But there are certain risks involved for the managers as they have to make their own decisions for running out the business without any guidance as there is no chief executive.
Method of decentralization also results in increase in overhead costs of J&J as there was duplication of services cost and extra personnel were involved in it. J&J decentralized organizational structure has led to a lack of mechanisms also the process used for exchanging information. There was a risk of lack of coordination between the staff responsible for doing a particular job together.
Decentralization has proven so successful for Johnson & Johnson but If J&J wants to excel in future then they have to utilize each and every resource of the different businesses and work together do as to get maximum share of market by its new innovative products and less overhead cost. They have plenty of different resources (financial, physical, human, and intellectual capital) within their 3 segments which can be used very efficiently so as to gain the advantage over upcoming competitors.
Evaluate top management initiatives designed to achieve synergies between J&J’s businesses.
J&J always believed in decentralization concept for running their businesses but as the time was passing down all the management was trying to design new step and new initiatives to achieve synergies between the J&J different businesses which can be helpful to J&J future success.
New Medical Tests: Firstly they started off with focusing on collecting a massive database using the gene patterns that is for a particular segment (like Cancer patients only). By using that database in their diagnostic business the drug development cost can be reduced. After getting this idea diagnostic team started developing a test on the drug which Research and development can use to anticipate which patients can be benefitted from an experimental cancer therapy.
New and Improved Drugs: Also J&J also started to take a scientific edge on the consumer’s brands in which they deal. They launched their new Liquid Band-Aid which is the combination of a material which was used to wound closing manufactured and sold by one of the J&J’s hospital - supply business. By doing this they are able to get a scientific edge on band aid as well as can able to capture consumers brand market. After success of this J&J took some more initiatives such as collaborating drug business and device operation business for manufacturing the drug “stent” which was used to open the arteries after angioplasty. Similarly J&J’s pharmaceutical operation works with company’s drug delivering operation, Alza corp., which comes up with a new chemical formulation of the epilepsy drug called Topamax. Alza was the J&J’s biggest acquisition ever: buying for $13.2 billion. J&J did this acquisition because Alza technology was very innovative and it can help J&J with safer and effective formulation of drugs. The new drug Topomax was the new release version for treating obesity. J&J also did te acquisition of Scios Inc. which was a biotech company. Scios was acquired by J&J in $2.4 billion because it has a drug for congestive heart failure.
Improved communication: for achieving the synergies between their businesses J&J started creating new systems to get better communication channel by which their van be more frequent collaboration between the dispirited operations of J&J. Also J&J developed a team of researchers and executives for making a perfect decision.
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