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Johnson and Johnson Company
Johnson & Johnson Company is the leading manufacturer of pharmaceuticals, consumer packaged goods, and medical products based in the US. The Company was founded in 1886 in New Brunswick, New Jersey, and has maintained its headquarters in New Jersey since its establishment. Johnson and Johnson is known for producing quality baby products, but it also provides diagnostic devices and surgery products. Being the leading Company in the pharmaceutical industry, the Company has maintained its prominent position for a long time due to several actors.
Competitive advantage
Johnson and Johnson’s Company has enjoyed a sustainable competitive advantage in the market because of its unique, innovative products. Most of its products are unique in several aspects such as benefits, formula and packaging. The Company has targeted specific market segments more so with its baby products such as baby shampoos and soaps, which makes it a trusted by many parents. These products do not cause skin irritation or eye or scalp, unlike other products. Most of its baby products are clinically proved, the Company has an effective Research and Development team to ensure that the products contain safe formula with all products being tested to meet the highest standards in the market. The Company strives to build trust, which is a critical element of attracting new customers.
Swot analysis.
Strength
Consumer segmentation: One of the significant strengths of Johnson and Johnson is its experience in the industry, especially in consumer segmentation. Most of its products are trusted brands by parents because of its high quality. This has enabled the Company to thrive and can penetrate new markets with unique products. The Company enjoys a strong brand presence because of its variety of products which are visible in the market. Additionally, most of its brands are trusted by parents and medical personnel all over the world.
Management strategy: The Company attracts highly skilled workers because of its management strategy. The Company has invested in training and learning programs. Most of their investments have been channeled towards training and development resulting in a skilled and motivated workforce. Through mergers and acquisitions, Johnson Company has created a stable organization with advanced technology, which has aided its growth. The Company has been successful in employing the right market strategies for its products. Johnson Company has a wealth of experience in entering a new market; its continuous expansion has helped the Company build new and better revenue streams targeting different markets all over the world.
Weakness
The Company’s weak area that can be improved is maintained its competitive advantage and strategic positioning.
The Company’s financial planning is not sound and efficient; the current asset ratio and its liquid ratio reveals that the Company can utilize its cash flow to make better investments. Even though the Company has been successful in integrating smaller companies through a merger, the Company has not succeeded in merging the different work cultures of these small businesses.
Conflict with partner companies: another weakness is the conflict with most of its partner companies. Having a larger portfolio of products, the Company has failed to put in place proper strategies in handling its vast operations, especially in acquired companies causing conflict among the small merged companies.
Opportunities for Johnson & Johnson
The Company has several opportunities for tapping on online channels. Online platforms can be good avenues for increasing sales. The Company can leverage on this opportunity by engaging online consumers. The new market trends in the consumer behavior can enable the Company to reach out to new untapped markets. These are some of the great opportunities the Company can use to generate more revenues. Johnson company is better placed to develop a myriad of selling its product across all market t segment .it can maximize its sales of pharmaceutical, diagnostic and baby products by engaging in rigorous marketing to increase its revenue.
Threats for Johnson & Johnson
Government regulations: Johnson company revenue stream can be affected by government regulations, including export and import traffic, which play a critical role in determining the Company’s growth. Johnson, in the past, had to recall most of its medicines due to safety concerns, which might affect its reputation and integrity in the future.
Intense Rivalry: for the past years, Johnson has faced stiff competition with new companies offer similar products. Some of its local partners provide better products that might affect its growth.
Financial performance
Johnson Company has record impressive financial growth. However, the Company has failed to outperform its competitors like GlaxoSmithKline plc. For the last twelve months, the Price-to-Earnings Ratio has been steady. In the fiscal years between January 2016 to 2019, the Company operated at a median of per ratio of 22.6. In the last five years, the company P/E ratio reached 288.7 in December 2017. The company earrings have been steady for the previous decade, with earnings per share being 6.1 %. This is lower than GlaxoSmithKline price to earnings ratio P/E of 39.75 in 2020. Despite Johnson Company recording a lower P/E ratio, its recent financial results have grown by 6.7%. This makes the company attractive to investors because they always get attracted by companies with good growth prospects.