Introduction :
Johnson & Johnson is a holding company that operates through its subsidiaries in the pharmaceutical, medical devices, and consumer packaged goods industries. It develops and markets a wide range of products in these sectors under various brand names. The company was founded in 1886 and is headquartered in New Brunswick, New Jersey. Let us see about the Pestle analysis of Johnson and Johnson.
Johnson and Johnson Pestle Analysis
In this article, we will be performing a PESTLE analysis on Johnson and Johnson. We will be delving into the Political, Environmental, Social, Technological, Legal, and Ethical aspects that affect the company. This will give us a better understanding of the company’s current position and how it might be affected by changes in these areas in the future.
The company’s key product categories include:
- Baby products
- Wound care
- Woman’s Health
- Over-the-counter drugs
- Orthopaedics
- Vision care
Political Influences on Johnson and Johnson:
The letter “P” in the acronym PESTLE represents the political factors of the company. In the following paragraphs, we will discuss some of the political considerations that Johnson and Johnson must take into account.
- Due to the fact that Johnson and Johnson are present in virtually every nation in some capacity or another, the company is obligated to maintain a close watch on the political climate and government policies of the nations in which it does business.
- In order for a company to function efficiently, there must be political stability and consistent policies implemented by the government. Because of this, Johnson and Johnson pay close attention to the state of politics because the company knows that political unrest will harm its business.
- Since Johnson and Johnson decided to cease all of its activities in Russia, one recent example of political unrest that is affecting the company’s operations is the conflict that has recently broken out between Russia and Ukraine. Due to the political climate in Russia, Johnson and Johnson’s decision to take this action will result in a decrease in revenue, as Russia was a significant market that has been closed off.
- It is also true that no two nations have identical policies. For instance, some nations have policies that are extremely rigid and stringent, which makes it difficult for the company to operate in those nations.
Economic Influences on Johnson & Johnson:
Economic factors hold a great deal of significance because they have an effect on the operations of any company and because businesses are required to function within markets and satisfy the demands of their customers. The company is influenced by the economic factors in its external environment, just like every other company.
- Johnson and Johnson’s choices and how they go about their business would be heavily influenced by a variety of economic considerations. For example, Johnson & Johnson would invest in countries with high-interest rates.
- Similarly, they would be attracted to underdeveloped countries by the availability of inexpensive labor. This would reduce the marginal cost of Johnson & Johnson’s products, resulting in substantial profits.
- Johnson & Johnson is a company that specializes in medical and pharmaceutical products, so it will be relatively unaffected by economic downturns.
- The demand for Johnson & Johnson’s products is resilient through recessions because they are necessities rather than luxuries.
- In addition, the adoption of a single currency by the European Union has made it easier for Johnson & Johnson to conduct business in all 19 countries that make up Europe.
- Aside from that, it’s not in J&J’s best interest to establish operations in countries like Turkey, where the inflation rate is exceptionally high because doing so would mean raising the prices of J&J’s products as well. If this happens, consumers might decide to look elsewhere, thereby reducing the company’s sales.
Social Influences on Johnson & Johnson:
The business practices of Johnson and Johnson are significantly impacted by social factors. Given the diversity of the brand’s product offerings, each market’s specific demographics must be considered when determining which products will be promoted there.
- For instance, Niger has the youngest population, with the highest proportion of people under the age of 15. This indicates that a large number of toddlers would also be present. When operating in such a market, Johnson & Johnson is in a position to market its baby products to derive the greatest possible benefits.
- In addition, nations like Luxembourg that have a culture of saving may not generate a lot of revenue for Johnson and Johnson because people in those nations would rather save their money than spend it on products manufactured by Johnson and Johnson.
- Johnson & Johnson may see less demand for its women’s beauty products in countries with strict religious beliefs, such as those in which women are not permitted to leave the house without a veil.
Technological Influences on Johnson & Johnson:
Numerous business strategies regard social media as a crucial component. Social media marketing presents opportunities for Johnson & Johnson to improve business performance.
- By providing its customers with the option to shop online from Johnson and Johnson’s online store, the company can make effective use of technology and better serve its customers. Consequently, Johnson & Johnson’s market share will grow, and the company’s bottom line will benefit.
- In every industry, the introduction of 5G is expected to be a significant game-changer. Utilizing 5G technology, Johnson & Johnson can gain a competitive advantage over its rivals. Faster operations and greater market penetration are additional benefits to Johnson & Johnson’s lightning-fast response times.
- People expect Johnson and Johnson to be technologically advanced so that it can meet their needs as effectively as possible, given that it is involved in healthcare and medicine
- In addition to this, Johnson and Johnson has the goal of increasing its market share, which is the primary motivation for the company’s significant investment in research and development activities. With an investment of $82.6 billion in research and development in 2020, Johnson & Johnson aimed to stay technologically ahead of rivals. The recent development of the Johnson and Johnson COVID-19 vaccine is a result of such intensive research and development.
Legal Influences on Johnson & Johnson:
The legal factors that affect the operations of a company are examined in greater detail in the fifth factor of the PESTLE analysis. It is imperative for a multinational corporation such as Johnson and Johnson to comply with the local legal requirements of each country in which it conducts business.
- Even the smallest amount of carelessness can lead to bans and significant penalties, both of which would be detrimental to the company’s finances as well as its reputation.
- The company must prevent legal action. For instance, many nations have strict guidelines to protect factory workers’ health and safety, and Johnson and Johnson must determine if its manufacturing facilities comply.
- Discrimination lawsuits against employers hurt the company’s image, making it harder to hire and retain top talent. A former Johnson and Johnson employee claims he was fired due to his age and disability. Illegal practices naturally cause controversies, which lower sales. The company’s reputation suffers.
- Johnson and Johnson should comply with the data protection regulation to protect customer privacy and safety. Laws protect consumers from deceptive advertising, unreasonable price increases, and minimum quality standards.
- Johnson and Johnson must consider these factors to comply with consumer protection laws. To protect its patents and other valuable ideas, Johnson & Johnson has strict intellectual property policies. Patent-related intellectual property legal documents form the basis for competitive business development policies.
Environmental Influences on Johnson & Johnson:
The rising worry over global climatic changes, rising pollution, and its effect on human health has also increased the significance of environmental analysis, which has had repercussions on Johnson & Johnson. Today, companies must consider both economic and environmental factors when studying new markets.
Before making decisions, businesses must consider environmental standards. Johnson and Johnson must be mindful of its operating environment as it expands across regions.
- Renewable technologies have gained popularity. Consumers prefer renewable technology companies, and some countries offer subsidies to attract investors.
- Renewable subsidies benefit Johnson & Johnson. Thus, it can invest in renewables. This investment improves the brand image, stakeholder satisfaction, and long-term sustainability.
- Resource depletion laws vary by country. To avoid negative publicity, Johnson and Johnson should study each government’s resource depletion policies.
- Johnson and Johnson’s excessive resource use may anger environmentalists, customers, and the public, hurting the company financially and reputationally.
Conclusion:
This brings us to the end of our discussion of the PESTEL model, an effective tool for analyzing macro-environmental factors that affect a company’s operations. Strategic decisions made by corporations such as Johnson & Johnson are influenced by a variety of variables, ranging from political to environmental.
FAQ:
- What is the pestle analysis for Johnson and Johnson?
Ans: The pestle analysis for Johnson and Johnson is a comprehensive evaluation of the company’s business and operating environment.
- What factors does a PESTLE analysis take into account?
Ans: The factors that a PESTLE analysis takes into account include political, economic, social, technological, legal, and environmental factors.
- How can a PESTLE analysis be used to assess a business?
Ans: A PESTLE analysis can be used to assess a business’s strengths and weaknesses concerning external factors. This can help businesses to identify opportunities and threats and make strategic decisions about where to allocate resources.
- Who are the stakeholders of Johnson & Johnson?
Ans: The Johnson and Johnson company is a publicly traded company with shareholders who are the primary stakeholders. Some stakeholders are invested in the company, such as employees, customers, and suppliers.
