State the problems or opportunities
There are several problems that are besotting this giant health care company. For one thing, it needs to get FDA clearances quickly for its new drug lines, especially stents, so that competitors don’t go ahead. Secondly, it’s high growth rates, earnings and profits needs to be sustained in future years, and even improved in order to stay ahead of the competition. Thirdly, for a company of its size, it needs to ensure before hand, that its acquisition sprees would be profitable cost benefit wise and add value to the organization. Finally, and most crucially, the pace of scientific and medical technological innovation in the health care industry in the United States is growing at a furious pace and J &J needs to keep pace with it, or get overtaken by its competitors.
List the alternatives
The alternatives that are available are that J& J makes different combines of drug groups and stents so that at least one of two of them could be rendered competitive, thus reducing long and arduous R & D costs. Besides, pricing of drugs and innovative products must be reasonably and in line with prices put forth by their competitors. This would not only have a stabilizing and restraining effect on markets but also avoid price wars and product conflicts in the market place. Perhaps J&J could take pride in the quality and performance of all its product groups and they need to capitalize on their strengths and opportunities in a quiet and dignified way and not cry themselves hoarse in the market place. What J&J are fundamentally keen about is maintaining and increasing their bottom line and for this purpose it needs to undertake useful strategies that could well serve these ends. High profile advertising could only due harm than good and could even erode the creditability that has been garnered over so many years of useful corporate performance by this company. Whatever J&J does today, its competitors does tomorrow- so this company should know the implications and actions of each of its plans and strategies in the market place.
Coming to acquisitions and takeovers, it is important that J&J are able to invest judiciously, especially in lines akin to their own. For this, it is necessary that cost benefits from new product investments and takeover are seen, not in the light of present circumstances but from the perspectives of the long term future of both parties.
Analyze the alternatives
J&J high investment profile in research and development costs, high costs of acquisition and decisions whither this could be profitable and sustainable in the long run are all matters that need to be viewed and analyzed in its right perspective. Besides, the long-term costs of such acquisitions also need to be viewed, not only from a purely economic point of view but how such acquisitions could help its diversification plans and add value to products and services. Being essentially a health care industry, it needs to seek out the preservation of public health as its predominant goal and objective in this industry. Besides the powers and potency of its rivals and competitors also needs to be sought, especially new entrants with newer, more competent technology than before. J& J’s high growth plans and diversifications should be underpinned by robust and judicious planning.
Reach a solution or recommendation
Perhaps J&J should take a leaf from the book of its immediate competitors, especially larger ones that could be a threat to its expansion and diversification programs. It needs to work in sync with its own plans and objectives and needs also to view the larger context of its orientation towards public health and healthy competitive spirit in all its endeavors.