Johnson&Johnson Case

1. Evaluate the planning and control system in use at Johnson & Johnson.  What are its strengths and weaknesses?

Evaluating planning and control system

The planning and control system used at Johnson & Johnson relies on decentralized management system with Five-and Ten-year planning concept, which provides long-term visions for the company. Johnson & Johnson is managed on a decentralization structure and comprises about 155 autonomous subsidiaries. While the center of the control function consists of the chairman, president, chief financial officer, vice president of administration, and executive committee members, the company conducts its business through operation subsidiaries, for the most part, integral, autonomous operations. Direct responsibility for each company lies with its operating management, led by general manager or managing director who reports directly or through a company group chairman to a member of the executive committee. Therefore, the effectiveness of planning and control system is closely related to this typical structure of the company. Conducting the business by breaking it down into subsidiaries allows the company to compete successfully and effectively in high-competitive health care markets. There are numerous reasons explained why adapting such system gives the company competitive edges to drive success.

Strengths

First, Five-and Ten-year plans benefit Johnson & Johnson’s long-term goals and opportunities. Given that health care is one of the most competitive industries, it is fairly difficult to predict its future because it is a fast growing and highly complex business. Therefore, providing short-term focus while gearing toward long-term performance would enhance greater benefits. Each Johnson & Johnson subsidiary develops a Five-and Ten-year strategic plan to use in the process of planning and budgeting. Moreover, this plan requires managers to include in their plans an account of how and why their...