Environmental_Factors

Environmental Factors The company chosen for analysis in this paper is Johnson & Johnson (J&J). J&J was founded in 1886 in New Brunswick, New Jersey. Over the years they have grown into a world-wide company with several divisions and thousands of employees. This paper will attempt to analyze how various environmental factors affect global and marketing decisions of this leader in the healthcare industry. Economic interdependence and trade practices Using a decentralize management approach Johnson and Johnson is a conglomerate of more than 250 individual companies. Each company is managed independently but has access to the resources and knowledge of a Fortune 50 company (Johnson & Johnson [J&J], 2010). Many of these companies operate in the global arena. J&J has been part of the global market for many years. As communication becomes more sophisticated and technology improves transportation and services J&J has grown even larger through international agreements in foreign countries. Many companies seek international agreements as a means of expanding the company footprint and increasing potential profits by off shoring some the business segments to third world countries, J&J is no exception. Demographics and Physical Infrastructure Age, gender, income level, race, and ethnicity are the five types of demographics usually associated with marketing. The objective of gathering demographics is to determine the segments of a population and to have a clear picture of the membership of these segments. Once compiled the demographic information is used to develop marketing strategies and plans for the product being researched (“Demographics“, 2010). J&J companies are broad based. This gives them several advantages. Each operating company maintains a local view, regardless of where they are located in the world. This gives the company visibility to changing customer need, changing technologies, and scientific development. This broad view of the healthcare industry gives them the ability to transfer scientific breakthrough and manufacturing expertise to every company within the J&J umbrella. Cultural Differences Because J&J has such a large presence in the global marketplace they continually look for opportunities to identify cultural differences. By openly seeking diversity in their employees, J&J is able to create an atmosphere where cultural differences are readily acknowledged and supported. This means, wherever the customer is located, they have access to the best products and services the company can provide. J&Js decentralized management model means most international subsidiaries are managed by local citizens. Social Responsibility and Ethics vs. Legal Obligations All companies must balance social responsibility and ethics with legal obligations. Social responsibility and ethics do not mean the same thing to every person so there is no specific right and wrong. Legal obligations are considered the minimum standard so this should not be difficult, but managers are faced with difficult choices every day. J& J has specific policies in place that help define ethics as it applies to company employees and helps train them in applying the skills. Ethics and social responsibility is taken seriously at J&J. It has been a part of the company for over 100 years. Robert Wood Johnson, former chairman from 1932 to 1963 and a member of the Company’s founding family, crafted Our Credo himself in 1943, just before Johnson & Johnson became a publicly traded company. This was long before anyone ever heard the term “corporate social responsibility.” Our Credo is more than just a moral compass. We believe it’s a recipe for business success. The fact that Johnson & Johnson is one of only a handful of companies that have flourished through more than a century of change is proof of that.(“Our credo values“, 2010, para. 2) The Foreign Corrupt Practices Act of 1977 was enacted after a Security and Exchange Commission (SCE) investigation revealed several hundred United States companies regularly bribed foreign nationals to gain preferential treatment when doing business in foreign countries. The FCPA was a step toward restoring public confidence in the US business community. The anti-bribery portion of the Act makes it illegal for a U.S. citizen to pay a foreign official with the purpose of either retaining current business or obtaining new business. The act makes it illegal to offer anything of value as a bribe, but does not define any monetary limits. Each case is evaluated on the intent of bribery, not the amount. (“FCPA“, 2010) The FCPA is still alive and well today. In 2007(Hoffman, 2007), J&J reported that two of their foreign companies had made questionable contributions. While they did not disclose the countries involved, the worldwide chairman of medical devices resigned immediately taking full blame for the problem. This was most likely a preemptive move to show the Justice Department and the SEC that J&J takes the FCPA seriously. If found guilty of violating the Act, J&J could have been barred from participating in Medicare programs, programs that provide a significant portion of any healthcare companies revenues. In a company the size of J&J, technology plays a major role. Technology helps streamline and maintain distribution channels, tracks inventory across the globe, but most importantly allows for real time communication of virtually any data captured by the company. This allows the company to track financials, inventory, sales, advertising, human resources, or any other data required by either another unit or a corporate department. Technology has also played an important role in the advancement of the company’s product portfolio. J&J is a leader in disposable contacts, glucose monitors, medical devices for the treatment of vascular disease, and many other medical devices. Many of which are not possible with the use of advanced technology (“Medical devices & diagnostics“, 2010) Environmental factors play a vital role in the development and ongoing business of any company. Business must recognize the various factors and realize their place in company development. As demonstrated at Johnson & Johnson, when these factors are discussed, acknowledged, and steps put in place so they are continually evaluated, the company will reap the benefits of knowing how their business fits in the economy today. The more knowledge a company can obtain about their products, their competition, and the environmental factors that can affect their business the better off the company will be. References Demographics. (2010). Retrieved from http://en.wikipedia.org/wiki/Demographics Foreign corrupt practices act. (2010). Retrieved from http://en.wikipedia.org/wiki/Foreign_Corrupt_Practices_Act Hoffman, E. (2007). Johnson & Johnson discloses serious payment breaches in foreign unit. Retrieved from http://seekingalpha.com/article/26886-johnson-johnson-discloses-serious-payment-breaches-in-foreign-unit Johnson & Johnson. (2010). Our management approach. Retrieved from http://www.jnj.com/connect/about-jnj/management-approach/ Medical devices & diagnostics. (2010). Retrieved from http://www.jnj.com/connect/about-jnj/company-structure/medical-devices/ Our credo values. (2010). Retrieved from http://www.jnj.com/connect/about-jnj/jnj-credo'contentIDR=0180d40047b52dd99e3edf3e4cc71393&useDefaultText=0&useDefaultDesc=0