Johnson & Johnson SWOT Analysis

Company: Johnson & Johnson CEO: Alex Gorsky
Founders: James Wood Johnson, Edward Mead Johnson, and Robert Wood Johnson I
Year founded: January 1886
Headquarters: New Brunswick, New Jersey, United States
Employees (Dec 2019): 126,500
Ticker Symbol: JNJ Type: Public
Annual Revenue (Dec 2019): $82.06 Billion
Profit | Net income (Dec 2019): $15.30 Billion

Fun Fact: Johnson & Johnson’s Credo has been translated into dozens of languages and dialects, from Arabic to Vietnamese with 342 words in English, 415 words in Romanian, and 607 words in the Chinese language.

Founded as a family business over a century ago, Johnson & Johnson grew steadily and survived the worst economic period to become the global powerhouse in medical services. While it started with only 14 employees consisting mostly of friends and family, it endured all the rough periods and now employs about 126, 500 people across the world. As entrepreneurially spirited people, Johnson & Johnson SWOT Analysis offers an invaluable opportunity to learn and build our own empires. Here is an in-depth Johnson & Johnson SWOT Analysis.

Johnson & Johnson’s Strengths

1. Global Dominance

Johnson and Johnson is the leading health care company globally and has more than 265 operating companies in over 60 countries globally. It is a leader in medical devices and diagnostics, pharmaceutical products, and consumer healthcare products. [Source 1]

2. Highly Influential

Johnson & Johnson is one of the most influential companies in the world. It influences the economic wellbeing of many countries, including the US stocks market. [Source 2]

3. Highly Experience

With over 130 years of experience, Johnson & Johnson understands what it takes to fulfill the needs of the target market fully. Having more experience in matters of health is a major strength and advantage over competitors. [Source 3]

4. Extensive Product Portfolio

From Purell to Tylenol, Listerine, baby products, Destin, Visine, Clean & Clear, Neutrogena, Band-Aid, Stayfree, and Acuvue Lenses, all these products enhance the company’s stability and superiority in the market. [Source 4]

5. Strong Community Engagement

Johnson & Johnson engages fully in international affairs as a concerned global citizen in matters that affect global health. From the Healthy Child Initiative with the UN to the malaria campaign with the AU and combating the virus with the US government, the company is always at the forefront in matters of global health. [Source 5]

6. Robust Supply Chain

Johnson & Johnson has an extensive supply chain that ensures all raw materials are available, and finished products are distributed efficiently to retailers, outlets, and pharmacies across the world. [Source 6]

7. Brilliant Partnerships

Most companies insist on manufacturing each profitable product themselves, which can be catastrophic. Johnson & Johnson understands the ineffectiveness of this strategy and opts to partner with leaders in specific regions and fields of expertise to deliver highly effective products. [Source 7]

8. Effective Marketing

Johnson & Johnson’s marketing strategy focuses on exploiting the emotional connection to nurture trust and long-lasting relationships between mothers and their products. The strategy has effectively marketed the products and attracted customers globally. [Source 8]

9. Strategic Acquisitions and Mergers

The quicker a company gets into new and lucrative markets, the faster it grows. Johnson & Johnson strategically acquires and merges with big and small companies for quick and profitable expansion. [Source 9]

Johnson & Johnson’s Weaknesses

1. Unethical Operations

Lawsuits against the negative effects of Johnson & Johnson’s Xarelto, talc-based baby powder, opium-addictive Norman drug, and many more are projected to cost about $15 billion. Most importantly, each lawsuit erodes trust and taints its reputation. [Source 10]

2. Lack of Diversification

Johnson & Johnson’s global revenue comes from three major divisions: pharmaceutical, medical devices and diagnostics, and consumer. With all its eggs in a single basket, Johnson & Johnson can incur catastrophic losses. [Source 11]

3. Overdependence on Successful Products

Once a product is launched and risen to become a leader in the market, there is nowhere else to go but down. Johnson & Johnson’s overdependence on $3.5 billion yearly from Zytiga until 2018 when a court allowed sales of generic versions of the drug leading to a sharp decline in sales. [Source 12]

Johnson & Johnson’s Opportunities

1. Rebalance Portfolio

With medical devices and pharmaceuticals bringing in over 80% of total revenue, Johnson & Johnson can focus on increasing sales of consumer health products. Rebalancing the portfolio can increase total revenue. [Source 13]

2. Expand through Acquisition

Johnson & Johnson’s revenue increased immensely from 2016 to 2020 with acquisitions like Tylenol. It can expand again, using acquisitions. [Source 14]

3. Focus on Emerging Markets

About 57% of Johnson & Johnson’s global pharmaceutical sales come from the US. The company can focus on increasing pharmaceutical sales in Latin America, Africa, and Asia. [Source 15]

4. Target the Lower-Class

Johnson & Johnson can introduce a cheaper variety or offer discounts for its drugs to target the lower-class. [Source 16]

Johnson & Johnson’s Threats

1. Stiff Competition

From Reckitt Benckiser to Unilever, Procter and Gamble, Abbott, and many more, the large number of strong global players competing against Johnson & Johnson threatens profitability. If stiff competition stiffens further, Johnson & Johnson will lose a substantial portion of its market share. [Source 17]

2 Increase in Generics

Recently, Johnson & Johnson’s revenue dropped after the sales of generic versions of Zytiga were allowed into the market. If generic drugs increase drastically in the future, the company’s profitability and sustainability will be threatened further. [Source 18]

3. Stringent Regulation

Since Johnson & Johnson offers its brands in different markets across the world, it has to comply with numerous regulations enacted by governments. Its record does not help the company. [Source 19]

4. New Technologically Advanced Entrants

Innovative drug manufacturers are emerging rapidly from countries like India. If any company acquires the technological capacity to develop cheaper and more effective substitutes, retaining even most customers will be a challenge for Johnson & Johnson. [Source 20]

5. Intensified Fight against Drug Abuse

The role of drug manufacturers in the opioid epidemic in the US can lead to the enactment of harsher laws in the future. If governments ban drugs manufactured by Johnson and Johnson, this will threaten the profitability or even the existence of the company. [Source 21]