LSC London School of Commerce MBA 1 Group A

MANAGING HUMAN CAPITAL ASSIGMENT

THI BICH LINH TRAN L0192HOHO0611

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Table of Contents Table of Contents........................................................................................2 Introduction.................................................................................................3 Mission and vision statement......................................................................4 Vision........................................................................................................4 Core value.............................................................................................4 Core purpose.........................................................................................6 Mission ..............................................................................................6 The analysis of J&Js internal business environment...................................8 SWOT analysis..........................................................................................8 Evaluation of current strategy .................................................................9 The analysis of the companys competitive advantages..........................9 Superior quality...................................................................................10 Superior customer responsiveness ..................................................11 The strategy of Johnson & Johnson............................................................12 J&Js strategy..........................................................................................12 Corporate level strategy.....................................................................12 Business level strategy ......................................................................12 Implementation strategy........................................................................13 Reference..................................................................................................15

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Introduction There is no the same way for everyone to lead to success and the mutual pattern that you can adapt to survive and to stand a firm in the business world full of continuous challenges. The most vital thing is that much more passionate you feel for what you do and the best you are at all, more likely you will succeed. Your own business must benefit customers to improve the quality of human life. It is the vehicle whereby your business is in a lasting position to establish trust and to elicit collaboration with customers, employees, shareholders, creditors and the community and the business can be sustainable for lasting in the during long-term period. In the other words, you can build from the good to the great. What has been discussed is everything that I have found from researching about strategy of Johnson & Johnson. The company which aims to care for the world embraces research and science - bringing innovative ideas, products and services to advance the health and wellbeing of people. Employees of the J&J Family work with partners in health care to touch the lives of over one billion people throughout the world everyday. Everything is all in the slogan of J&J healthy people, healthy planet. There is some basic information about the company, J&J is: The worlds sixth-largest consumer health company The worlds largest and most diverse medical devices and diagnostics company The worlds fifth-largest biologics company And the worlds eighth-largest pharmaceuticals company

J&J is the most widely diversified in healthcare industry; also the company possesses currently the range of 600 different products and thousands of new schemes to find out more innovative products annually. At the moment, the corporation is operating in more than 60 countries with 250 operating companies and franchises, employing approximately 116,000 people. The worldwide headquarters is located in New Brunswick, New Jersey, USA. To be honest, I feel so proud to have an opportunity to learn, analyze, and share with you something about the company that many parents have called greatness. Hopefully, all of the following information can convey my feeling about J&J to you. Besides, this research is not only an Page 3

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exercise of a particular strategic management subject but also a set of practical experiences that I am able to mind to implement my own dream business. I would like to take you on a short tour of what I have been figure out through a 4000-word Strategic Management Assignment. Mission and vision statement A mission and vision statement will definitely draw you a dream picture about what the company desires to enhance the quality of life, make something good become better or rectify existing faults. In the beginning of assignment, I have introduced J&J as the company great, built for lasting so on and so forth. You may suppose that I am exaggerating. But if you understand J&Js mission and vision deeply, you have no dout to my point of view. The perspectives of J&Js founders that have been kept and developed by J&J family are awesome, meaningful and make a sense of reality. Vision Core value There is no official statement about the core values of J&J, but these are always shared by the members of the "J&J family and are stated in the companys credo. In 1943, the credo value was drafted by Robert Wood Johnson, the former chairman of J&J from 1932 to 1963 and some other members. Although it was changed two times in 1948 and 1979, it has still retained some fundamental worthiness and the employees of corporation believe strongly that it is not only a part of decision making process in daily tasks but also a proof of achieved business. Each organizational person from the CEO to guard considers the credo value as the moral norms to follow; they comply with the statement to prevent the negative effects that may occur. This is very important because J&J is in healthcare field and its decision has a remarkable effect on the human live. In fact, A vice president of Medical Devices & Diagnostics Group said that the values are always available in our culture and are the glue that binds us together. As a result, we can conclude that the core values are what belong to J&J and standardized on board. Some core values of J&J that can clearly figure out are: The sense of responsibility, trustworthiness, straightforwardness Respect for individual Passion for creativity Page 4

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J&J provides customers health care products all over the world so the sense of responsibility and reliability is very obligatory stuff. The formers of the group felt thoughtfully that the first responsibility of J&J is for customers who use the J&J products and services, the second is for employees,the community and the environment and the last is for shareholders. In addition, J&J believes that if the above responsibilities all take charge well, the organizations goals will be fulfilled. The actions by which the company overcame its obstacle in 1982 showed their commitment to responsibility. Actually, when an investigation found that seven people were departed from the life by Tylenol in Chicago, a kind of pain relieved pill of the company, the company immediately took back 31 million bottles which were available on market, allowing customers to exchange freely of other safer pills. Although this made Tylenol's market share decreased significantly from 35% to 7%, the company recovered its place in market only 9 months later and thanked to the sense of responsibility. Furthermore, it becomes the example for businessmen about a skilful ability to handle troubles. The way by which J&J resolved the problem pointed to the fact that J&J have formed goodwill in the mind of the customers in a long time, it is not just a moment. Basically, the products and services can reach the customer thanks to its staff, so the company keep the personal values into its core values. In J&Js structure, each employee is seen as being an individual who has right to be respected and treated fairly and is in conditions to develop themselves comprehensively. Each human owns distinct characteristics, ideas, thoughts so the company encourages diversity of thinking of the employees. In addition to holding the employees in respect, the company is also raising respect for the customers - by trying to create quality products in an affordable price, and for suppliers, distributors by building up the stable relationship with them; communities the company aims to do an approach to corporate citizenship defines who it is and how it aspires to act in the world, obey all laws and contribute to development of health, education and environment; for shareholders the owners company, the company will ensure that the profit is made adequately. Last but not least, everyone in the company totally agrees that an important stuff that all of 122,200 employees can highly share is passion whereby all employees have undertaken a wide range of invention and products to care for the health of people from more than 120 years. Some employees else have said that passion for creativity is in their DNA. It is clear that what is linked to DNA is difficult to change because it belongs to nature. Many J&Js considerable breakthroughs are based on the particular core value in healthcare service, such as Band-Aid, Tylenol Page 5

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or lotions children J&J so on and so forth. In spite of the fact that the business environment changes days by days, the passion will always exist in the members of workforce and provide the company with energy and sense of pride to achieve more and more breakthrough to care for the world. Core purpose Another part of vision statement is the core purpose. Admittedly, health is now truly priceless commodity because having a sharp wellbeing helps you figure situation out more effectively and make sound decisions. Furthermore, J&J is operating in healthcare service so the core purpose or what J&J Family brings to the world is the desire to make people healthier and safer is at the heart of our companys giving which can markedly motivate the employees all work for improving in health and well being of people around the world. One of its stories, aids to the Japanese people, is a typical effort to help communities cope with disaster. In response to the urgent need, the company has committed $8 million in funds, considerable product donations of medical supplies and consumer hygiene products, J&J always try to find the best way to call helping hands and also play a vital role with relief effort. The passion and the strict mind providing the effective medical care to human beings is a question of the success of J&J. The core value that J&J Family to share, the core purpose that it attempts to fulfil will definitely support to make a meaningful distinction in peoples lives Mission There is a specific collection of values and standards that is shared by all staff in J&J; it is all spelled out in what the firm calls our credo value which has been transmitted through all members of the company day by day since it was written. It is seen as being the lodestar for all individuals in decision making process. In terms of the credo value, we feel strongly that profits are not the compulsory target to be achieved at any cost, the most crucial ones is to elicit the prestige, credibility and respect from firstly patients and customers, followed by employees, communities and the other share holders. It is the key factor behind the firms non-stop creativity which guides all operating companies worldwide has the splendid opportunity to motivate their morale. In order to achieve what the company has committed, J&J was determined to follow four simple concepts which comprise: being broadly based in human health; managing our business for the long term; taking a decentralized management approach; and focusing on our people and values. The company also set four priorities Page 6

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to focus the entire enterprise on key drivers of growth: innovative products, robust pipelines, global presence and talented people.

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The analysis of J&Js internal business environment SWOT analysis SWOT is an analysis of the internal and external business environment that has an impact on all firms, SWOT deals with strengths and weaknesses of a company as well as opportunities and threats posed by the external environment and it analyses the internal processes of company as well as external factors. For this reason, some suggest that SWOT is an appropriate term for a scan of the internal and external environment which is an worthy part of the strategic planning process. This technique also helps to discover the question whether the strategy has potential any faultiness under vigorously uncertain circumstances. Strengths The SWOT Analysis Weaknesses

1.Efective management 1.The ability to activities innovate not as good 2.Well-trained staff as that of Merck, 3.Reputation in high quality Abbott, Eli Lilly products and services -Expanding the scope of business - Joint venture for Opportunities activities spread across the acquisition of new 1.The increasing world (S1,2,3,4; O2) technology(01, W1) demand for the health care products -Expanding the production and 2.Taking advantage in promotion to achieve favourable exchange differentiation strategy (S1,2,3,4; rate O1) -Support non-profit organization -Improving internal throughout the world in R&D activities 1.The increasingly strict advancing the improvement of (T2,W1) regulations for health the community (S3,T1) care industry 2.Vigorous competition -Making differentiation and among the industry, reducing cost to achieve a high especially in R&D position in the industry (S3,4;T2) 3.The reducing of - Improvement in innovation to patent protection replace the out-of-date products (S1,2;T3) Threats

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Evaluation of current strategy From the SWOT analysis and what has been discussed about the strategy of the company, we properly realize that the company is now achieving competitive advantages and is supported by the financial successes in J&Js business statement. According to global business magazine, Fortune, J&J is ranked 35 among the largest companies in America and is the hugest company in the health care industry. Moreover, J&J has earned the most numerous turnover and had the most profitable ROE in drug manufacturer industry. Turning to the J&Js reports 2011 second-quarter income statement, the company reported sales of $16,600,000,000; which rose to 8.3% during a year period and the net income of 3,500,000,000, an increase of 4.9%, as compared to the same period in last year. The enterprise value is 173.85 billion USD at July 29, 2011. In addition, J&J has built up an enviable reputation as citizenship among the stakeholders, government and community. The further information that needs to take into consideration is that J&J has been good so far as the greatest grade of quality and ability to response to the customers act. The following analysis will unlock what the company based on to build and sustain the competitive advantage; they are superior performances in quality and responsiveness to customers The analysis of the companys competitive advantages During its history, J&J has kept the revenue increased for 27 consecutive years. Also, J&J has announced 4% total earning for investors compared to a 1.4% total return for the S&P 500, the prices of 500 largecap common stocks actively operated in the USA. J&J The average profitability from 2005-2010 (%) 1.98 Drug Manufacturer -Major 1.45

I have absolutely no doubt to draw a conclusion that the company is now gaining a sustained competitive advantage in healthcare industry because the companys profitability is greater than the average profitability of the industry. Building and sustaining a competitive advantage requires a company to achieve superior efficiency, quality, innovation, and responsiveness to its customers. There are two of superior performances that the company does to achieve a high position in business world, superior quality and customer responsiveness

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Superior quality J&J has created the reliability of its product since it was established, which is stated in credo value. From the beginning of the platform, we can look In meeting their needs everything we do must be of high quality. The commitment among the founder of the firm soon permeated down to the members of family J&J. The key concept that company bases on to attain superior reliability of its products is a policy of global high-quality, whereby all the world-wide operating companies must comply with a strict level of quality, which is possible due partly to the organizations infrastructure and partly to the managers ability to keep entirely the employees mind into high quality perspective. J&J is simultaneously buying and producing everything from raw materials, ingredients, medicine and diagnostic devices to create the final product. Their quality and constancy are extremely critical to the success of the final product and to the goodwill. Therefore, one of the company's efforts to bring superior quality is to make the sustained quality for all components that make up the product. Company is coordinating confident pharmacists, and medical experts, analysts into quality teams which take charge of control quality before the raw materials are in use. Alongside the team, J&J has built up a great amount of complex laboratories, and been still going to expand the old ones and construct the new ones. It is very important to take into account that J&Js supplier and partners all must comply with must comply with the standards of the company in both quality and quantity. In addition, all products are going to be designed and produced to ensure that they will possibly provide patients with the predetermined purposes. The Six Sigma methodology, a descendant of the total quality management philosophy, is a direct tool the company widely uses to increase the reliability of the products and implement a program to strictly control errors. Six sigma program was applied at J&J in 1997, it was the replacement for TQM, which was adopted at J&J from 1980s. The board of directors entirely involved themselves to develop the Six Sigma methodology. All the member of workforce orients themselves to the implementation of six sigma and their results are assessed by the process-based measurement. J&J considers Six Sigma as the way they do to make a big difference in comparison with their competitors. Another prominent policy in an effort to create high-quality products is a process of strictly control errors. The employees all exercise very high discipline to find out and rectify any error that occur in production process, which helps ensure there is no inaccurate products released into the market. The process also includes establishing of customer service centres where customers can possibly make claim about the products and clearly give Page 10

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feedback as soon as possible. In addition, J&J fosters a culture and training programs for all the members of staff to ensure the quality of the product with actually committed feeling in their minds. Superior customer responsiveness To achieve superior customer responsiveness, a company must do a better job than a competitor by identifying and satisfying its customers needs. Efforts is trying to create workplace environment where every employee keeps the focus to meet the customers demand, which is shown in the beginning of their Credo value, the company has prioritise customers is the stakeholders who first have to satisfy. J&Js mission is to care for a healthy world, which requires all people making up the world are health. In addition, J&J also create a separate section to respond the customers need. This is Johnson & Johnsons safety, health & environmental functions (SH&E), the departments are organized as a Technical Resources Group (TRG) to optimally serve 200 companies world related to the manufacture of health care products for the consumer, pharmaceutical and medical devices and diagnostics markets. The TRGs mission is to create competitive advantage for J&J operating companies through a strategy of beyond compliance, delivering outstanding service to our customers in pursuit of their business objectives. Other sources of enhanced customer responsiveness, which is the effort of R&D department is superior design and superior support. The R&D department always create new products with the buyers value chain in mind. The invention of J&Js baby care linked to the claim of customers about the displeasure when using medical gauze could be the good example for the contribution of R&D. The customer-centric culture and the Credo value Caring for the world, one person at the time was guiding the employees to meet the unique needs of a particular customer. All of the action enables J&J to build brand loyalty and earn a premium profit for its product in a long-term period. From what have been discussed, we can draw conclusion that it is said to have a competitive advantage over its rivals. J&J much depends on superior quality and superior customer responsiveness, which can highly enable J&J to differentiate itself from its competitors. One more important thing is that all the collaboration of the R & D, marketing, production and management team, all the functional departments contributes to create superior quality for the company.

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The strategy of Johnson & Johnson J&Js strategy Corporate level strategy Corporate level strategy is to define the actions that companies implement to gain competitive advantage. When the company succeed to build an effective corporate strategy, the company will definitely earn above-average profit. The corporate-level strategy has to answer two key questions: What businesses should the firm in? How should the corporate office manage the array of business units?

For J&J, the strategic corporate level strategies is restructuring whereby the company can change the set of business units or financial structure. J&J sometimes replace undeveloped operating companies that are no longer adds value to ongoing operations with more effective business units. In addition, J&J reforms sub-unit management team and restructure business units (SBU) to pay full attention to existing SBUs that still allow the company to fulfil new market opportunities. The restructuring took place when J&J is cutting costs in response to business challenges including the decline in sales of key products such as medicinal products (PROCIT) medical equipment (Cypher coronary-Stent). J&J announced a plan to cut off from 3% to 4% of the workforce with more than 12,000 employees to adapt to the decline in sales of key products. While the big portion of other companies develops restructuring strategy to overcome the consequences of excessive diversification that results in lower portfolio growth and make the competitive actions companies far away from core competencies and/or business performance to create core value is deteriorated by short-term profits. This is not the case about J&J. There are two main reasons why J&J pursued restructuring strategy. Firstly, the tendency to the needs of customers for the business segment of J&J is gradually changed and J&J wants to pay more attention to two areas, consumer products and prescription products, to achieve higher return with future generations in mind. Thus, restructuring strategy enables J&J change financial structure of three business units. Business level strategy Currently, J&J has three main business units, three of them turn to divide into smaller groups consumer products including baby care, skin & Page 12

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hair care, wound care, oral health care, womens health, over-the-counter medicines, nutritionals and vision care; medical devices & diagnostics containing the technologies to treat some of the worlds most pervasive and chronic conditions; the third, prescription products which focuses on unmet medical needs across several therapeutic areas: oncology; infectious disease; immunology; neuroscience; cardiovascular and metabolism. J&J have done differentiation strategy which calls for the development of the product and response to customers needs. J&J commit to provide world-wide customers with the highly customer-centric services and products. J&J is a multination company, operating in hundreds of nations; it is therefore not only to provide high quality but also Worldwide quality policy, which means quality is the same for everyone across all the countries where it operates. This policy gives a quality standard that is measured strictly and communicated widely within the organization to ensure all the partners understanding of policy objectives, whereby achieve satisfaction of the customers need in a more effective way. The high quality itself is not enough to make a difference in the increasingly competitive business environment. Customers is now play a very important role in business game, so it is very clear to point that the customer, and not the business organization itself is the focus to which all the other activities are directed to. The customer-centric organization like J&J try to make all the organizational activities and strategies of the various components of the value chain bias towards the needs and wants as well as limitations of the prospective customers or clients both internal and external in the hope that by doing so, J&J will find it success in a differentiation strategy. To conclude, J&J has pursued differentiation strategy to produce customers with differentiated products through the superior quality and customer responsiveness. Implementation strategy The implementation of company business strategy involves the application of the management process to obtain the desired goals, which coordinates the designing organizational structure with the designing control systems; thereby the company can pursue its strategy in the most effective way. J&J has designed a corporate structure with some following rules. First, the company has a flat organizational structure with a wide span of control and fewer layers. J&J tend to push decision-making authority bottom out within the organization to control the activities creating the Page 13

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value, each of operating companies functions as its own small business. The decentralized management approach enables the employees anticipate customers needs and deliver meaningful, high-quality solutions. Next, the company decided to allocate financial and human resources to functional department across matrix structure. This structure is consistent with international business strategy that the company has chosen to run business in international market. Last but not least, using regular and official group helps J&J control the process of creating superior performances. They are Six Sigma to control superior quality and SH&E to manage customer responsiveness action

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Reference 1. http://www.jnj.com/connect/about-jnj 2. http://en.wikipedia.org/wiki/jnj 3. Lynch, R.(2006),Corporate Strategy,(4th edition),Pitman Publishing 4. Mintzberg, H.and Quinn,J.(2003), The Strategy Process,(4th edition), Prentice Hall 5. Porter, M.(1985),Competitive Advantage, The Free Press, Harvard, MA 6. Charles W.L. Hill, Gareth R. Jones(2009), Essential of Strategic management(2nd edition), South-Western, Cengage Learning

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