2. Johnson & Johnson McGraw-Hill/Irwin Strategic Management, 3/e
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3. Johnson & Johnson
What kind of diversification does Johnson & Johnson pursue?

4. Johnson & Johnson
What challenges does William C. Weldon face as CEO of J&J?

5. Johnson & Johnson Why is synergy important for J&J?
What has Weldon done to foster synergy?

6. Johnson & Johnson Evaluate Weldon’s leadership of J&J.
What steps has he taken to spur innovation?

7. Q1. Diversification Models
Related diversification
Businesses in the health care area
Even many of the consumer businesses are in the health care area
But, businesses are run autonomously
Hard to figure out what specific resources are shared between businesses
Businesses have own manufacturing and marketing functions
However, several businesses grouped together under a powerful well-known brand.

8. Q2. Weldon’s Challenges Acquisition slowdown
In the past growth through acquisitions
Difficulty in spotting acquisition targets
Competition for acquisitions drives up prices
Drug Business’s difficulties
A number of blockbuster drugs coming off patent; threatened by lower priced generics
Competition from Abbott and Amgen for J&J’s Remicade
Competition for stents from Boston Scientific

9. Q3. Synergy Synergy key motivation for related diversification
Independence of business units makes synergy difficult at J&J
According to Weldon, best growth opportunities would come from increased collaboration between units
Weldon has to balance the need for autonomy with the need for synergy
Creation of groups that draw people from different units
Payoff
Drug-coated stent called Cypher
Liquid Band-Aid
Dandruff shampoo from Nizoral, anti-fungal treatment

10. Q4. Weldon’s Performance
Established clear direction
Saw need for coordination among units and synergy (see previous question)
Moved J&J away from entrepreneurial model of innovation to a corporate innovation model.