On March 13. 2019. a California jury awarded S29 million to a woman who claimed that asbestos in Johnson & Johnson’s (J&J) talcum- powder-based products caused her cancer.1 The verdict marked the latest in a series of legal challenges that the world’s largest healthcare company has faced about the quality of its products In addition to having to settle misleading claims about its hip implants. J&J now faces more than 13.000 talc-related lawsuits across the United States—claims that some of its products, such as Johnson’s Baby Powder, contain traces of asbestos that can cause cancer Even though such talc-based products account for a very small share of J&J s overall sales, the firm’s image has long been tied to the purity of these products.
These lawsuits have posed a serious problem for the well-established reputation of J&J that has been developed over many years. With 260 operating companies in virtually every country. J&J has managed to develop under its banner the world’s largest medical device business, an even bigger pharmaceutical business and a consumer products division with a dozen megabrands from Neutrogena to Tylenol. The firm’s reputation has been derived from its diversified businesses that have reflected its wide range of expertise and allowed it to develop a customer base spanning from consumers to hospitals to governments.
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In fact, the financial stability that has resulted from its range of businesses has been J&J’s calling card for decades. Its sales have risen on regular basis, although profits have dipped a bit in recent years (see t3 Exhibit 1 and (§ 2 ). The firm has raised its dividend for well over 50 years and it remains one of only two U S. companies with an AAA credit rating from Standard and Poor’s. ‘ They’re in a great position.” said Kristen Stewart, an analyst at Deutsche Bank. “They have the luxury of time and the ability to look at different opportunities across different business units. That is what a diversified business platform affords them.
Questions
- What corporate strategy does Johnson & Johnson pursue?
- What implications does Johnson & Johnson’s corporate strategy have for its organizational design?
- What is the role of strategic leadership in a company like Johnson & Johnson?
- How can synergy best be managed at a company such as Johnson & Johnson?
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