Johnson and Johnson Pakistan

Introduction of Johnson & Johnson

Johnson & Johnson embrace research and science - bringing innovative ideas, products and services to advance the health and well-being of people.

Johnson & Johnson comprises:

• The world’s sixth-largest consumer health company
• The world’s largest and most diverse medical devices and diagnostics company
• The world’s fifth-largest biologics company
• And the world’s eighth-largest pharmaceuticals company
  
  
  
  
  

Vision Statement

To maximize the global power of diversity and inclusion to drive superior business results and sustainable competitive advantage.

Mission Statement

To embed diversity and inclusion into our business to drive innovation and growth ensuring we better serve patients, customers, employees and our communities.

Part 1 (Abdul Waseem)

Political Macro Factors:

There are many factors in the macro-environment that will affect the decisions of the managers of any organization. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analyze these factors managers can categorize them using the PESTEL model. This classification distinguishes between following factors:

Typical PESTEL factors to consider include:

Factor	Could include:
Political	e.g. EU enlargement, the euro, international trade, taxation policy
Economic	e.g. interest rates, exchange rates, national income, inflation, unemployment, Stock Market
Social	e.g. ageing population, attitudes to work, income distribution
Technological	e.g. innovation, new product development, rate of technological obsolescence
Environmental	e.g. global warming, environmental issues
Legal	e.g. competition law, health and safety, employment law

This report shall focus the first element of a MACRO (PESTLE) analysis, which is the ‘Political’ factor.

Political Factors:

The political factors influence organizations in many ways. Political factors can create advantages and opportunities for organizations. Conversely they can place obligations and duties on organizations. Political factors include the following types of instrument:

- Legislation such as the minimum wage or anti discrimination laws.
- Voluntary codes and practices
- Market regulations
- Trade agreements, tariffs or restrictions
- Tax levies and tax breaks
- Type of government regime eg. communist, democratic, dictatorship

Non conformance with legislative obligations can lead to sanctions such as fines, adverse publicity and imprisonment. Ineffective voluntary codes and practices will often lead to governments introducing legislation to regulate the activities covered by the codes and practices.

Political Conditions of Pakistan

Viewing the political condition of Pakistan any one can understand it easily that our many Politicians always see their interests and never gave a thought to our beloved homeland. I will not mention anyone’s name it’s just a general opinion. The situation which prevailed these days in Pakistan makes it clear to everyone that no one is willing to trust our government as it has been observed that fewer people have submitted funds in government Bank accounts. This is harmful for our economy and no one is willing to come and invest in Pakistan. Moreover, the risk factor has always remained high in terms of doing business in Pakistan. Other constraints of resources like, the following have also hindered growth opportunities.

Uncertain law and order situations

Our government is not taking any measures to control the situation and people are reluctant to come and invest in Pakistan, which is affecting many industrialist any causinh them to leave Pakistan and shift their industries to other countries like Bangladesh and China due to security reasons.

Power Supply

Electricity or shortage of it, in Pakistan is a dire issue. It affects everyone, rich possibly more than poor but only because former rely on such luxuries more than the latter. Shortage of power supply is a one of the biggest hurdles being faced by our industrialist. There is need for an honest and effective review on the workings of our electric companies, failure to do so would lead to eventual privatization of these companies. Economically speaking, it doesn’t make any sense for an organization that has a product with inelastic demand to remain in loss. However what that means is expensive electricity for consumers but also less manpower, due to likely efficiencies.

High Inflation rate

Due to high inflation rate our industries cannot compete in international market. One of the most significant developments in the current economic scene in Pakistan has been the sharp increase in the rate of inflation. The recent surge of inflation is a matter of serious concern for a variety of reasons. First, Pakistan has been a low-inflation country as it has experienced price stability during the last three decades. The recent inundation by inflation is a phenomenon to which the people of Pakistan are not accustomed and, hence, it is a major concern for the policy-makers.

How the political condition of Pakistan effects J & J Pakistan ?

Due to uncertain law in order situation their business is also affected. At this time when many industries shifted to other countries, it quite difficult for any organization to survive effortlessly. Johnson & Johnson is one of the organizations who decide not to leave and face the circumstances whatever they are.

When instable and insecure conditions arises in some country it results in employee lack of innovation, motivation, moral and ethical values while increase in frustration, job shifting / switching and even moving to other developed countries. It also results in lacking of initiative, hardworking, dedication, devotion, carefulness, creativity, efficiency, effectiveness and concentration. Organizations will be effected not only by the lack of investment and outsourced projects but also in schedule slippage, cost overrun or even discontinuity of the projects. Due to the above factors quality of work will decrease.

Interest rate in politics is increasing and employees are talking about politics within office timings. They are wasting more time discussing the uncertainty, gossip and related versions of the stories. Newspapers, news websites and news channels are being discussed almost round the clock. The focus on work and projects has decreased. Team work and communication has disturbed. Their attention form work has deviated and if the brain is not there it means that there is no point working in a team or individually. Country is facing worst conditions regarding security. Professionals are facing lack of concentration on work. Political instability has deceased moral, motivation and interest in their work which is badly affecting schedule; number of bugs produced are increasing etc. Employee changed behaviors due to political instability creates problem to accomplish all the quality related tasks in the given time;

1. So therefore one has to either compromise over quality or
2. Shall need more time to ensure quality, also
3. It disturbs the flow of working of a department

What would be my strategy as a manager to overcome the situation?

It is necessary for organizations to take immediate actions to reduce political instability effects on their employees, this will be beneficial for organizations work progress and increasing quality of service and work products. Following would be my Recommendation as Manager;

1. The Management should tell the employees about the importance of their projects and impacts incase if the company not deliver the project at time what are the intricacy face by the company in future and on the employee’s job security.
2. Provide some kind of recreational activities (if possible) such that indoor games, LAN games, recreational trips, outdoor tournaments, get together parties.
3. Provide employee job security by telling them that nothing will happen with respect to job provided that they concentrate on work.
4. Provide employee physical security and also can provide life / medical insurance. Do strictly examine the people entering the organization. People feel motivated when they see organization is taking concerns relating them. Organizations have to adapt the safety first policy and then organization.
5. Motivate employees to handle these Political instable conditions like guiding, empowering, training and involving them.
6. Try to create such atmosphere to show that there is nothing happened with respect to organization and work.
7. Organization can work on products so that employees can work with out client pressure until the product is released. Limitation is that very few organizations in Pakistan can invest on products and wait for revenue generation till it has been launched. Best way is to do project and products simultaneously where employee are a bit satisfied that incase of projects failure organization can shift them to product.
8. Make proactive organization strategies like must care political instable conditions while doing planning, estimation, scheduling etc also perform risk analysis more carefully.
9. Realize employees that company is stable and growing.

Part 2 (S.M.Fawad)

Social Environment

Social responsibility is defined as the obligation and commitment of managers to take steps for protecting and improving society’s welfare along with protecting their own interest. The managers must have social responsibility because of the following reasons:

2.1.1.		Organizational Resources - An organization has a diverse pool of resources in form of men, money, competencies and functional expertise. When an organization has these resources in hand, it is in better position to work for societal goals.
2.1.2.		Precautionary measure - if an organization lingers on dealing with the social issues now, it would land up putting out social fires so that no time is left for realizing its goal of producing goods and services. Practically, it is more cost-efficient to deal with the social issues before they turn into disaster consuming a large part if managements time.
2.1.3.		Moral Obligation - The acceptance of managers’ social responsibility has been identified as a morally appropriate position. It is the moral responsibility of the organization to assist solving or removing the social problems
2.1.4.	Efficient and Effective Employees - Recruiting employees becomes easier for socially responsible organization. Employees are attracted to contribute for more socially responsible organizations. For instance - Tobacco companies have difficulty recruiting employees with best skills and competencies.
2.1.5.	Better Organizational Environment - The organization that is most responsive to the betterment of social quality of life will consequently have a better society in which it can perform its business operations. Employee hiring would be easier and employee would of a superior quality. There would be low rate of employee turnover and absenteeism. Because of all the social improvements, there will be low crime rate consequently less money would be spent in form of taxes and for protection of land. Thus, an improved society will create a better business environment.

Social responsibility can also promote the development of groups and expand supporting industries.

The response of the manager with respect to the social environment

The term social responsibilities can be defined as the obligation of management towards the society and others concerned.

Reason for Social Responsibilities: Business enterprises are creatures of society and should respond to the demands of society. If the management does not react to changes in social demands, the society will either force them to do so through laws or will not permit the enterprise to survive. Therefore the longterm interests of business are best served when management assume social responsibilities. The image of business organization liked with the quality of its products and customer service and the extent to which it fulfills the expectations of owners, employees, consumers, government and the community at large. For longterm success it matters a great deal if the firm has a favourable image in the public mind. Every business enterprise is a organ of society and its activities have impact on the social scene. Therefore, it is important for management to consider whether their policies and actions are likely to promote the public good, advances the basic values of society, and constitute to its stability, strength and harmony.

Increasing concern for the social responsibility of management, it is now recognized that besides taking care of the financial interest of owners, managers of business firms must also take into account the interest of various other groups such as employees, consumers, the government and the community as a whole. These interested groups are directly or indirectly affected by the pursuit of business activities and they are the stake-holders of the business enterprise.

Responsibility towards employees: Management responsibility towards employees relate to the fair wages and salaries, satisfactory work environment, labour management relations and employee welfare. Fair wages should be fixed in the light of labor productivity, the prevailing wage rates in the same or neighboring areas and relative importance of jobs. Managers salaries and allowances are expected to be linked with their responsibility, initiative and skill. But the spread between minimum wages and highest salaries should be reasonable. Employees are expected to build up and maintain harmonious relationships between superior and subordinates. Another aspect of responsibility towards employees is the provision of welfare amenities like safety and security of working conditions, medical facilities, housing, canteen, leave and retirement benefits.

Responsibility towards consumers: In a competitive market, serving consumers is supposed to be a prime concern of management. But in reality perfect competition does not prevail in all product markets. In the event of shortage of supply there is no automatic correction. Besides consumers are often victims of unfair trade practices and unethical conduct of business. Consumer interests are thus protected to some extent with laws and pressure of organized consumer groups. Management should anticipate these developments, satisfy consumer needs and protect consumer interests. Goods must be of appropriate standard and quality and be available in adequate quantities at reasonable prices. Management should avoid resorting to hoarding or creating artificial scarcity as well as false and misleading advertisements.

Responsibility towards the Governments: As a part of their social responsibility, management must conduct business affair in lawful manner, honestly pay all the taxes and dues, and should not corrupt public officials for selfish ends. Business activities must also confirm to the economic and social policies of the government.

Responsibility towards the community and society: The socially responsible role of management in relation to the community are expected to be revealed by its policies with respect to the employment of handicapped persons, and weaker sections of the community, environmental protection, pollution control, setting up industries in backward areas, and providing relief to the victims of natural calamities etc.

Creating an ethical workplace

Business managers in most organizations commonly strive to encourage ethical practices not only to ensure moral conduct, but also to gain whatever business advantage there may be in having potential consumers and employees regard the company as ethical. Creating, distributing, and continually improving a company's code of ethics is one usual step managers can take to establish an ethical workplace.

Another step managers can take is to create a special office or department with the responsibility of ensuring ethical practices within the organization. For example, management at a major supplier of missile systems and aircraft components has established a corporate ethics office. This ethics office is a tangible sign to all employees that management is serious about encouraging ethical practices within the company.

Social Responsiveness of the Manager

Social responsiveness is the degree of effectiveness and efficiency the manager would display in pursuing social responsibilities. The greater the degree of effectiveness and efficiency, the more socially responsive the organization is said to be. The socially responsive manager who is both effective and efficient meets their social responsibilities without wasting organizational resources in the process. Determining exactly which social responsibilities an organization should pursue and then deciding how to pursue them are perhaps the two most critical decision-making aspects of maintaining a high level of social responsiveness within an organization. That is, managers must decide whether their organization should undertake the activities on its own or acquire the help of outsiders with more expertise in the area.

Part 3 (S.Zulqarnain Iqbal)

Meaning of Economic Environment Those Economic factors which have their affect on the working of the business is known as economic environment. It includes system, policies and nature of an economy, trade cycles, economic resources, level of income, distribution of income and wealth etc. Economic environment is very dynamic and complex in nature. It does not remain the same. It keeps on changing from time to time with the changes in an economy like change in Govt. policies, political situations.

Elements of Economic Environment

It has mainly five main components

1. Economic Conditions
2. Economic System
3. Economic Policies
4. International Economic Environment
5. Economic Legislations

Managing for Sustainable Growth

Over our history, this approach has allowed Johnson & Johnson to manage through various economic cycles. Recently, we have faced unprecedented economic conditions, coupled with one of the most difficult business periods in the Company’s history. While we are always preparing for anticipated patent expirations and competitive challenges, few—if any—forecasters predicted the extent of the worldwide recession and its widespread impact. Virtually all industries, including health care, have experienced extraordinary pressures.

We recognized these economic challenges and initiated appropriate and necessary steps to ensure our ongoing success. We have had to rethink some investments, reduce infrastructure and find ways to operate more efficiently while focusing on the excellent prospects for innovation and growth within Johnson & Johnson.

Actions and Plans across our business

We further consolidated our management structure and took other actions to generate the resources necessary to drive future growth, including aggressive funding for launching innovative products and services in the near term, pursuit of our most promising longer-term growth opportunities and continuing investments in the development of our people.

In August, we started streamlining our operations by eliminating the Comprehensive Care Group Operating Committee, transferring those businesses into one Medical Devices and Diagnostics segment along with the Surgical Care franchises.

In November, we outlined restructuring actions and plans developed by each of our businesses. These included reducing layers of management, increasing individual spans of control and simplifying processes. Among our difficult decisions was the elimination of some jobs and redefinition of others. We remain committed to the fair and responsible treatment of all affected employees,

Consumer

Our Consumer business segment is improving operating efficiency by refining management structures and responsibilities in its businesses. To smooth decision-making, clearer, more consistent lines of responsibility were established for regional vice presidents, impacting their operational relationships with managing directors and franchise general managers; this took effect Jan. 1, 2010.

Medical Devices and Diagnostics

The Medical Devices and Diagnostics business segment took steps to integrate businesses into one group and made some additional structural changes to ensure that our businesses in this segment remain focused on their core strategies and highest-priority growth platforms and opportunities.

Pharmaceuticals

The Pharmaceuticals business segment is increasing its focus in several areas: reprioritizing activities to support core products; redeploying significant resources to maximize opportunities with new products and solutions; investing in prioritized internal and external development opportunities to ensure a robust pipeline; and exploring new business models while continuing investments in emerging markets with growth potential.

Part 4 (Aaqash Nazir)

Environmental Factors effecting J&J

Political Factors: The political challenge is that Johnson & Johnson may face could be to conform to all the difference government leadership styles in various countries it operates within. Certain countries have extreme legislation or restrictions in their use of certain kinds of chemicals. As a result of that, Johnson and Johnson will be obligated to produce only safe products that do not contain any harmful substances. Also, different legislation for advertising in different countries could also affecting Johnson & Johnson advertising and Promotion.

Economic Factors: Johnson and Johnson may have adapts to all the different economics environments and problems in all countries it operates in. luckily, the economics have predicted a recovery from the current economic downturn. This means that consumer’s disposal income may be increasing in the coming years; hence there will be more money for the consumers to spend on luxury products.

Socio-Cultural Factors: the high diversity in people from different geographic region continues to raise a lot of challenges on the how Johnson & Johnson able to deliver to all the target groups they want to serve. Nevertheless, Johnson & Johnson is able to mitigate the effect of the difference in Socio-cultural factors by having a decentralized geographic system to serve the various markets.

Technological Factors: Many people are becoming more IT savvy; this creates an opportunity for Johnson & Johnson to launch more internet selling product. On the other hand, competitors are also building improving on their technologies and their deliverable. This calls for more work to be done on R&D for Johnson, if they want to continue to enjoy their current sustainable competitive advantage.

Conclusion

Entering third world markets can always be a challenge for companies and even the largest and most successful companies struggle if they don’t adapt to the local conditions. Pakistan is a country where there is a great potential despite being a very volatile market and companies have to play their cards right. Companies such as Coca Cola and Phillip Morris have struggled here with main reasons being the inefficiency to respond to changing dynamics of the domestic market and consumer preferences.

The PEST analysis is very necessary for Johnson and Johnson to operate here. The uncertain political conditions mean that they have to keep a sharp eye on the possible change in laws and potential law and order disturbances.

Words such as Westernization and liberalism are misunderstood and looked upon as a forbidden fruit even though society is moving towards that. Having to gain the trust of the local people and not going over the top in portraying the image of the company is a must.
The country has inflation at its peak with the cost of living increasing by the day alongside the devaluation of the currency. Future economic outlook must be checked upon when deciding whether to set up local production sites.

Technology in most industries is usually imported as the R&D into modern machinery is almost nothing. Another problem is finding local trained workers who can operate them. This can turn out to be a long and expensive cause as training locals would take time. However this is only beneficial for the short run as in the long run technology would become outdated and would need to be replaced which would again trigger training projects. The company must learn to integrate R&D into the whole system if it wants to sustain its growth.

Posted in: Johnson and Johnson Pakistan,MBA Reports