Johnson & Johnson in the 1990s SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Johnson & Johnson in the 1990s
Describes the major challenges facing Ralph Larsen, CEO of Johnson & Johnson since 1989, as he strives to maintain the company's decentralized management structure and at the same time keep the company competitive in the 1990s.
Swot Analysis of "Johnson & Johnson in the 1990s" written by Andrall E. Pearson, Johanna M. Hurstak includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Johnson Larsen facing as an external strategic factors. Some of the topics covered in Johnson & Johnson in the 1990s case study are - Strategic Management Strategies, Managing people, Organizational culture, Organizational structure, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Johnson & Johnson in the 1990s casestudy better are - – there is backlash against globalization, increasing government debt because of Covid-19 spendings, technology disruption, cloud computing is disrupting traditional business models, wage bills are increasing, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion,
increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Johnson & Johnson in the 1990s
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Johnson & Johnson in the 1990s case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Johnson Larsen, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Johnson Larsen operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Johnson & Johnson in the 1990s can be done for the following purposes –
1. Strategic planning using facts provided in Johnson & Johnson in the 1990s case study
2. Improving business portfolio management of Johnson Larsen
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Johnson Larsen
Strengths Johnson & Johnson in the 1990s | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Johnson Larsen in Johnson & Johnson in the 1990s Harvard Business Review case study are -
Diverse revenue streams
– Johnson Larsen is present in almost all the verticals within the industry. This has provided firm in Johnson & Johnson in the 1990s case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Strong track record of project management
– Johnson Larsen is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Johnson Larsen has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to lead change in Leadership & Managing People field
– Johnson Larsen is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Johnson Larsen in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Johnson & Johnson in the 1990s Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Low bargaining power of suppliers
– Suppliers of Johnson Larsen in the sector have low bargaining power. Johnson & Johnson in the 1990s has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Johnson Larsen to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Johnson Larsen has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Johnson Larsen to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Johnson Larsen are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Learning organization
- Johnson Larsen is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Johnson Larsen is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Johnson & Johnson in the 1990s Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Johnson Larsen has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Johnson & Johnson in the 1990s Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Successful track record of launching new products
– Johnson Larsen has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Johnson Larsen has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to recruit top talent
– Johnson Larsen is one of the leading recruiters in the industry. Managers in the Johnson & Johnson in the 1990s are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Johnson & Johnson in the 1990s | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Johnson & Johnson in the 1990s are -
Slow to strategic competitive environment developments
– As Johnson & Johnson in the 1990s HBR case study mentions - Johnson Larsen takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Johnson Larsen supply chain. Even after few cautionary changes mentioned in the HBR case study - Johnson & Johnson in the 1990s, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Johnson Larsen vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Johnson Larsen has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High cash cycle compare to competitors
Johnson Larsen has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Interest costs
– Compare to the competition, Johnson Larsen has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of Johnson Larsen is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Johnson Larsen needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Johnson Larsen to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Johnson Larsen, firm in the HBR case study Johnson & Johnson in the 1990s needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Johnson Larsen has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Johnson & Johnson in the 1990s should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Johnson & Johnson in the 1990s, is just above the industry average. Johnson Larsen needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Lack of clear differentiation of Johnson Larsen products
– To increase the profitability and margins on the products, Johnson Larsen needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– After analyzing the HBR case study Johnson & Johnson in the 1990s, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Johnson & Johnson in the 1990s | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Johnson & Johnson in the 1990s are -
Manufacturing automation
– Johnson Larsen can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Johnson Larsen is facing challenges because of the dominance of functional experts in the organization. Johnson & Johnson in the 1990s case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Using analytics as competitive advantage
– Johnson Larsen has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Johnson & Johnson in the 1990s - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Johnson Larsen to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Johnson Larsen in the consumer business. Now Johnson Larsen can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Johnson Larsen can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Low interest rates
– Even though inflation is raising its head in most developed economies, Johnson Larsen can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Johnson Larsen can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Johnson Larsen can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Johnson & Johnson in the 1990s suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Johnson Larsen in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Johnson Larsen can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Johnson Larsen can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Johnson Larsen to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Loyalty marketing
– Johnson Larsen has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Better consumer reach
– The expansion of the 5G network will help Johnson Larsen to increase its market reach. Johnson Larsen will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Threats Johnson & Johnson in the 1990s External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Johnson & Johnson in the 1990s are -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Johnson Larsen in the Leadership & Managing People sector and impact the bottomline of the organization.
Increasing wage structure of Johnson Larsen
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Johnson Larsen.
Regulatory challenges
– Johnson Larsen needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Johnson Larsen can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Johnson & Johnson in the 1990s .
Shortening product life cycle
– it is one of the major threat that Johnson Larsen is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Johnson Larsen can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Johnson Larsen.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Johnson Larsen business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Environmental challenges
– Johnson Larsen needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Johnson Larsen can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
High dependence on third party suppliers
– Johnson Larsen high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Stagnating economy with rate increase
– Johnson Larsen can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Johnson Larsen demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of Johnson & Johnson in the 1990s Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Johnson & Johnson in the 1990s needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Johnson & Johnson in the 1990s is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Johnson & Johnson in the 1990s is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Johnson & Johnson in the 1990s is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Johnson Larsen needs to make to build a sustainable competitive advantage.
