Corporate Strategy gor J & J Company

Corporate Strategy gor J & J Company

J & J Company has grown over the years since it was founded in 1886.  The growth has been seen in terms of vertical, geographical, and product scope. When it comes to vertical scope, J&J controls more than one stage of the supply chain. I the beginning, it was producing surgical dressings, but with time it has expanded into medical research, drugs, and consumer products.

It has also grown in terms of geographical scope. The first company of J&J was located in New Jersey. Currently, J&J operates in more than 60 countries all over the world. The company has grown on the basis of product scope. J&J offers a wide range of products ranging from consumer healthcare, medical devices, and pharmaceuticals.

J&J’s main methods of growth include internal growth that is building an international market from scratch.  For external growth, it focuses on acquisitions. The motives of J&J are to extend the scope of the firm.

J&J has, over the years, expanded the scope of its activities. In some of its ventures, it is its own supplier and consumer. As a result, the company controls more activities along its value chain. J&J began by focusing on surgical dressings, but it later diversified into complex medicinal ventures. To control pharmaceutical activities, a vital part of its value chain, J&J began acquiring pharmaceutical firms.

The company first acquired Cilag Chemie, McNeil Laboratories, and Jansenn Pharmaceutica as a move towards expanding in the pharmaceutical field. These firms specialize in research aimed at innovating lifesaving pharmaceutical products.  Acquiring them as a move by J&J to vertically integrate was beneficial to the company. The reason is that the research offered by the laboratories was specifically related to the growth of the company. Research is durable and can lead to innovations that have massive benefits to J&J. The intensity of cost in getting the research centers was quite high. However, the resultant benefits were totally worth it. As the company stretched to the pharmaceutical field, it would conduct research often. All its products would need extensive research as failure to do so would result in serious health repercussions on its consumers. This form of integration is backward integration.

The main reason why J&J vertically integrates is that it increases the entry barrier to different industries. An example is that when it integrated into the research field, the company was able to venture well into the AIDS area. Another example is when J&J integrated into the skincare industry by acquiring Roc. Another reason for vertical integration by J&J is to remain competitive. Had the company stuck in producing only surgical dressing, it would be closed by now or expiring massive losses.  The integration is vital for its life cycle.

The company also has utilized horizontal integration. It merged its two value systems those are pharmaceutical and medical devices.  Although these two value systems have some differences, they do share some similarities. They also often have the same customers in terms of hospitals.

When it comes to Buy, Ally, or DIY Matrix, J&J makes its products. The company avoids outsourcing since it deals with delicate medical, pharmaceutical, and consumer health products. J&J DIYs to reduce external risks of people copying its products. J&J also makes its own products so as to ensure they are of high quality by monitoring raw ingredients used in the making of them.  J&J uses the Buy matrix by buying or acquiring other firms that are in the same field as them. J&J acquired Tibotec-Vitro because this company specializes in the latest techniques of artificial intelligence and molecular biology to make new drugs.

J & J Company is highly diversified. The lack of diversification has a number of benefits ranging from a focus on a single enterprise and, therefore, reduction of chances to make erroneous mistakes to avoid unnecessary risks of entering into ‘unknown’ consumer markets. However, J&J is quick in forecasting new consumer needs and changing trends.  J&J has purchased over 70 different firms since its operation. Its main divisions are pharmaceuticals, medical devices, and consumer products.

J & J Company benefits from diversification. Diversification is the basis of innovation. First, the company has grown to operate in 60 different countries. Moreover, it supplies its products to 200 countries. This has resulted in a bigger consumer base, thus more profits. Second, the company reduces its risk of failure because it does not put all its eggs in one basket. By diversifying, the company also capitalizes on its resources and capabilities.

J&J has related as well as unrelated product diversification. In related product diversification, J&J there are Janssen healthcare innovation and Janssen Therapeutics, among many others. The company has also ventured in goods that lack similarities, such as producing baby care products and, at the same time dealing with wound care products.

Benefits of related product diversification are that J&J transferred its already established expertise across the value chains. Also, there is a lowering of unitary costs by increasing the range of complementary products a company specializes in. The disadvantage is that the anticipated synergies between the products may fail to materialize. The main benefit of unrelated product diversification is that there is risk reduction. There is an increase in protection against adversities for the company.

J&J is a multinational firm. It has investments in more than one country.  J&J ventures abroad so as to increase its market size. It is located in more than 60 countries and sells products virtually to all countries in the world. New countries increase the number of customers bringing about the achievement of the economies of scale and scope.  Another reason for J&J’s internationalism is to transfer competitive advantage to that country. Lastly, there is access to new resources and capabilities and risk reduction. The main challenge of internationalism is overcoming the liability of foreignness. It is quite daunting to venture into distant countries. However, so far, J&J has been successful in its foreign ventures.

J&J uses a global strategy in its internationalization. It seeks efficiency through standardization and economies of scale. Most of its products are similar from country to country. It does not modify them to cater to the local taste. The benefit of global strategy is that there is an increase in achieving synergies and efficiency. Nevertheless, J&J can suffer because of the more money needed in transportation, tariffs, and coordination.

J&J choice of entry mode ranges from exporting, acquisitions to Greenfield ventures. They ship products from the domestic market to the international market. It also has made several acquisitions throughout the years.  J&J, over the years, has purchased foreign companies as a way to enter into the foreign markets. J&J often creates a company from scratch in the new country.

J&J’s speed of internationalization is gradual. It first opened another branch in its neighboring country that is Canada, before expanding into distant ones. The company also first exports in the ‘target’ country before opening a company there. An example is when it first exported to Montreal-based Gilmour Brothers. Then, when the demand increased, they opened a plant in Gilmore. The company can be categorized as a born-again global. This is because, at first, they concentrated on the domestic market then later had rapid internationalization.

I think that CPA was important to J&J in the expansion of the company to new countries. They might have done this by seeking to improve the economic environment, creating new markets and opportunities they can improve on, and modifying legislation. CPA helped the company by making the conditions in the target country favorable for its growth.