J and J Essay example

4318 Words Jul 27th, 2012 18 Pages
Johnson & Johnson:

Successfully Strategizing for the

Changing Global Business Environment

April 27, 2009

IBE – D

Kara Findley

Emily Manz

Alex Thompson

I. Introduction

Johnson & Johnson is the world's largest healthcare company. Founded in the United States in 1886, the company has been profitable for 75 straight years and currently operates 250 subsidiary companies in 57 countries. Its products fall into three segments: pharmaceuticals, with 39% of total sales; medical devices and diagnostics, with 36%; and consumer products, with 25%. Additionally, the company employs 119,200 people worldwide and sells its products in 175 countries. A truly global corporation,
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Due to a lack of available information about the bargaining power of suppliers as it applies to Johnson & Johnson, this paper will address the four other forces: the threat of new entrants, the threat of substitutes, the bargaining power of customers, and the rivalry among industry competitors.

1. The Threat of New Entrants – High Barriers to Entry

The threat of new entrants is not of particular concern to Johnson & Johnson. Barriers to entry, especially in the industries of pharmaceuticals and medical devices, are extremely high if not unsurpassable. The world’s top pharmaceutical companies have extensive manufacturing capabilities, distribution systems, and economies of scale that have been built up over decades and would be virtually impossible for a new entrant to replicate. These top firms also have patents that protect their current products, as well as established research pipelines that ensure the continual development of new products. Also, they have strong brand names and large marketing budgets with which to defend them. Finally, the exceptionally high capital requirements for founding a pharmaceutical company and the sharp retaliation that new entrants could expect from the established competitors render the threat of new entrants very low. The medical device industry has similarly

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