PROJECT REPORT ON GLOBAL BUSINESS MANAGEMENT

SUBMITTED TO: Prof. AMIT KUMAR

SUBMITTED BY: ASHISH KUMAR CHAKSHU GOEL NOORBIR SINGH RANJIT SINGH

JOHNSON & JOHNSON

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INTRODUCTION Operating in over 50 countries with more than 1 Lakh people, Johnson & Johnson USA has been ranked 4 times in the Fortune Top 10 list of the most admired companies in the US. Johnson & Johnson (J&J) India, a subsidiary of Johnson & Johnson USA, is one of the leading players in Indian pharmaceutical and consumer products business. It has employee strength of over 1,800. It started business in India in 1947 in Bombay with Johnsons Baby Powder, and, over time, introduced other products like toothbrushes, Johnsons Baby Cream and Prickly Heat Powder. BRIEF HISTORY: Global Manufacturer of Pharmaceuticals, Consumer Products and Medical Devices. Listed in Fortune 500 Companies & 1st in 50 top Pharma Companies. 250 subsidiary companies with operations in over 60 countries. Well-known consumer products are the BAND-AID Brand line of bandages, Tylenol Medications , JOHNSON'S BABY Products Produced its first products in 1886 ROBERT WOOD JOHNSON served as the first President of the company.

J&J IN INDIA Spread its roots in India during 1947. It was Mr. Patrick Whaley who set the foundation. Launched Johnsons Baby cream and Prickly Powder. Product like bellodomma, pharmaceutical tapes were imported from the parent company. In Sep. 1957, a new company Johnson & Johnson India Ltd. was created and registered. Recently this company celebrated its 53 years in India.

GROWTH Income Growth Revenue Growth Year 2010 2009 2008 Net Income $13.334 billion $12.266 billion $12.949 billion Year 2010 2009 2008 Revenue $61.587 billion $61.897 billion $63.747 billion

Earnings for the first quarter rose 28.6% to $4.5 billion, or $1.62 per share, from the $3.5 billion, or $1.26 per share, reported in the corresponding period a year ago. Sales were up just 4% to $15.6 billion, from $15 billion. Johnson & Johnson highlighted a number of skin care products, along with an over-thecounter allergy treatment, womens sanitary products and international sales of Listerine, as contributors to the quarter's operational results. Internationally, sales grew 14.3% to $8.0 billion, from $7.0 billion, while Johnson & Johnson saw its U.S. businesses contract
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4.9% to $7.7 billion, from $8.1 billion. In fact, each region outside of the U.S. experienced double-digit sales growth.

COMPETITOR: JNJ operates in three divisions: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. Market cap is $182.61 billion. Current dividend yield is 3.42%. EPS is expected to increase by 6.48%, and analysts estimate a 5-year EPS growth of 6.24%, while the past five-year EPS growth rate has been 7.35%. Trailing P/E ratio is 15.11, and forward P/E falls to 12.67. Johnson & Johnson has a low beta value of 0.61. Insiders own 0.03% of the company, and they increased their holdings by 15.44% in the last six months. On April 29, UBS upgraded Johnson & Johnson with a target price of $72. Pfizer Inc. is a research-based, global biopharmaceutical company that provides prescription medicines for humans and other livings worldwide. Market cap is $165.29 billion. The trailing P/E ratio is 19.92, and a forward P/E is 9.22. Similar to Johnson and Johnson, Pfizer has a low beta value of 0.71. The current dividend yield is 3.82%. The past five-year EPS growth rate has been -0.04%, both analysts estimate an annualized EPS growth of 2.84% for the next five-year period. Net profit margins stand at 12.56%, and ROE is 9.41%. In the last quarter, sales decreased by -0.45%, but EPS increased by 11.23%. Insiders own 0.06% of the company, and they increased their holdings by 12.05% in the last six months. At first glance, you might think that Pfizer at $19 with its 6.5% dividend yield is a better buy than J&J at $70, not far from its 52-week high, and much smaller yield of 2.6%. Based on these factors, its Pfizer thats the more expensive stock. When it comes to patent expirations. JNJ will lose $3.8 billion worth of income to drugs going off patent, while Pfizer loses $6.6 billion. Score, 5-3, JNJ. Next well look at pipeline. Pfizer expects to start 15 to 20 phase III tials between 2008 and 2009, with between 24 and 48 programs in Phase III by the end of 2009. And between 2010 and 2012, Pfizer expects to have between 15 to 20 submissions to the Food and Drug Administration. Thats a much bigger pipeline than JNJ has, which is an expected seven to 10 drugs for approval between 2008 and 2010. Score: 5-4, JNJ. JNJ trade at 15 times next years estimates versus Pfizers 7.7 times.

THE MAIN ROUTES OF GLOBALIZATION FOLLOWED ARE: DIRECT INVESTMENT MERGERS & ACQUISITIONS: (Discussed in FDI History) JOINT VENTURES: Johnson & Johnson to Acquire Merck & Co., Inc.'s Interest in European Consumer Pharmaceuticals Joint Venture
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Johnson & Johnson and Merck Create New Joint Venture in Canada to Market OTC Pharmaceuticals. Bayer enters joint venture with Johnson & Johnson to develop thrombosis drug: TTMT, WLP, CAH, BAY, JNJ. Building a presence in Japan, Johnson & Johnson has acquired a majority stake in a joint venture with the Kyowa Hakko Kogyo Company, the ninth-largest Japanese drug company.

SUBSIDIARIES: Principal Subsidiaries 250 subsidiary companies with operations in over 60 countries ALZA Corporation; BabyCenter, L.L.C.; Biosense Webster, Inc.; Centocor, Inc.; Codman & Shurtleff, Inc.; Cordis Corporation; DePuy, Inc.; Ethicon EndoSurgery, Inc.; Ethicon, Inc.; Independence Technology, L.L.C.; Janssen Pharmaceutica Products, L.P.; Johnson & Johnson Consumer Products Company; Johnson & Johnson Development Corporation; Johnson & Johnson Gateway, LLC; Johnson & Johnson Health Care Systems Inc.; Johnson & Johnson - Merck Consumer Pharmaceuticals Co. (50%); Johnson & Johnson Pediatric Institute, L.L.C.; Johnson & Johnson Pharmaceutical Research & Development, L.L.C.; Johnson & Johnson Sales and Logistics Company.

For Johnson & Johnson, this also means a special focus on high-growth emerging markets such as the BRIC countries.

FDI HISTORY J&J purchased Synthes for 19 billion Swiss francs ($21.6 billion). Johnson & Johnson paid about $2.37 billion to acquire the Leiden-based company, and expects to retain Crucells management, staff and headquarters. Johnson & Johnson (China) Investment Co Ltd. announced that it has acquired Beijing Dabao Cosmetics Co Ltd. from Beijing on JULY 30, 2008. Johnson & Johnson purchased DePuy Inc a successful maker of orthopedic devices, for $3.5 billion in cash. In 1959, Johnson & Johnson acquired McNeil Laboratories. On 24 October 1961, Janssen Pharmaceutica was acquired by Johnson & Johnson In 1994 Johnson & Johnson acquired Neutrogena for $924 million. The Cordis Corporation was acquired by Johnson & Johnson for $1.8 billion. Johnson & Johnson has agreed to buy the rest of Crucell for $2.4 billion.

RECENT TRENDS, PROJECTS AND ASSIGNMENTS 1. TIGHTENING FDA REGULATIONS

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On May 19, 2010, the FDA announced 21 proposals aimed at increasing transparency to the public regarding regulatory information. Such information will increase the amount of information accessible to the public with regard to companies pipeline drugs and manufacturing facilities that might otherwise not have been disclosed. The tightened regulations and increased transparency will eventually improve the overall quality of pharmaceutical products. 2. PRODUCT DEVELOPMENT In 2010, Johnson & Johnson spent a total of $6.84 billion in research and development, 11.1 % of total sales, in its three business segments. New products introduced in the last five years accounted for over 30% of sales. The company currently holds almost 54,000 patents domestically and internationally. 3. GENERIC DRUGS Due to Food and Drug Administration (FDA) regulations, pharmaceutical patents last 17 years, during which a pharmaceutical company has an exclusive right to manufacture a particular drug. After the patent expires, generic versions of the product can be produced and sold by competitors. Generic medication is cheaper than brand medication, and the lower cost is often a strong incentive for consumers to choose generic over brands. In addition, the presence of a generic alternative may prompt a decrease in the brand name medication price. 4. LITIGATION Companies in the health care industry face significant liabilities if a product is later found to be defective or produce adverse reactions. All three segment's of Johnson & Johnson's business face the risk of litigation. As of the end of 2006, Johnson & Johnson faces 1,500 such lawsuits against its products. Notably, there are 700 claimants for the antipsychotic drug Risperdal, which is also the company's bestselling drug. 5. HEALTH INSURANCE Insurance programs are more likely tocover essential expenses, such as heart disease medication, and less likely to cover nonessential expenses, such as cosmetic surgery. Johnson & Johnson's Procrit is often used by chemotherapy patients and Risperdal is often prescribed to the elderly. These prescriptions are covered by Medicare, which helps to increase sales. 6. CONSUMER HEALTH In 2006, 53% of adults used the internet to find health information. This trend for increased consumer awareness affects Johnson & Johnson's consumer health and pharmaceutical segments, as products are now targeted more towards the consumer. POLITICAL & LEGAL ISSUES: Shareholders have filed lawsuits against pharmaceutical giant Johnson & Johnson over charges of fraud, production defects, drug recalls, and poor marketing practices.. Stockholders have also charged J&J with ignoring warning signs and government investigations concerning production defects and poor marketing practices.
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In March 2011, Johnson & Johnson signed a consent decree with the U.S. government which requires the company to correct manufacturing-quality problems at three plants operated by McNeil Consumer Healthcare. In April 2011, J&J agreed to pay nearly $80 million in settlements for U.S. and U.K. lawsuits alleging that the company paid bribes to doctors in three European countries, as well as kickbacks to a pharmacy company that caters to nursing home patients, in order to get the company to buy J&J drugs. Last year, J&J agreed to pay more than $81 million to resolve a U.S. investigation of its illegal promotion of antiepileptic drug Topamax for unapproved uses.. Since September 2009, J&J has recalled more than twenty-five types of pharmaceutical drugs due to issues like contamination and incorrect labeling Among the issues at the plant were substandard drugs, failure to detect incorrect expiration dates on labels, failure to pinpoint product detects during routine testing, failure to adhere to laboratory controls, and insufficient training of laboratory staff. The lawsuits filed against Johnson & Johnson by shareholders claim that some of the company's current and former managers and directors breached their fiduciary duty by allowing numerous product recalls, kickback charges, and other instances of alleged wrongdoing to take place.

CROSS CULTURAL ETHNOCENTRISM Ethnocentrism is the belief that one's own cultural group is somehow innately superior to others. Difficulties due to a misunderstanding of elements in cross-cultural communication may affect even enlightened people. COMMUNICATION By assessing in advance the roles these variables play in business communication, one can improve one's ability to convey those messages effectively to an audience from a different culture. LANGUAGE Among the most often cited barriers to conflict-free cross-cultural business communication is the use of different languages. Difficulties with language fall basically into three categories: (1)gross translation problems, (2)the problems in conveying subtle distinctions from language to language & (3) culturally-based variations among speakers of the same language. ENVIRONMENT AND TECHNOLOGY Most people are accustomed to ways of looking at the environment and the use of technology particular to their own culture. Generally, cultures may be divided into three approaches toward technology: (1) control; (2) subjugation, and (3) harmonization. Five major areas of attitudes toward a nation's physical characteristics and natural resources are likely to result in cultural
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environmental presuppositions. These are: climate, topography, population, size, population, density, the relative availability of natural resources. SOCIAL ORGANIZATION Social organization, as it affects the workplace, is often culturally determined. One must take care not to assume that the view held in one's own culture is universal on such issues reflecting the culture's social organization as nepotism and kinship ties etc. CONTEXTING AND FACE-SAVING Communication depends on the context in which the communication is set. The more information sender and receiver share in common, the higher the context of the communication and the less necessary to communicate through words or gestures. Communication, then, can be seen as being high or low in contexting. AUTHORITY CONCEPTION Different cultures often view the distribution of authority in their society differently. The view of authority in a given society affects communication in the business environment significantly as it shapes the view of how a message will be received based on the relative status or rank of the message's sender to its receiver NONVERBAL BEHAVIOR Among the most markedly varying dimensions of intercultural communication is nonverbal behavior. Much of nonverbal communication may be broken down into six areas: dress; kinesics, or body language; oculesics, or eye contact; haptics, or touching behavior; proxemics, or the use of body space; and paralanguage. Any one of these areas communicates significant information nonverbally in any given culture. TEMPORAL CONCEPTION International business communication is also affected by cross-cultural differences in temporal conception or the understanding of time. The influence of temporal conception on communication is extensive PRODUCT

(1)BABY CARE (4) VISION CARE

(2) SKIN & HAIR (5) NUTRITIONALS

(3) ORAL HEALTH CARE (6) WOMEN'S HEALTH

(7) OVER-THE-COUNTER MEDICINES PRODUCT STRATEGIES: MANAGEMENT APPROACH Johnson and Johnson's decentralized management approach as explained on Johnson and Johnson's. Basic international strategies can be generally divided into two
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categories: Global and Multi-domestic. The global strategy operates by leveraging things like efficiency, scale economy and portability to offer products and services that appeal to elastic customers Johnson and Johnson is a massive corporation, but it operates very differently under a multi-domestic strategy. Johnson and Johnson produce hundreds of different products in many different areas, and operates through over 250 semi-autonomous subsidiaries. It focuses on value based products through these subsidiaries to reach inelastic customers. This strategy takes the principles of differentiation to an international level. SUCCESSFULLY EXECUTE PRODUCT LAUNCHES Expect to launch significant new products over 18 months Address unmet medical need & Differentiation required Early and diverse stakeholder input Patients & Physicians and providers Regulators and payors & Commercial execution

JOHNSON AND JOHNSON MARKETING MIX. PRODUCT Johnson and Johnson products are basically in Three main categories: Pharmaceuticals, Medical Devices & Diagnostics, and Consumer Health care. The following are examples of the Johnson & Johnson Product Inventory: Feminine hygiene, Denture care, Contraceptives, Immunology, First aid, Family planning, Oncology, Nutritionals, Diabetes care, Neurology, Vision care, Allergy cold and flu treatment, Womens Health, Medical devices and diagnostics. PRICE.

Johnson and Johnson works with governments to develop differential pricing approaches to help more people access their medical products. Johnson & Johnson companies have agreements with the United Kingdom for VELCADE (bortezomib), a treatment for multiple myeloma, and with France for RISPERDAL CONSTA (risperidone long-acting injection) a medication for the symptoms of schizophrenia. Companies and government agencies are also entering other types of risk-sharing agreements in order to help people gain access to new therapies sooner. The following are examples of Johnson and Johnson consumer product prices: Bengay Pain Relief $12.99, (at Amazon), Listerine Oral Care $7.49 (Next Tag), Splenda Sweetener $7 (Drusstore.com).Tylenol Rapid Release $12.95 ( Allegro Medical.com ). PLACE

These are some companies that sell Johnson and Johnson products wholesale: Over the Counter Wholesale.com, WUZ Group, ShopatHome.com

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Johnson and Johnson products can be found at the following retail outlets: Target, Walgreens, WalMart, Vons and Eversave, to name but a few. PROMOTION

Johnson and Johnson offers special discount coupons on products such as baby care, and contact lens. Johnson and Johnson has run a Beauty for All Ages rebate promotion on Coupons.com and some of the campaign products are available at Walgreens and may also include buy one get one half off discount as well. Johnson & Johnson is involved with many causes and advertising campaigns that encourage healthy lifestyles. Key initiatives include: The Campaign for Nursing's Future, Having a Baby Changes Things, and Because We Care We Act (China). PROCESS

Johnson and Johnson employs what they call a Decentralized Management Approach. Employees are encouraged to be Entrepreneurial with the understanding that they will benefit from focusing on customer needs and providing solutions. Johnson and Johnson seeks to turn insights into innovative new products and sometimes whole new businesses. Their goal is to capitalize on scientific breakthroughs, marketing insights and manufacturing expertise easily across the full range their businesses. With more than 250
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operating companies have a local window into emerging customer needs, scientific developments, and technologies throughout the world.

The Executive Committee of Johnson & Johnson is the principal management group responsible for the operations and allocation of the resources of the Company. This Committee oversees and coordinates the activities of the Consumer, Pharmaceuticals and Medical Devices and Diagnostics business segments. Each subsidiary within the business segments is, with some exceptions, managed by citizens of the country where it is locate BENEFITS/MOTIVES:

Exemption from local corporate taxation and stamp duty, providing the company does not engage in local business BVI IBC's have no tax liabilities. The tax rate is zero percent Payment of capital gains taxes, inheritance taxes and death duties are not applicable on IBC's registered in the BVI All dividends, interests, royalties, rents, compensations and other amounts are exempted from the payment of income tax in the BVI There is no compulsion for an IBC to hold Annual General Meetings (AGMs) Board meetings can be held anywhere in the world including the BVI Physical presence of attendees is not a requirement in company IBC's are not required to file annual returns IBC's are not required to prepare (or submit) company accounts to any authority Offshore company accounts need not be audited by internal or external auditors Books and records of IBC's can be maintained anywhere in the world Share books or company meeting minutes need not be certified by any authority There is no requirement for having a minimum or maximum share capital The share capital of an IBC need not be disclosed There are no issued share capital requirements for IBC's Multiple classes of shares can be issued by an IBC An IBC can issue shares with or without a par value Shares can be denominated in any currency, not necessarily only in the USD Shares may be denominated in more than one currency No foreign exchange controls funds that can be moved freely in and out of BVI Faster growth , Cheaper imports ,New technologies: Spur of foreign competition, Increase consumer income: Increased investment opportunities , Enhances the domestic competitiveness Enhance potential for expansion of your business Extend sales potential of the existing products Maintain cost competitiveness in your domestic market , Gains a global market share Reduce dependence on existing markets

FUTURE INITIATIVE

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Company's commitment to help address global health needs with goals ranging from targeting affordable access to HIV and TB therapies for populations in some of the leastdeveloped countries of the world. Aggressive absolute reduction targets of CO2 emissions, water usage and waste disposal are supplemented by product stewardship goals that will help the company strive to introduce at least 60 products that meet the company's rigorous sustainability innovation .

The seven strategic priorities of Healthy Future 2015 are defined as: Advancing community wellness by launching health initiatives to help people gain access to timely, easy-to-understand, health-related information; Enhancing outcome measurement in philanthropy by working with philanthropic partners to measure health outcomes and raise the standard of health outcome measurement; Fostering the most engaged, health-conscious and safe employees in the world by improving upon the company's global culture of health and safety. Building on the company's legacy in safeguarding the planet by reducing the environmental impacts of the operations of Johnson & Johnson Partnering with suppliers who embrace sustainability by joining with suppliers who demonstrate a similar commitment to that of Johnson & Johnson. Advancing global health through research and development for neglected diseases and affordable access to the company's medicines by working to identify new ways to address these issues, and by partnering with like-minded organizations to help expand the impact of Johnson & Johnson; and Committing to enhanced transparency and accessing the power of external collaboration by providing transparency about the company's business practices and products, and collaborating with partners. J&J said it is focusing on "unmet needs" -- diseases without good treatments -- as most blockbuster drugs for common conditions like blood pressure and cholesterol problems now have much-cheaper generic rivals or will soon.

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CONCLUSION Johnson & Johnson had suffered last three years with poor performance in which its unit volumes & sales had been flat. The reasons were: patent expirations of key ethical drug products, continuing efforts to control health care spending in developed countries with Obama care exacerbating the US situation, the world economic slowdown and quality control issues in its consumer business that caused a sharp drop in product sales.

One good thing is that JNJ will be finished with its patent cliff earlier than other major pharmaceuticals, most of whom will have their patent cliffs extend into 2013 and 2014. This puts JNJ in a somewhat better light than its peer ethical drug companies. It can offer low priced cost effective products - usually older ones that have been replaced by newer ones in developed countries - in emerging markets. Then as incomes and medical infrastructure improve, JNJ can introduce its more sophisticated products. JNJ has always relied on acquisitions to be a major driver of growth and this will certainly continue & besides that it is having new & diversified product range with talented work force.

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