Vertical Integration at Johnson & Johnson
Johnson & Johnson: Planning Vertical Integration
Team Synergy
April 4, 2011
In a competitive market to which Johnson and Johnson operates, the smallest of errors can lead to consequences which can cut revenue. When large mistakes occur, millions of dollars are lost, and even worse, there is a loss of customer confidence. Johnson and Johnson has had numerous recalls in their consumer healthcare division recently, which rocked the organization’s once sound image, and diminished its profits. These recalls have hurt Johnson and Johnson’s stocks and cost the company about $900 million in sales last year (Rockoff, 2011).
Opportunity
For Johnson and Johnson to continue being an industry leader, change is needed. An overhaul of the company’s production management must be examined. Recalls like ones they have been experiencing are unacceptable in the medical field. Mr. Weldon acknowledged customers were smarting from the recalls, and vowed to regain their trust and confidence once the recalled medicines return to the market at the end of this quarter (Rockoff, 2010). These recalls have led to the closing of plants, and loss of profits. Johnson and Johnson must reestablish itself as a premier, family oriented health care organization. Establishing consumer confidence once again and finding ways to regain its market share is the company’s primary strategic plan. An integration of the McNeil arm (which produces the products recalled) to the Johnson and Johnson production standards is needed. The recall problems have not been a one and done case. In the fiscal year of 2010 the FDA reported that Johnson and Johnson had to recall “approximately 288 million drug product units” (Perrone, 2011). Johnson and Johnson needs to find a way to control this problem before this arm of their corporation ruins its image which has been built over years. An integration of product management must be implemented with proper oversight, and execution. The ultimate goal is to minimize any
Team Synergy
April 4, 2011
In a competitive market to which Johnson and Johnson operates, the smallest of errors can lead to consequences which can cut revenue. When large mistakes occur, millions of dollars are lost, and even worse, there is a loss of customer confidence. Johnson and Johnson has had numerous recalls in their consumer healthcare division recently, which rocked the organization’s once sound image, and diminished its profits. These recalls have hurt Johnson and Johnson’s stocks and cost the company about $900 million in sales last year (Rockoff, 2011).
Opportunity
For Johnson and Johnson to continue being an industry leader, change is needed. An overhaul of the company’s production management must be examined. Recalls like ones they have been experiencing are unacceptable in the medical field. Mr. Weldon acknowledged customers were smarting from the recalls, and vowed to regain their trust and confidence once the recalled medicines return to the market at the end of this quarter (Rockoff, 2010). These recalls have led to the closing of plants, and loss of profits. Johnson and Johnson must reestablish itself as a premier, family oriented health care organization. Establishing consumer confidence once again and finding ways to regain its market share is the company’s primary strategic plan. An integration of the McNeil arm (which produces the products recalled) to the Johnson and Johnson production standards is needed. The recall problems have not been a one and done case. In the fiscal year of 2010 the FDA reported that Johnson and Johnson had to recall “approximately 288 million drug product units” (Perrone, 2011). Johnson and Johnson needs to find a way to control this problem before this arm of their corporation ruins its image which has been built over years. An integration of product management must be implemented with proper oversight, and execution. The ultimate goal is to minimize any
References: Adelman, M. A. (1955). Concept and Statistical Measurement of Vertical Integration. Retrieved April 3, 2011 from http://www.nber.org/chapters/c0965. Bigelow, L. (2010). Outsourcing May Lead to Failure in Tough Times and Even in Good. Retrieved April 3, 2011 from http://www.business.utah.edu/node/1198. Haase, S. (2002). Supply Chain Redesign: Advanced Sterilization Products (ASP). Retrieved April 3, 2011 from http://www.lda-us.com/Articles/AME_SupplyChainRedesign.pdf. MetricStream. (2011). Enhance Quality Tracking and Process Efficiency Optimization in Pharmaceutical Manufacturing. Retrieved April 3. 2011 from http://www.metricstream.com/whitepapers/html/pharma.htm. Perrone, M. (2011, March 29). Yahoo Finance. Retrieved April 2, 2011, from www.finance.yahoo.com. Rockoff, J. D. (2011, March). J&J Recall Watch: More Musty-smelling Tylenol Caplets. Retrieved April 2, 2011, from WSJ: www.wsj.com. Rockoff, J. D. (2010, August 19). WSJ. Retrieved April 3, 2011, from www.wsj.com.