Analysis of Michael E. Porter’s Threat of Entry Force On Johnson & Johnson’s Consumer Segment

Topics: Brand management, Brand, Advertising Pages: 4 (1288 words) Published: June 6, 2014

Analysis of Michael E. Porter’s Threat of Entry Force
On Johnson & Johnson’s Consumer Segment

As one of the world’s largest, most respected and diverse manufacturers of health care products I would assert that the “Threat of Entry” force as defined in Michael E. Porter’s Five Competitive Forces that Shape Strategy is “weak” or low as it pertains to entirety of Johnson & Johnson’s Consumer Segment. Johnson & Johnson has over 250 subsidiaries, with strong brand recognition across their products, a vast worldwide distribution network, large financial resources as well as the economies of scale. That being said Johnson & Johnson does face some threat of competition from new entrants. The greatest value that this company has is its brand recognition defined by the personal relationship and trust that the consumer has in the Johnson & Johnson name. With brand equity at the core there are several strategies I will explore that will lower the “Threat of Entrants” and capitalize on Johnson & Johnson’s strengths. With Johnson & Johnson’s extensive manufacturing capabilities and the ability to produce each unit at a low cost the economy of scale is strong. For new entrants to compete with this scale of mass global production it would require a very high capital investment which is a deterrent. In order to maintain this advantage Johnson & Johnson must continually fund the investment in manufacturing technology to produce each unit at the most cost efficient level. As such a large company with a diverse product line it is the benefit of scale for the Johnson & Johnson brand itself that also garners additional advantages in both media advertising and consumer recognition. Everyone is familiar with Johnson & Johnson’s well-known products. Over a 125 years of marketing has fostered the consumer’s trust and personal relationship with the brand. For example, as new mother’s discover Johnson & Johnson’s “natural” baby products there is a built...

References: Porter, Michael E. (2008) The Five Competitive Forces That Shape Strategy
Harvard Business Review, January 2008
Johnson & Johnson. April 18, 2014
http://www.jnj.com/home.htm
Wikinvest. April 18, 2014
http://www.wikinvest.com/stock/JOHNSON_%26_JOHNSON_%28JNJ%29#Consumer_Health_Care:_24.25_of_FY_2010_Revenue
Yahoo Finance. April 18, 2014
http://finance.yahoo.com/q?s=JNJ
Christy Van Esley. November 23, 2013. Transcript of Johnson & Johnson Company Analysis
http://prezi.com/uc_wgvz281fr/johnson-and-johnson-company-analysis/
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