This paper examines the concept of strategic control as applied to Johnson & Johnson, distinguishing it from general managerial control through a thermostat analogy. It explores how J&J's deliberate choice to remain a broadly based healthcare company — spanning consumer, pharmaceutical, and medical device markets — serves as a strategic buffer against regulatory volatility that has affected more narrowly focused competitors such as Pfizer and Merck. The paper also discusses how the company's decentralized, regionally focused management structure complements its product diversity, allowing local branches to tailor corporate resources to their specific market environments.
Strategic managers exercise control when they attempt to deploy the tools of management to achieve long-range organizational goals in relation to the rest of the industry. A useful way of understanding strategic control — as opposed to purely managerial control — is to think of an organization such as Johnson & Johnson as a thermostat. A heater warms the room when the temperature falls below a certain level. Management in general decides when that low temperature has been reached and what mechanisms should be set in motion to enable the heater to do its job, but a strategic manager alone determines the optimum temperature — that is, when a market environment is too cool or too hot.
Diversity of purpose and regional control of international branches are the "temperatures" at which Johnson & Johnson has set its strategic control thermostat. As a means of maintaining strategic dominance in the drug and healthcare industry, the company has set its fundamental strategic direction to remain a broadly based human healthcare company serving the consumer, pharmaceutical, and medical device and diagnostics markets (J&J Official Website, 2005).
This is a strategically wise position. Rather than specializing in one arena of health care, Johnson & Johnson's diversity of products and character buffers it against the specific regulatory turmoil that has affected largely pharmaceutically based healthcare companies, such as Pfizer and Merck. By spanning multiple market segments, J&J reduces its exposure to the risks that come with dependence on any single product category or regulatory environment.
"How product diversity shields against regulatory risk"
"Local management tailoring resources to regional markets"
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