The Analysis of Procter & Gambler and Johnson & Johnson Company
Introduction
Globally, a firm has a competitive advantage when it implements a strategy that its competitors are unable to copy or find too costly to imitate (Hitt, Ireland, and Robert 6). In fact, most of the multinational organizations get confident with its strategies if the strategy resulted in one or more useful competitive advantage and if the competitor’s effort to copy the strategy has ceased or failed. On the other hand, to maintain the strategy and succeed through it, organizations come up with the right strategic management process. In this case, for a firm to manage its strategy appropriately, full set of commitment is needed, realistic decisions, and actions that will make the company achieve competitiveness through the strategy are required. Hitt, Ireland, and Robert say that with the right strategic ideas, global businesses has a chance to earn above-average returns, as it is vivid that strategies give organization all the requirement it needs to influence its performance within the market (6).
However, before the identification of the strategies that a firm should use for competitiveness and earning average return purposes, it is sensible for the company to consider the issue of customer segmentation that is set in the market. In addition, other factors that multinational firms ought to consider before coming up with the operational strategies include the organizational corporate governance and SWOT factors as these are among the key element that may influence the operation of global firms. Therefore, for a detailed discussion, this paper focuses on analyzing both Johnson and Johnson (J & J) and Procter and Gambler (P & G) Companies with the aim of comparing the two companies based on the key factors that are considered before making the decision of implementing operational strategies. The paper will analyze the two global enterprises with the review of the customers that both companies serves, company’s structure, the company’s executive compensation, and SWOT analysis in both organizations. The reason why the analysis will be based on these factors is that this study intends at exploring the difference and similarity between two global firms regarding strategic management.
The J & J Company Customers and Segmentation
Apparently, for most of the multinational and local firms, the customers are the key players in the determination of the competitive poster. Rajagopal outlines that for the companies in the global market to be successful in different ways, it is important for them to identify new ways or strategies that integrate their business models so that the companies can have the best practices within the market (151). With the review of the Johnson & Johnson Company, it is clear that the company serves a different type of customers globally. J & J Company has more than 250 businesses that are located in more than 60 countries worldwide (“J&J Company Structure”). In fact, the company is recognized for its service to commercial customers and intermediary partners who are based in America. The intermediary partners include hospitals, health planners, medical facilities distributors, medical equipment wholesalers, and the United States government, where J&J Company products are distributed to the public hospitals by the government (“J&J Company Structure”). As J & J Company aims at enhancing customer experience through strategic management of the customer data the company is organized into different business segments that are made of the franchises and therapeutic categories.
J&J Customer Segmentation
The company has a number of customers segments, in which it aim at satisfying the different groups of customers in the U.S and across the globe. The first category of the J & J Company customer division is the consumer healthcare segment. The segment includes an abroad range of medical products that are used for baby care services, skin care, wound care, and women health field, over-the-counter pharmaceutical products, and prevention products that are set to provide various healthcare treatment services (“J&J Company Structure”). The company also has medical devices customer segment, where it focus on the people with different diseases that need professional attentions. In this case, the company sees the sick people who need the medical attention as their primary customers, especially the people who are in need of the vision care, diabetes care, infection treatment, and clients who require aesthetic care (“J&J Company Structure”). In fact, in this segment, “J&J Company Structure” reveals that the division is comprised of the company’s medical solutions and global surgery group, for the professionals to provide care services to different people within the segment. Lastly, for customer satisfaction J & J Company has Pharmaceuticals segment, in which it uses its resources and medical goal to collaborate with all customers across the globe. The staffs at J & J Company who are set to offer pharmaceutical services are dedicated to addressing the unmet needs of the customers who are diagnosed with several diseases. In this division, the groups of customers who are served by the company include people with the infection illnesses such as HIV/AIDS and tuberculosis. With the identification of this group with unmet healthcare need, J & J Company has developed sustainable strategies that are integrated with the healthcare services through partnership and transparency.
Form of Corporate Governance at J&J Company
Corporate governance regards to the structure and processes for the organizational direction and control of the activities that are carried out within an organization (Sarbah and Wen 40). The corporate governance in organization stand for the relationship among the management, board of directors, controlling shareholders, minority shareholders, and any other shareholders who are affected by the business operations (40). Importantly, research finds out that good corporate governance contributes to sustainable economic development, enhances the performance of the company, and determines the growth of the companies in the competitive market (40). With this understanding, it is important for the organizations to consider the aspect of corporate governance before the implementation of strategic plans because a good corporate governance enhances the management of the strategies in the best way possible.
J & J Company operates with functional form of structure, where the company has a corporate form of governance connecting different management personnel’s with its operational strategies (“Corporate Governance Materials”). The reason that make J & J Company uses this form of structure is that the functional structure is an important form of business operation, especially for companies that trade in the global market and want to enhance its success through multinational strategies. With J & J Company recognized as an organization that has complex operational strategies, J & J Company employs functional organizational structure to make sure that there are control and coordination of different functions and activities at all level of management. Within the company’s corporate governance, the boards of directors are the top management team, with Mr. Gorsky being the Chairman of the Board Committee (“Corporate Governance Materials”). The board of directors at J & J Company oversees several business activities relating to the company, in which the directors’ carry out the responsibilities of sales, marketing, and managing some of the crucial business activities. The president of the company appoints the chairperson of the board of directors at J & J Company (“Corporate Governance Materials”). For competitive advantage and to succeed in the multinational businesses, J & J Company has a board of directors that has a better understanding of the global issues facing global companies in the healthcare industry and a board that has in-depth knowledge concerning the company’s business, history, and culture of the company.
Executive Compensation at J & J Company
In a firm, executive compensation is broad concept that incorporates different areas of an organization (Sirkin, and Lawrence 6). From the business management perspective, executive compensation is the package that the executive in the business receives and any other issue that relates to the payment of the executive members of the organizations (6). In a more detailed manner, executive compensations are part of the employment agreement, in which the executives and the businesses agree on significant arrangements concerning the processing of payment arrangements.
At J & J Company, the compensation of the company CEO is raised according to the board conclusion, with the executive compensation at J & J being one of the financial goal for the enterprise (“Corporate Governance Materials”). In the year 2015, the Company agreed to increase the total compensation of the chairperson Alex Gorsky to 48 percent, as an award for the good work he is doing for the company. As one of the world leading company in the medical industry, the compensation increase is a decision that is passed by the board of directors, with the executives in the organizations being rewarded with compensation bonuses, as a way of motivating them and aiming at retaining the best group of employees (“Corporate Governance Materials”). In fact, the board is set to review the salary of the company CEO, whereby the board will either make a decision to increase the CEO’s salary or continue working with the current payment program.
J & J Company SWOT Analysis
SWOT analysis is an acronym for strength, weaknesses, opportunities, and threats. Kurtz, and Louis state that by systematically evaluating all four factors that make up the SWOT analysis concept, a firm can then come with ideas to develop the best strategies that will enhance competitive advantage and profitability (288). For a company to assess its competitive position within the market, this can be done through SWOT analysis, where the company will evaluate its strength, weaknesses, opportunities, and threat (228). For a SWOT analysis to show the company its intended objectives, the managers need to review the strength and weaknesses each function, such as finance, marketing, information technology, and human resource (228). On the other hand, to evaluate the firm opportunities and threats, the organizational leaders may reviews opportunities such as the ideas that will make the company grow, the opportunities to get different skills and experience from the workforce (229). The threats that the companies are likely to face include economic recession, change in government regulations and rules concerning the business activities.
Kurtz and Boone note that J & J Company carries different forms of evaluations that are set to cater for the Company’s SWOT analysis (228). In this essence, for the company to have the strengths that will ensure that it come up with effective strategies, J & J Company intends at coming up with financial support from the consumers buying its products. Here, the company aims at selling more products to the consumers, whereby the sales make the company sustainable financially. J & J Company also do SWOT analysis through its marketing programs, with the goal of creating product awareness to its customers. For instance, the company used the marketing strategy to place Tylenol Extra Capsules in the market as it was trying to introduce new products in the market (Dominguez 245). The company also has financial resources from the R&D department, in which the department emphasizes on employing innovative employees at J & J Company (“Corporate Governance Materials”). Some of the weaknesses that are influencing J & J Company performance include the issue of global business standardization, whereby cost control measures are set for multinational organizations. The increased market share that J & J Company is enjoying in the current state is an opportunity for the company to further its operations globally. Finally, the issue of competitors and leadership is a threat to the company. For instance, J & J Company has in one time find itself in a crisis that was caused by lack of leadership awareness, where the leaders did not know the impact of Tylenol Extra Capsules that lead to the death of the customers who consumed the product (Dominguez 245).
Analysis of Procter & Gambler (P&G)
Works Cited
“Corporate Governance Materials.” Johnson & Johnson 2016. Web.
Dominguez, Orlando J. Ems Supervisor: Principles and Practice. , 2016. Print.
Sarbah, Alfred and Wen Xiao. “Good Corporate Governance Structures: A Must For Family Businesses.” Open Journal of Business and Management 3.1 (2015): 40-57
Hitt, Michael A, R D. Ireland, and Robert E. Hoskisson. Strategic Management Competitiveness and Globalization Concepts (11th ed). Minneapolis/St. Paul, Minnesota: West Publishing Company. 2015. Print.
“J&J Company Structure”. Johnson & Johnson. 2016. Web
Kurtz, David L, and Louis E. Boone. Contemporary Business. Hoboken, N.J: Wiley, 2011. Print.
Rajagopal, . The Butterfly Effect in Competitive Markets: Driving Small Changes for Large Differences. , 2015.
Sirkin, Michael S, and Lawrence K. Cagney. Executive Compensation. New York, N.Y. (345 Park Ave., South, New York 10010: Law Journal Seminars-Press, 1996. Continually updated resource.
