Strategies of Johnson & Johnson & IBM

2.1 The pharmaceutical business segment of Johnson & Johnson enjoys a number of distinct competitive advantages and internal competencies. Hamer (2004) commented that among these advantages and competencies are such items as a well-established and highly productive research and development pipeline, an excellent cash position, superior marketing ability, and an ongoing commitment to high quality science. Research and development and various scientific laboratories are largely responsible for identifying potential products, testing and evaluating those products, and moving the products through the pipeline toward eventual Food and Drug Authority approval. Marketing is a major participant in ensuring that both prescription and over-the-counter (OTC) pharmaceutical products are appropriately priced, packaged, positioned, and advertised.

2.2 The pharmaceutical segment enjoys a number of competitive advantages as identified by Michael Porter's Five Forces Model (Wheelen & Hunger, 2000). The pharmaceutical sector is generally immune to the threat of new entrants. The cost of moving into this sector is prohibitive for most potential entrants, who are more likely to be acquired by an existing company. Rivalry among firms is, however, quite high and competition for research talent, market share, and so forth is intense. Pharmaceutical firms, according to Elling, et al (2002), have experienced enormous changes in the past

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Acquisitions of smaller firms due to cash assets Threats: Hypercompetition from major rivals (see chart above) Hamer (2003) noted that the firm invests large amounts in R&D, which constitutes both a strength and a weakness. Other opportunities include prescription to OTC transformations of certain products in the later stages of their life cycles, which offers an opportunity to realize additional revenues from this segment of the sector's business. However, expiring patents creates heightened competition from generic companies, while insurance companies are pressuring this and other pharma firms to lower prices. 3. The business strategy that Johnson & Johnson must follow over the course of the next 10 years consists of several discrete elements, to wit: 1. It must move products rapidly through the pipeline, targeting such diseases as cancer and cardiovascular medicine. New strengths needed include greater flexibility in R&D activities. 2. The company must continue to develop its platform for gaining segment share and strengthening its leadership position. 3. The company must continue to develop collaborative partnerships and to engage in joint ventures, particularly with players in the biotechnology
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