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Johnson & Johnson Value Chain Analysis Summary

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Johnson & Johnson currently has a 10.4% market share of the Pharmaceutical Manufacturing industry. They have the second largest share of this industry, just behind Amgen at 10.9%. By looking at the revenue and operating income for Johnson & Johnson, we can see their margins and evaluate their performance. Johnson & Johnson’s operating profit margin improved from 2015 to 2016 but decreased significantly from 2016 to 2017. The operating profit margin for the company as a whole in 2016 was 28.72% and in 2017 it was 24.07% (Appendix A). This means from 2016 to 2017, there was a decrease in profit. This is common in companies in their mature stage, which Johnson & Johnson is. Value Chain Value chain analysis is a tool used for the examination of the strategically relevant activities of a business in order to understand the behavior of costs and the potential sources of differentiation. Johnson & Johnson takes every opportunity to maximize the positive impacts and minimize the risks along its value chain. Research and development is a very important part of their value chain. It is linked throughout almost every aspect of their priority topics including product quality, reliability, and safety, access and affordability, and all the way to their product end of life. Research and development at Johnson & Johnson is used to create new products and figure out ways to improve their old products. Since there are many illnesses that do not have a cure, Johnson & Johnson invests in
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