PESTLE Analysis of Johnson and Johnson
This post will cover the PESTLE analysis of Johnson and Johnson, a popular baby care brand. But they also offer a plethora of other products including skincare products, medicines, contact lenses, baby products, and so on under different names. Have you ever wondered why all babies smell amazing? This is because of the beautiful Johnson and Johnson baby products. Without any doubt, this brand is the favorite of almost every mother. It’s their No.1 choice when it comes to buying baby products.
There are wide varieties of products that Johnson and Johnson produces. They sell their products under diverse brand names. You can get a complete overview of the company by exploring its history. With over 136 years of experience, the company has retained its position in the competitive marketplace and is still relevant which is extraordinary.
In terms of revenue, Johnson and Johnson has also managed a place in the Fortune 500 list. This is the reason for conducting its PESTLE analysis. This PESTLE analysis of Johnson and Johnson will allow you to give complete insight into the company by discovering its political, economic, social, technological, legal, and environmental factors. All these factors are external and greatly impact the company’s growth. Before moving further with the Johnson and Johnson PESTLE analysis, let’s have a look at its history.
In 1886, three brothers founded this company, a private limited company at that time. But, it turned out to be a public limited company in 1944. The company acquired different companies such as Janssen Pharmaceutica and McNeil Laboratories to expand and launch new products.
If we talk about the top American companies in terms of revenue, then Johnson and Johnson would definitely come in the list. The company generated almost 94 billion dollars in 2021. Right now, it has a strong presence in over 60 countries and ships its products to more than 175 countries. They have more than 134,500 employees across the world.
Doing this PESTLE analysis of Johnson and Johnson will highlight the important factors that impact the company. The word PESTLE stands for Political, Economic, Social, Technological, Legal, and Environmental factors. This excellent strategic planning tool allows the company to benchmark its position and formulate innovative strategies to keep harmful external factors at bay.
Political Factors | PESTLE Analysis of Johnson and Johnson
In PESTLE, the letter P stands for political. It highlights the company’s business factors affected by political factors. As Johnson and Johnson works in different regions of the world, it has to closely watch all the political factors of every country in order to counter harmful things. An international business like Johnson and Johnson requires non-fluctuating policies and government stability to run its business without any pressure. That’s why the company closely monitors the political factors of every country it operates.
The recent war between Ukraine and Russia has affected the company’s operations. Due to this conflict, they decided to close their operations in Russia. This decision affected the company’s revenue because Russia was one of the major markets. This happened due to the political unrest in the country. However, every country has different policies and regulations for international companies. Rigid and non-flexible policies are not so favorable for the company. Recently, Slovenia debarred the company’s Covid-19 vaccine. Such things can damage its international image and profitability as well. Reputation is everything for such a big company.
Economic Factors
As an international organization, the company has to face several economic conditions and laws in different countries. It is highly susceptible to the economic stability of different countries. Any country’s economic condition change can impact Johnson and Johnson’s business. The macro external business factors of the company are directly impacted by the economic upheaval. On the other hand, several economic decisions and processes can also hurt its operations globally. For example, if a country offers a high-interest rate to the company, it would love to invest in that country.
Moreover, cheap labor is another main attraction for Johnson and Johnson. Due to this reason, the company would love to invest in underdeveloped countries. In this way, they can manufacture products at low prices and can earn more profits. The impact of the recession is not that big on the company because it operates mainly in the pharmaceutical and medical sectors. Also, Johnson and Johnson is not a luxury brand because it sells basic necessity items. So, the demand for its products won’t decrease in any situation. That’s why Johnson and Johnson is truly a successful company in Europe.
Countries that have higher inflation rates won’t offer a favorable working environment to companies like Johnson and Johnson. The higher inflation rate affects the consumer spending pattern and they look for cheaper alternatives which is not good for the company’s profitability.
Social Factors | PESTLE Analysis of Johnson and Johnson
Every country in the world has its own cultural standards or norms. For a multinational brand like Johnson and Johnson, it is imperative to understand the societal norms of the country in which it operates. Otherwise, they can face grave consequences. The impact of social factors is also very big on the company’s operations and revenue stream. Being a diverse international brand that sells various products, the company should analyze the demographics to target the right customers accordingly. In this way, the company can generate so much revenue.
Right now, Niger has the youngest population in the world. It means the percentage of toddlers would also be there. The company can market its baby products in these countries to earn maximum profits. On the other hand, countries like Luxembourg are not so favorable for Johnson and Johnson because they believe in saving. People usually like to save money instead of spending money which is not ideal for the company’s growth. Moreover, the demand for skin and beauty products is very low in Arab countries because women in these countries are not allowed to go outside without a veil.
Technological Factors
The impact of technology on a business is colossal. It has the ability to completely influence the business of any company working globally such as Johnson and Johnson. The rising technological trends and innovations allow companies to manufacture products cost-effectively. As a result, the company can target every customer segment by marketing its cheap products. Social media is another big factor in the marketing strategy of the company. Johnson and Johnson can exploit social media to market its products and services in an eye-catching way.
Johnson and Johnson can also strengthen its online platforms to sell its products. In this way, it can cater to a large number of customers. It will help them to increase their revenue stream and market share. The latest 5G technology can also boost the company’s performance. It can offer a competitive advantage to Johnson and Johnson over its rivals. They can speed up their operations and business operations to effectively target customers. In addition, the company should advance its business operations in order to fulfill the expectations of customers. Investing money in research and development is also essential to manufacturing and selling new products.
It is a wonderful way to gain a competitive advantage. They spent over 83 billion dollars on research and development in 2020. Such initiatives will allow the company to become a market leader in its industry. And the Covid-19 vaccination of Johnson and Johnson is proof of its investment in R&D.
Legal Factors | PESTLE Analysis of Johnson and Johnson
Another important thing that can affect the company’s image and performance is the legal factor. The company should abide by the laws of every country in order to run the business smoothly. Any negligence in a legal matter can cause a heavy penalty or fine. The risk of getting sued is also there which is inevitable. The company should ensure that every contract and legal action is according to the law of the country. Johnson and Johnson should take care of everything from health and safety laws to anti-discrimination laws and unemployment laws.
Discriminatory suits against workers can impact the overall image of the company globally. Johnson and Johnson should protect itself from unnecessary lawsuits and controversies. They should take data protection rules and regulations into consideration. They should develop strict strategies regarding the use of IPR and patents. It is necessary for Johnson and Johnson to establish a legal team in every country to counter lawsuits and legal proceedings.
Environmental Factors
The mounting concerns over climate change are a big concern for every company including Johnson and Johnson. The company should carefully analyze all the environmental factors. They should keep environmental standards in mind at the time of developing strategies or making decisions. As the company operates in a range of countries, it should fulfill the environmental standards of every region. More and more companies are reducing their carbon footprint and investing in renewable energy sources. It is a big opportunity for Johnson and Johnson to invest in these things to get a competitive lead. It will also help them to attract new investors or stakeholders.
Johnson and Johnson should play an important role in sustainability. This kind of investment is imperative for such a big brand. This will allow the company to strengthen its brand image.
Conclusion: PESTLE Analysis of Johnson and Johnson
This post highlights the critical overview of the company’s performance. Without any doubt, Johnson and Johnson is one of the most successful brands in the world right now. The purpose of conducting the PESTLE analysis of Johnson and Johnson is to investigate its major business factors on the basis of its political, economic, social, technological, legal, and environmental factors.
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