Have you guys ever wondered how almost all the babies smell the same? No, there’s nothing supernatural going on. That’s not how babies smell naturally. But, in fact, that’s how Johnson’s baby powder smells.
Johnson and Johnson’s baby products are very popular among mothers. It’s very surprising to see how everything has changed except the mother’s choice when it comes to baby products over the decades.
Although Johnson and Johnson have become a household name due to their baby products, however, that’s not what they only produce. There is a wide variety of products that Johnson and Johnson produce under different brand names, including medicines, band-Aids, baby products, skincare products, contact lenses, etc.
Johnson and Johnson’s history tells a lot about the company. Over the span of 136 years, the way this company has managed to expand and remain relevant is simply remarkable.
Since Johnson and Johnson were recently listed in the Fortune 500 list of the topmost significant companies in the US in terms of revenue, we decided to conduct a Johnson and Johnson PESTLE Analysis. This PESTLE analysis will help us identify some of the external factors that impact Johnson and Johnson.
Before we move ahead with the PESTLE analysis, let’s get to know Johnson and Johnson in detail first.
Johnson and Johnson were founded by three brothers in 1886. Initially, it was a private limited company, but then in 1944, it became a public limited company. After that, it acquired several companies such as McNeil Laboratories and Janssen Pharmaceutica to introduce new products and expand its operations.
Johnson and Johnson are considered among the US’s top companies in terms of revenue. In 2021, it managed to generate revenue of $93.8 billion. Moreover, it has successfully spread its operations in more than 60 countries while shipping its products to 175 countries.
A company that was started by a few men now provides employment to more than 134,500 employees across the globe.
Conducting a PESTLE analysis of Johnson and Johnson will help us analyze how the macroeconomic factors impact the company. However, before proceeding further, let us tell you what PESTLE analysis is.
The word “PESTLE” represents Political, Economic, Social, Technological, Legal, and Environmental factors affecting a company. This tool helps businesses formulate strategies to counter the external factors affecting them.
The letter P in the acronym PESTLE represents the company’s political factors. This section will discuss some of the political factors affecting Johnson and Johnson.
Since Johnson and Johnson operate in almost every country in different capacities, it has to keep a close eye on the government policies and political scenarios of the countries it operates.
Any business requires Political stability and non-fluctuating government policies to run smoothly. Therefore, Johnson and Johnson monitor political stability very carefully since Political instability will adversely affect its operations.
The recent conflict between Russia and Ukraine is an example of political unrest affecting the operations of Johnson and Johnson since the company decided to suspend its operations in Russia.
This action of Johnson and Johnson will result in a revenue fall since Russia was a big market that has been closed down due to political reasons.
Similarly, the policies of each country differ from the other. For example, some countries have very rigid and strict policies that make it difficult for the company to operate.
Recently, Slovenia banned Johnson and Johnson’s COVID-19 vaccine since a woman died after receiving Johnson and Johnson COVID-19 vaccine.
Such bans would not only damage Johnson and Johnson financially but also damage the reputation of Johnson and Johnson across the globe.
Since companies have to operate in markets and meet the demand of their consumers, economic factors hold great significance since they impact the operations of any company.
Like any other company, Johnson and Johnson is also influenced by the economic factors in its external environment.
Several economic factors would influence the decisions and operations of Johnson and Johnson. For instance, countries offering high-interest rates would attract Johnson and Johnson to invest in those countries.
Similarly, cheap labor would be a source of attraction for Johnson and Johnson to operate in underdeveloped countries. This would decrease the marginal cost of Johnson and Johnson’s products, leading to high profits.
Moreover, unlike most businesses, recessions won’t impact Johnson and Johnson much since the company mainly offers products related to the field of medical and pharmaceuticals.
Since Johnson and Johnson offers products that are a necessity, not a luxury, demand for its products won’t decline much during depressions.
Moreover, the European Union’s single currency helps Johnson and Johnson to operate in all the 19 countries of Europe freely.
Other than that, operations in countries with high inflation, such as Turkey, will not be much beneficial for Johnson and Johnson since high inflation will increase the price of its products too; this can cause people to switch to other alternatives causing Johnson and Johnson’s demand to fall.
Culture and norms vary from country to country. For any multinational company, it is essential to understand the culture and norms of the country where it is operating, or else it could face serious consequences.
Social factors highly influence the operations of Johnson and Johnson. Since the brand offers different types of products, it has to look at the demographics of every market to decide what kinds of products to market to generate maximum revenue for the company.
For example, Niger has the highest population under the age of 15. This means a large population of toddlers would also be present. In such a market, Johnson and Johnson can market its baby products to maximize benefits.
Moreover, countries with a saving culture like Luxembourg may not generate high revenue for Johnson and Johnson since people would rather save instead of buying products from Johnson and Johnson.
Other than that, countries with religiously strict beliefs, where women are not allowed to leave their homes without a veil, would have less demand for women’s beauty-related products of Johnson and Johnson.
The technological factors mentioned in this section can influence the business performance of Johnson Johnson. The new technologies and innovations are increasing the efficiency of healthcare products and reducing their prices.
Social media is considered a significant part of many business strategies. Johnson and Johnson can leverage the opportunities offered by social media marketing to improve business performance.
Johnson and Johnson can make full use of technology by facilitating its customers by allowing them to shop online from its online store. This will increase Johnson and Johnson’s market share and help it generate more revenue.
The arrival of 5G is considered a game-changer in every market. Johnson and Johnson can make the most of the 5G technology to gain a competitive advantage over its competitors. In addition, Johnson and Johnson can use its speed to speed up its own operations and gain maximum market share.
Since Johnson and Johnson operate in healthcare and medicine, people expect it to be technologically advanced so that it can meet their needs in the best way possible. Other than that, Johnson and Johnson also wants to gain a competitive edge; that’s why it spends a lot of money on R&D.
In 2020, Johnson and Johnson spent $82.6 billion on R&D so that it could be technologically ahead of its competitors. A result of such intensive R&D can be witnessed in the form of the Johnson and Johnson COVID-19 vaccine, which came into being recently.
The fifth factor of PESTLE analysis highlights the legal factors that affect a company’s operations. A multinational company like Johnson and Johnson should abide by the laws of the markets where it operates.
Minor negligence can result in bans and heavy penalties that would damage the company financially and reputation-wise.
Johnson and Johnson have to ensure that they are not liable for any lawsuit. For example, many countries have strict regulations for the health and safety of workers in factory settings; it is the responsibility of Johnson and Johnson to check if its factories adhere to these guidelines.
Similarly, anti-discrimination laws also need to be carefully studied when developing human resource practices since discriminatory suits against employers harm the organizational image and affect the organization’s ability to attract and retain talent.
Recently, a worker of Johnson and Johnson accused the company of firing him based on his age and disability. Naturally, such unlawful practices create controversies that lead to a fall in sales. As a result, the company earns a bad name for itself.
Johnson and Johnson also need to consider the data protection regulation to protect customers’ privacy and security. Moreover, there are laws to set maximum prices, ensure certain quality standards and protect consumers from fraudulent marketing claims.
Johnson and Johnson must consider these factors to comply with consumer protection laws.
Furthermore, to protect the company’s patents and other valuable ideas, Johnson and Johnson has developed strict policies regarding the usage of intellectual property rights.
These Intellectual property legal documents associated with patents provide the framework for business development policies that can be identified as a source of competitive advantage.
The growing concern over global climatic changes, increasing pollution, and its effect on human health has also increased environmental analysis’s importance. These days, it is not enough for companies to consider only economic factors while studying new markets; they must also consider environmental factors.
Businesses must also take into account environmental standards before making any decisions. For example, since Johnson and Johnson is expanding its business across various regions, it needs to be careful about the environment in which it operates.
Over time, the world has shown interest in renewable technologies. Consumers consider companies using renewable technologies are deemed to be preferred by the consumers; some countries even offer subsidies to attract investors to invest in renewable technologies.
Johnson and Johnson can benefit from renewable subsidies. As a result, it will be able to invest in renewable technologies. This investment is beneficial because it ensures long-term sustainability, increases stakeholder satisfaction, and expands the customer base through enhanced brand image.
Moreover, different countries have different levels of strictness regarding the issue of resource depletion. Therefore, Johnson and Johnson should study the policies of each government on resource depletion so that it can stay away from the bad publicity.
Johnson and Johnson’s excessive use of resources can draw a negative response from several groups, such as environmental protection groups, customers, and the general public, which would hurt the company financially and reputation.
After this article, let’s summarise whatever we discussed throughout. So basically, we started off our discussion by sharing the history of Johnson and Johnson with you guys.
Then we shed some light on its current status; we got to know that Johnson and Johnson has now been considered one of the biggest companies in the US in terms of revenue.
Then we proceeded further to the PESTLE analysis of Johnson and Johnson to investigate how the external factors such as political, economic, social, technological, legal and environmental factors impact Johnson and Johnson.
PESTLE analysis is considered an important tool to analyze the external factors influencing a company. PESTLE analysis framework provides an unlimited opportunity to investigate each external factor in detail to make counter strategies timely.
Although this PESTLE analysis investigated external factors affecting Johnson and Johnson, if you are curious about both internal and external factors impacting Johnson and Johnson, then look at Johnson and Johnson SWOT analysis.
We assume that if you have reached this far reading this article, you must have really enjoyed it. If you’re interested in knowing more about PESTLE analysis, go through some of PESTLE analysis examples.