Johnson and Johnson 1

Discuss the advantages and risk of j & j independent operations of its business units.

Johnson & Johnson is a global American company which was founded in 1886 and incorporated in 1887. Johnson & Johnson has made up 204 different businesses which are segmented into three different segments: Drugs, Medical devices and diagnostics and Consumers products. Most important advantage they have is the sustainable competitive advantage as there are 3 different segments of J&J which offers different products and each of the segments are totally well positioned as a well trusted family brand which helps them to sell out their product very easily in the market.

There are other advantages which J&J has in diversifying their business, if any of the division gets into loss then the other segment set off that loss by its profit. This also helps J&J to allow take bigger risk with their strategies and products. (For example: Surgical device business had a loss of around $500 million between 1992 and 1995, which was hardly felt by J&J). J&J has a very rich heritage as well as unique culture which is an advantage for every business under J&J. Johnson & Johnson is well known for their decentralization model where the delegation of decision making is transferred to the sub segments of business units. J&J has followed Decentralization concept in which each of the businesses produces its own strategies according to their own internal and external analysis. For example: All the businesses have their own Human resources and Finance departments which are on different phases. Decentralization allows organizations to take the advantage of division of labor and allows the organization for decision making by using multiple individuals inputs. Weldon believes that by adopting decentralization model, managers and work force can allow themselves to understand their markets in a much better way. Through decentralization approach workforce will get desirable motivational effect. It also helps the organization to find the answers of how to drive business within the markets. Through Decentralization J&J has an opportunity to be close to their customers by which they can understand the needs of their customers very well. Decentralization also helps in innovation as it allows different people to come up with different ideas, skills, and vision to satisfy the needs of customers by using technology and manufacturing different products.