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Johnson & Johnson (a): Philosophy & Culture

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Johnson & Johnson (A): Philosophy & Culture

Team G

Shreya Agarwal Adriàn Cabrera Jonasz Friedlender Gianmarco Panone Logan Schlutz Rayan Seif

Corporate Strategy

Professor JOSE ANTONIO MARTINEZ MARCOS

IE Business School

Submitted April the 16th, 2015

1. What is the J&J culture? Does it really make a difference for the company?

Two key features characterize Johnson & Johnson’s culture: decentralization and the Credo. The first organizes each business around a given set of customers or given market need, while the second aligns all the different businesses on a same set of principles and goals, by underscoring the company’s responsibilities to its customers, employees, stockholders and the community in which it operates.

Advantages brought by the decentralized corporate strategy are: • Different businesses have more freedom thus they can better meet the special needs of specific customers.

• Each company, being well knowledgeable in its fields, can create new innovative ways to run their businesses successfully, knowing that they have no unnecessary constraints. • Higher level of creativity and productivity because of the granted autonomy.

Autonomy is limited only by the company’s credo: • Meeting the needs of specific target markets, while focusing on high quality product and reduction of costs, to insure a fast growth. • Maintain a good atmosphere in the company and involve all employees in the company to increase productivity (using compensations, fast career development…). • Do what’s right for the community (Cyanide case) to preserve an excellent brand image. • Make sure the stockholders realize a fair return to remain attractive to exterior investors.

2. How does the J&J organization work? Look at the major players.

The organizational units are the operating company at the business level and the executive committee at the corporate level. 150 operating units (20 to 25 source companies) that are integral, autonomous, and wholly owned characterize J&J’s organization. Each company has a defined franchise and submit, monthly, quarterly, annual financial reports, and dividends. Each operating company is headed by a president, general manager, or managing director, who reports directly or through one of the 14 company group chairman to a member of the executive committee.

Before the expansion each operating company reported directly to one of the executive committee members. As the number of individual units increased, J&J

transferred the operating responsibilities, previously handled by the executive committee, to another group of individuals. Each company group chairman reports to a member of the executive committee and is responsible for an assigned group of operating units. The 11-­‐member executive committee is the principal management group responsible for the company’s policies and operations.

The CEO, the president, and the vice presidents for finance and administration have corporate general management responsibilities; the other seven are contact executives for specific operating segments. The EC meets daily and quarterly meets for two or three days to discuss major issues.

3. How did J&J develop such a strong culture or system of beliefs and values? Do you think it will be maintainable over time?

The company’s culture has been shaped around the idea that business exists only because people want and believe in it. J&J’s credo assures that companies follow a set of values and don’t drift away from the main goal: identify and satisfy customers’ needs. Decentralization allowed the creation of new companies when major market opportunities were identified, in order to better focus on well-­‐defined markets. This culture took time to be shaped, and employees believed in it, after seeing the facts. Managers, having great autonomy, were encouraged to think on the long-­‐term success of the company and operate as such. The company provided managers with a “Statement of Strategic Direction” in order to highlight the importance of corporate strategy in the long run over short term’s results (for example managers were responsible to define their compensations…). J&J’s corporate strategy is noteworthy and allowed its global expansion. However, many competitors that are merging and becoming more influential now threaten the company. Since the growth trend will slow down in the future we believe that the company will have to modify its strategy: consolidate companies that compete on dimension and keep the actual system in the other sectors.

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