Johnson Johnson Case Analysis
Carolyn Kuzmin
Johnson & Johnson Case
BUS465
September 21, 2014
Primary Issues
Johnson and Johnson is facing many quality control problems due to the size and spread of the company
The hip recall- and a swarm of other product recalls, manufacturing lapses and government inquiries
They have struggled with owning up to issues and addressing them quickly enough--- so the brand becomes somewhat tainted
The business is still growing with another merger on the horizon so something must be done to address their problems
There is lots of inside hiring and a lack of outside perspective
They are now trying to maintain a balance between the controls throughout the firm that are necessary to protect its reputation and the freedom for the business units that can allow it to keep growing
Portfolio Management
Data/Analysis
Financials
2012
2011
+/-
G/B
Income Statement
COR
.322
.305
+.017
B
SG&A
.310
.315
-.005
G
Net Income
.161
.217
-.056
B
Balance Sheet
Cash
.123
.188
-.065
B
Act Payable
.161
.150
+.011
B
LIQ
Current
1.901
1.021
+.88
G
Quick
1.592
1.817
-.225
B
LT Solv
Total Debt
.466
.450
+.016
B
x Int earned
26.893
38.246
-11.35
B
Turnovers
Days Rec
78.447
71.107
+7.34
B
Days Pay
330.081
300.185
+29.896
B
Profitability
ROE
.167
.236
-.069
B
ROA
.089
.130
-.041
B
Most are “Bad”
In just a year most financial ratios have generally gotten worse
Cost of Revenue has increased, but SG&A decreased
Net margins have decreased
Accounts payable has increased while cash has decreased
Strategic Business Units
Consumer Health Care- Every day people of all ages in households around the world use J&J products. CASH COWS- moving to Question marks?
Although J&J products have been trusted for years, the recent problems could potentially hurt their market and taint their name
It is also now their smallest SBU in terms of sales so they could potentially look to focus on one of the other two segments.
Pharmaceuticals: J&J pharmaceutical companies offer medicines that treat many of
Johnson & Johnson Case
BUS465
September 21, 2014
Primary Issues
Johnson and Johnson is facing many quality control problems due to the size and spread of the company
The hip recall- and a swarm of other product recalls, manufacturing lapses and government inquiries
They have struggled with owning up to issues and addressing them quickly enough--- so the brand becomes somewhat tainted
The business is still growing with another merger on the horizon so something must be done to address their problems
There is lots of inside hiring and a lack of outside perspective
They are now trying to maintain a balance between the controls throughout the firm that are necessary to protect its reputation and the freedom for the business units that can allow it to keep growing
Portfolio Management
Data/Analysis
Financials
2012
2011
+/-
G/B
Income Statement
COR
.322
.305
+.017
B
SG&A
.310
.315
-.005
G
Net Income
.161
.217
-.056
B
Balance Sheet
Cash
.123
.188
-.065
B
Act Payable
.161
.150
+.011
B
LIQ
Current
1.901
1.021
+.88
G
Quick
1.592
1.817
-.225
B
LT Solv
Total Debt
.466
.450
+.016
B
x Int earned
26.893
38.246
-11.35
B
Turnovers
Days Rec
78.447
71.107
+7.34
B
Days Pay
330.081
300.185
+29.896
B
Profitability
ROE
.167
.236
-.069
B
ROA
.089
.130
-.041
B
Most are “Bad”
In just a year most financial ratios have generally gotten worse
Cost of Revenue has increased, but SG&A decreased
Net margins have decreased
Accounts payable has increased while cash has decreased
Strategic Business Units
Consumer Health Care- Every day people of all ages in households around the world use J&J products. CASH COWS- moving to Question marks?
Although J&J products have been trusted for years, the recent problems could potentially hurt their market and taint their name
It is also now their smallest SBU in terms of sales so they could potentially look to focus on one of the other two segments.
Pharmaceuticals: J&J pharmaceutical companies offer medicines that treat many of