Although the multi-domestic strategy has many helpful benefits for a global company, it also has some shortfalls. Inconsistency of the company’s values at the headquarters and overseas is one example of the limitations of the multi-domestic strategy. To add, the strategy often creates too much power and liberation for a local subsidiary, and local operations sometimes do not follow the decisions from the headquarters. This creates a managerial gap and often leads to greater costs or loss of a company. Johnson & Johnson also has experienced the limitation in the past when they first launched the famous pain reliever, Tylenol. [11] Since it took a long time to persuade the local operation to launch the product, the launch dates of the product between the United States and Japan were extremely far apart, resulting in confusion among customers.
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Global Organizational Structure
Johnson & Johnson has three business segments: consumer, medical devices and diagnostics, and pharmaceutical. [12] Having three different segments allows the company to stay market-focused and it also enables employees to have a direct influence on the business that they work for. Each business segment operates with independence and focuses on its own area, extending its reach globally. Regardless of the location, each operating companies in each segment hires local employees, addresses local conditions, and work with local business leaders to generate the most beneficial impact. Additionally, leaders in each business segment have the responsibility of creating and applying business plans, budgets, resource allocation, and new product launches.
Johnson & Johnson also has what is called a Group Operating Committee; the committee provides global strategic leadership in each segment and makes strategic investment decisions. [13] The next level of management is the global management team which is responsible for the selection and positioning strategy of various products. Moreover, they are assigned with an incredibly essential job of identifying success models which can be shared across the organization. Lastly, the corporate headquarters has a vital role in supporting all the operating companies overseas. With a broader perspective, the Johnson & Johnson headquarters make sure that each operating company implements the most effective strategies (See Exhibit 4).
With the systematic management alignment mentioned above, Johnson & Johnson strives to be one of the most successful global enterprises in the world. The company has a “big-company impact,” but has “small-company environments” which enables the company to satisfy both the employees and the customers, at all locations. [14]
J&J Medical Korea
Johnson and Johnson Medical Korea was established in 1988 and is now the top leading healthcare company in Korea. J&J Medical Korea specializes in medical devices and diagnostics business, providing doctors, nurses and hospitals with technologies they need to restore health to people who suffer from pervasive and chronic conditions. [15] J&J Medical Korea holds six brands: ETHICON ENDO-SURGERY, Cordis, Depuy, ETHICON, LifeScan, ASP. ETHICON was the first to enter Korea in 1966 on a pure import basis, so some say that J&J Medical became a complete, fully-fledged medical device company of Korea in 1988. Since its establishment, J&J Medical Korea has faithfully pursued its mission: providing comprehensive range of innovative products through customer focus. [16] The relative proportion of J&J Medical staff reflects such strategic concentration – approximately 75 percent of its staff is either in Sales or Marketing department (See Exhibit 2).
How J&J Medical Embodies its Vision into the Korean Market
A unique, B to B, client-oriented market
The distribution and sales process of medical device firms in Korea is not known to the public and most firms are highly cautious not to disclose their distribution and sales strategy as well. What we do know, however, is a high proportion of transactions occur between J&J Medical product specialists (sales staff) and medical faculty counterparts, mainly doctors and nurses. The patients as the end-users, therefore, have little or no power to pull suppliers to their own needs. This is a highly specialized market which requires a thorough understanding of surgical skills and technology. In this aspect, end-users have limited accessibility to product information, which explains why transactions take place between the supplier to a second supplier, or from a business to another business. Multinational companies including J&J Medical are market leaders with up to 64 per cent market share [17] and such MNEs have strict guidelines to keep their sales policies to themselves. As a result, experts point out that sales data remain in veil but there is nothing much the government can do since they can simply choose to exit the market. [18] Likewise, J&J Medical maintain confidentiality in sales and client information which illustrates the importance customer relations and sales techniques in the medical device market. Assuming J&J has full autonomy over its sales strategy from screening its lists of clients to pricing schemes, we can expect lobbying and other informal pressures to a certain extent as well. This is another probable explanation for the unique sales strategy of medical device distributors and entails a convincing implication on the following strategy of J&J Medical Korea.
Volunteer Projects and Social Service
J&J Medical devotes its PR effort to become a socially responsible company in parallel to its global credo. Articles on Naver deal with either new devices or social contributions including mental health, fighting breast cancer campaigns, and aiding the deprived in North Korea. It is evident that J&J puts significant weight on developing and preserving a clean and positive image to gain a stronger nationwide support. Such campaigns broadly target all Korean patients and potential customers as unlike the US, the majority of the population receive insurance-funded treatment. The implication of this strategy is quite simple. Creating a noble first-impression and diverting media attention from J&J’s private matters in its sales affairs. In this manner, J&J Medical Korea can attempt to maintain its reputed image and attract further attention from the public.
Looking into the Future of J&J Medical
Strengths and Weaknesses [19]
J&J has come so far. However, the purpose of this paper is not to merely focus on past glories of the company. Based on its past judgements and its results, the aim is to provide fruitful recommendations to the management of the company. To do this, there needs to be a firm analysis on the strenghts and weaknesses of the company.
One of the strongest points of J&J is based on the fact that the company and its executives uses the adaptation of entrepreneurial values in operating the company. This firm ground on which the executives stand on helps J&J retain an edge within the marketplace, as it provides a core value for the giant company to operate in coordination around the world. The size of the company is another strong factor. Worldwide sales for J&J have grown 14% in the year 2008, indicating a strong position for the global group. [20] While this figure shows that J&J is running strong, it also indirectly implies how J&J is able to gain an economies of scale in the global market, not to mention its lobbying power as a major corporation.
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This also enables J&J to utilize various problem solving techniques in order to challenge the standard practice and capitalize on growth through emerging markets, which enables associated growth. However, challenges have been faced within J&J, where a reduction in the market demand for key products has been identified. Another internal weakness across the industry, and not isolated to J&J, would be the level of theft and counterfeiting of drugs managed through internal personnel.
The closed-culture of the medical industry is also a factor which J&J should take into consideration to maintain its strong position in the market. Let us, then, see what position J&J should take and what plans it should implement.
Future Recommendations
The current situation of J&J, should be analyzed carefully to come to a realistic recommendation. As mentioned before, the characteristic of the industry influences the executive decisions of J&J greatly. For example, there is increasing pressure within pharmaceutical markets to reduce prices in line with medical budgets and maintain patent expirations to ensure generic programmes are updated within critical path movements.
To overcome this industry-created risk, J&J has recently highlighted new developments in pharma products with five undergoing regulatory review which provides the opportunity to grow the existing product portfolio. This should continue, and development into new functions of medical devices and diagnostics is preferred, as it will provide new markets to entry which will result in business growth.
In terms of promoting cooperation and cultural exchange within the company – which is extremely important considering the global spreadout of the company – the use of independent offices working as standalone unit should be contiuned. This provides the opportunity to develop concepts with cultural considerations which can prove important when taking a product to global markets.
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