Johnson&Johnson Report

Report of the Presentation

Outline

пЃ® History of the Company

пЃ® Credo

пЃ® SWOT Analysis

пЃ® Organization Structure

пЃ® Location of Decision Making

HISTORY

Johnson & Johnson was formed by James Wood Johnson and Edward Mead Johnson in a rented space in New Brunswick, New Jersey in 1886. The Company, which produced antiseptic surgical dressings, included just 14 factory workers at its inception. Later in the year, a third Johnson brother, Robert Wood Johnson, joined the Company. It was Robert, who had heard Sir Joseph Lister's theories of germs, who believed in the need to develop sterile dressings.

On October 28th 1887, Johnson & Johnson was incorporated with an authorized capital stock of $100,000, which was held by Robert (40%) James (30%) and Edward Mead (30%) Johnson. The stock was held by the family until 1944, when it began public trading on the New York Stock Exchange. In 1888, the rapidly expanding company now totaled 125 employees and 35,000 square feet of factory space.

After including talcum powder with some medicinal plasters, Johnson & Johnson entered the field of baby products when mothers had discovered the soothing effects the powder had on their babies in 1990. JOHNSON'SÐ'® Baby Powder was soon sold separately and featured the same distinctive fragrance used today.

In response to the need for quick treatment of life-threatening injuries incurred by railroad workers, Johnson & Johnson developed the original First Aid Kit. The Company also conducted a comprehensive study of first aid methods, resulting in lessons and techniques that are used to this day.

In 1905, Johnson & Johnson made its first acquisition with the purchase of the J. Ellwood Lee Company, a medical products company located in Conshohocken, Pennsylvania. The acquired company continued to operate independently and market products under the J. Ellwood Lee name, thus becoming the first addition to the Johnson & Johnson Family of Companies and the first example of what would become the Company's model of decentralized management.

On February 7th 1910, Robert Wood Johnson, Sr. died suddenly of Bright's Disease, a rare and acute kidney ailment. His brother, James Wood Johnson, succeeded him as President of the Company.

Also during the year, Robert Wood Johnson, Jr., the son of the founder, joined the company after his graduation from high school. Upon joining the company, he dropped the "Junior" from his name, and would later be known as "The General" for his service on the home front during World War II.

Johnson & Johnson began its overseas expansion with the first European operating company, formed in England. During 1924, Johnson & Johnson opened a manufacturing plant near London. Company President Robert Wood Johnson introduced the concept of decentralization and the term "Johnson & Johnson Family of Companies" during an executive meeting. These principles govern the way Johnson & Johnson does business to this day.

Despite the Depression, the Company opened a major manufacturing facility near Chicago, Illinois. This plant was the first major Johnson & Johnson facility in the United States located outside of New Brunswick.

The standard for the current Johnson & Johnson management organization was set with the creation of the Executive Committee in 1954. This move reduced the number of executives involved in decision making, with representatives of all major business segments and other significant areas serving on the Committee. Today, there are nine Committee members, including three women.

With the observation of the 75th anniversary of the company's founding, Johnson & Johnson was truly a worldwide enterprise, with 83 plants and facilities in 30 locations in the United States and 53 in foreign countries in 1953. The rapid growth of sales at Johnson & Johnson reached a significant milestone in 1970 with the company recording more than $1 billion in sales for the year. For the first time, individuals from outside the Company are appointed to the Johnson & Johnson Board of Directors. Also in 1978, Joan Ganz Cooney became the first woman to serve on the Board.

The fall of the Iron Curtain afforded Johnson & Johnson a new opportunity for expansion. During 1990, companies were formed in Hungary, Poland, Yugoslavia and Russia. Recognizing the importance of innovative new products and a robust pipeline, the Company's investment in research and development budget reached nearly $1 billion by 1991.

Company earnings reached $2 billion for the first time. As a result of successful acquisitions and the internal development of innovative pharmaceuticals and medical devices, Johnson & Johnson sales during 1994 were almost equally divided between consumer, professional and pharmaceutical segments. This balance is a clear example of the Company's commitment to remain broadly based and diversified. As expansion into the Asian market continued, a new company was formed in Vietnam. Johnson & Johnson also consolidated its pharmaceutical business in Europe, with the integration of all Janssen and Cilag companies there.

Johnson & Johnson continued its strong growth with sales that exceeded $20 billion in 1996.

Also, a number of reengineering efforts resulted in cumulative cost reductions of more than $1 billion in annual operating costs. Johnson & Johnson was awarded the National Medal of Technology, the United States' highest technology award, recognizing excellence in technological innovation and commercialization.

Total Johnson & Johnson shareholder value passed the $100 billion mark and reached almost $113 billion during 1998. Manufacturing, once done almost exclusively on a local basis, was realigned into a regional configuration, resulting in the closing of a number of plants in locations around the world.

The Company's commitment to developing a diverse and strong portfolio of products was illustrated by the fact that over 70 percent of revenues were from businesses