying behavior of the young parents has influenced the marketing strategy of
the organization in attracting the young parent customers. The marketing strategy undertaken to
win the trust and confidence of young parents in buying the organization’s products entail
undertaking free parental advises and clinics. Consequently, the targeted customers are able to
view the organization as a caring partner in promoting the welfare of their children in
considering buying their products. Furthermore, Johnson and Johnson organization target
customers facing wounds and physical injuries in selling its products. Individuals facing physical
injuries and wounds have the characteristic of buying products with market reputation of
enhancing recovery. Thus, the buying characteristic of the targeted customers has seen
organization using the experiences of past consumers in reassuring the prospective consumers
the product will meet their expectations.
Another aspect of the company’s marketing dimension is the diverse wants and needs of
each customer segments. The different customer segments the organization targets have different
wants and needs, which determine if they will buy the organization’s products. The needs and
wants of the young women customers targeted by the organization are to enhance their skin and
hair appearance. Accordingly, the young women customers have been buying the skin and hair
products of Johnson and Johnson organization due to the positive market reputation the company
has been able to retain over the years. Similarly, the needs of the young parents in buying baby
care products are to ensure their babies’ skin and health is optimally protected. Thus, the
customers have been buying the organization’s products due to the word of mouth affirmations
and endorsement by credible sources. The customers facing wounds and physical injuries also,
have the need of recovering their physical health efficiently and effectively. Accordingly, the
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26
targeted consumers have been buying the organization’s product due to positive market
reputation.
Johnson and Johnson organization has been able to satisfy the needs and wants of the
customers considerably due to product diversification according to the deputy sales and
marketing manager. The diversity of the various brands targeting different types of customers
ensures the diverse problems they face are captured effectively (Voola & O'Cass, 2010). Thus,
the targeted consumers are able to choose the type of brand corresponding to their specific need.
Similarly, the extensive research and development investment the company has undertaken over
the years has ensured it is able to respond to emerging cases effectively and efficiently.
Consequently, the organization has been able to meet the needs and wants of the consumers
substantially in the market.
Even though Johnson and Johnson organization has been able to meet the needs and
wants of the customers substantially, it faces competition on the products it supplies. The main
competitors of Johnson and Johnson organization are Procter and Gamble and Uniliver
organizations. The competition Johnson and Johnson organization faces from the competitors is
derived from price, quality, and brand image differentiations. The price of Unilever and Procter
and Gamble products are relatively lower to Johnson and Johnson products. Thus, price sensitive
customers have the potential of buying from the competing companies due to the money they
will save (Roberts & Alpert, 2010). However, the brand image and quality of the Johnson and
Johnson products are high in the market compared to that of competitors. The high quality and
brand image of Johnson and Johnson organization has enhanced its market penetration due to
positive market response. Thus, the competition differentiations are vital on the performance of
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27
the organization because they influence the extent of the organization in attracting and retaining
customers (Voola & O'Cass, 2010).
Similarly, the competitive advantage of Johnson and Johnson organization has been
instrumental in promoting its performance. One of the sources of the organization’s competitive
advantage has been its market reputation. The market sentiments by consumers have been
favorable to the products supplied by the organization on the function superiority. Thus, the
positive market reputation has enabled the organization to compete and survive in the market
effectively in the future. However, the sustainability of the market reputation may be hampered
in the future if a new entrant with superior products emerges (Roberts & Alpert, 2010). Another
source of the organization’s competitive advantage has been its huge financial resources.
Johnson and Johnson organization has huge financial resource to support extensive marketing
activities and research and development activities. Thus, the company is able to compete and
develop new superior products in the market at ease. The sustainability of the financial resource
source of competitive advantage has potential of been hampered in future if competition
intensifies slowing down revenue realization.
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Appendix
Customer
Johnson and Johnson
Procter and Gamble
Uniliver Company
wants/needs
products:
products:
products:
Skin and hair
2
2
1
Smooth baby’s skin
2
1
1
Cool and quick
2
2
1
enhancement
appearance
recovery
Scale:
o
0 = need not met
o
1 = need partially met
o
2 = need fully met
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