Tylenol and Duracell Strategic Management

(This case contains some fictional information.)

Management of Johnson & Johnson desperately needs a strategic plan to save its Tylenol business, but first some background. According to Johnson & Johnson,

Johnson & Johnson has been a part of people's lives for 128 years and a valuable part of their investments for approximately 70 years. Founded in 1886, we listed our shares on the New York Stock Exchange for public investors in 1944.

During our history, we have built the most comprehensive base of health care businesses in the world, generating approximately 70 percent of our revenues from No. 1 or No. 2 global leadership positions in our respective markets.

Our consistent performance has enabled us to deliver an exceptional track record of growth that few, if any, companies can claim: 30 consecutive years of adjusted earnings increases; and 52 consecutive years of dividend increases.

In 2013, the company had revenue of $71.3 billion mostly from healthcare, such as skin-care products, nutritional products, over-the-counter and prescription pharmaceuticals, medical devices, and diagnostic tools. Johnson & Johnson products are found in virtually every home, hospital, operating room and doctor’s office in 188 countries worldwide.

In 1955, McNeil Laboratories introduced Tylenol, the first pain reliever without aspirin. The product was so successful regionally that Johnson & Johnson acquired the company in 1959 to expand the business globally.

This morning, Amazon announced the acquisition of a small pharmaceutical company which had secretly developed and patented a pain reviver which is much more effective than Tylenol. Although Tylenol has an excellent reputation, Johnson & Johnson cannot reformulate it. Management needs a new strategy to combat Amazon and save the Tylenol business. Help them by answering the 13 questions starting on the following page.

1. Recommend a vision statement for Johnson & Johnson’s Tylenol business. You do not have to justify it, but you may if you have any doubt about being misunderstood. (5 points)

We see people happy, because pain no longer exists. – Tylenol

We see people happy, because reliable energy is in their hands. – Duracell

2. Recommend a mission statement for Johnson & Johnson’s Tylenol business. (5 points)

Tylenol:

World’s most talented teams of scientists, biologists and chemists work together to provide every family and every individual with the most effective pain reliever. Our state of the art equipment allows us to produce safe and strong medications. We bind ourselves to serve our customers truthfully, treat our teams with respect and commit ourselves to social engagement.

Duracell:

World’s most talented teams of engineers, designers and product managers work together to provide every family and every individual with the most durable and longer lasting batteries. Our state of the art equipment allows us to produce environment-friendly, disposable and exceptionally powerful products. We bind ourselves to serve our customers truthfully, treat our teams with respect and commit ourselves to social engagement.

3. Justify your answer to the previous question. (5 points)

Tylenol:

Our core competencies of scientific proficiency, technological capabilities and best-in-class laboratories allow us to develop new approaches to fight pain and eliminate the causes of pain, which brings us closer to our vision that pain no longer exists. Our operating philosophy is identified in the last sentence of our mission statement.

Duracell:

Our core competencies of scientific proficiency, technological capabilities and best-in-class production plants allow us to build cost-effective, environment-friendly products and extend battery lifespan greatly, which brings us closer to our vision that each person can have a guaranteed longer lasting battery on their hands. Our operating philosophy is identified in the last sentence of our mission statement.

4. Describe two (no more!) important opportunities and two (no more!) important threats facing Johnson & Johnson’s Tylenol business, including the combination of strengths/weaknesses and macro environmental factors creating each. (10 points)

Tylenol:

External Factors:

1- New legislation that forbids to use citric acid as the component of the pain reliever

2- New Social trend – healthy medication/drug-free living

3- Minimum wage drop to $6.50

4- 5 more Advil production plants were built

Strengths:

1- Patent for a new pain relief formula (assets)

2- A lot of cash on hand for development purposes (capital – resources)

Weaknesses:

1- Bad reputation: everyday Tylenol consumption lead to liver failure

2- Weak cultural bonds within the organization

Opportunity 1:

Patent for a new pain relief formula + New Social trend healthy medication/drug-free living = Enhanced Reputation

Opportunity 2:

A lot of cash on hand for development purposes + New legislation that forbids to use citric acid as the component of the pain reliever = High profits from a new product

Threat 1: