Management Communication for Johnson and Johnson -MyAssignmenthelp

Question: Discuss about the ManagementCommunication for Johnson and Johnson. Answer: Overview of economic sustainability through Johnson and Johnson Johnson and Johnson is an American multinational company that is liable to deliver consumer packaged goods, medical devices and pharmaceutical products (Johnson Johnson., 2017). Johnson and Johnson also have 250 subsidiaries and together they operate in 60 counties and deliver their products in over 175 countries (Johnson Johnson., 2017). All these subsidiaries are independent have policies and procedures that provides them a global competitive advantage and financial growth in worlds economy. The total revenue that is attained by this company was $70,074 million and $71,890 million in the year 2015 and 2016 respectively (Statista, 2017). However, the net income of these two years was $15,409 million and $16,540 million (Statista, 2017). The concerned company also takes effective policies and procedures for attaining more financial growth and that not only can develop their business effectiveness but also helps them to establish their organization as global perspective. Image 1: Annual revenue of Johnson and Johnson 2005- 2016 (Source: Statista, 2017) Economic Sustainability policies and practices of Johnson Johnson The annual report of the concerned organization illustrates that in order to attain economic profit and suitability, Johnson and Johnson experiments with new ideas. It is also mentioned that they also purchase new equipments, provides new facilities and launch new products (Johnson Johnson., 2017). In the annual report it is mentioned that they are planning to send produce 10 new products by 2019 that have the potential to drive $1 billion sales in each line (Johnson Johnson, 2017). This planning comes along with their planning of additional 40 line extensions by the same year (Johnson Johnson, 2017). The company also desire to earn more than $500 million in potential sales through at least 10 of the product line (Johnson Johnson, 2017). It is also found from the companys website that they have developed Strategic Capital Allocation Framework to evaluate their cash flow system. They have also targeted for Value Creating Acquisitions for effective economic sustainability (Johnson Johnson., 2017). In the year 2016, they have invested $5 billion in acquisitions and licensing deals. It is also stated in the annual report that, they have planned to acquire Actelion Ltd. for $30 billion (Johnson Johnson, 2017). The potential reason due to which they select this acquisition is that they can expand and complement their Janssen portfolio for attaining professionalism in pulmonary arterial hypertension and reinforces (Johnson Johnson, 2017). Economic sustainability can also be attained by funding internal growth initiatives like improvement of research and development department for making regular innovation (Johnson Johnson., 2017). Moreover, organizing Share Repurchase Programs for return value to shareholders also enhances their economic responsibility that on the other hand helps them to attain more financial growth (Johnson Johnson., 2017). In his case, they have repurchased the companys share by $7.3 billion through available cash and access to the capital markets (Johnson Johnson, 2017). They get the sustainability by improved shareholder value, enhancement in share price, tax benefits and more than before that allows the company to obtain more financial growth. Johnson and Johnson also follow the regulation of paying fair share of taxes and fair returning of services to our stakeholders. The annual report also illustrates that the concerned organization also conducts business and files tax returns and perform tax audits with the collaboration of many tax authorities. Moreover, the concerned organization also follow Base Erosion and Profit Shifting (BEPS) project for disclosing their activities to tax authorities across the world. This approach leads to greater audit scrutiny of profits from other coiu7ntries where they desired to serve their services. Lastly, all the financial, economic and political risks consideration are followed that are- foreign currency exchange, inflation and currency devaluation risks, illegal importation of pharmaceutical products, anti-bribery and other regulations and trade protection measures and import/export licensing requirements (Johnson Johnson, 2017). In context of Foreign Currency Exchange, Johnson and Johnson use financial instruments to overcome the adversity of the sudden fluctuations in currency value in other nations (Johnson Johnson, 2017). Moreover, the concerned organization handles the inflation and currency devaluation risks through programs like cost reduction programs. This is evident from their operations in highly inflationary nations like Venezuela. Moreover, the economic sustainability of the policy can also be attained by not following illegal importing of Pharmaceutical Products and follow the legislation of United States Federal Food, Drug, and Cosmetic Act (Act) (21 U.S.C. section 331) (Johnson Johnson, 2017). In addition to that they also follow governing regulation for anti bribery like- U.S. Foreign Corrupt Practices Act (FCPA) and U.K Bribery Act 2010 in order to attain effective economic sustainability (Johnson Johnson, 2017). Measuring Sustainability of the Economic Policies This step is sustainable as acquisition allows people to occur synergy by combiningbusiness activities. Cartwright and Cooper (2014) moreover depicts that effective acquisitions also enhance the business performances and diminishes the cost of business activities. This step also provides the diversification to the business that leads to business expansion. In this way, more people can experiences their services and they can get the opportunity to attain more financial growth. The policy for investing more in acquisitions can be referred as a sustainable move because Actelion Pharmaceuticals Limited is a bio-technology company successfully provided medical solutions for the betterment of the community since 1997 (Actelion.com, 2017). This company only research and provides solution for rare disease or sometime called as orphan disease. This company is also the first effective organization to deal with endothelian receptor antagonist (Actelion.com, 2017). Moreover, they also have has 2 9 operative affiliatesall over the world. Thus, on acquiring this company, Johnson and Johnson will get diversified business operations. Taken for instance, they will get the benefit of recycled content products, FEMP-designated products, ENERGY STAR qualified products along with Biopreferred and biobased products (Department of Transportation, 2017). In this way, due to diversified products and services, Johnson and Johnson will face lesser market risk and this will enhance their economic sustainability in the market. Following legislations are important for attaining economic sustainability as it is directly linked with the effective productivity performance along with investment and market openness. The fair trade legations, anti-bribery laws and other pharmaceutical legislations diminish the traditional barrier to trade and develop effective partnership with the trading nations. Moreover, following all these legations promote domestic competition and simplifying administrative procedures. All these aspects help to be an ethical company so that more business partners intend to establish effective business relations. Another policy is to repurchase the shares back from shareholders. This is the reduction of the outstanding shares of the organization in the market, which furthermore increase their stock price. Fried and Wang (2017) also stated that share buybacks also improves other financial ratios. It is also evident that if the share price increases due to the share buybacks, the earning per share also increases. Johnson and Johnson also desire to think these buybacks as alternative to dividends. This approach can be said as sustainable as repurchasing of shares may rise to a tax advantage for the stakeholders as there will be a lower capital gain rate on the stock sale compared to the regular income tax rate calculated on the dividends. Thus, the sales of their products automatically increased due to outstanding shares after the repurchasing of the shares. Another policy is to invest in the betterment of RD departments is a sustainable move for attuning more financial growth for the company. According to Consolidated Financial Statements, Johnson and Johnson have investment $ 9,095 million in the year 2016 (Johnson Johnson, 2017). The concerned organization also took initiatives for collaborative arrangements in research and development activities with other pharmaceutical or biotechnology companies in order to develop well proved drug candidates or intellectual property (Johnson Johnson, 2017). Johnson and Johnson also employ approximately 126,400 employees for developing new products and innovation in their existing products so that more customer base can be attained (Johnson Johnson, 2017). It is also mentioned in the annual report of the organization that development of new products resulted in 22% of sales in the year 2016 due to the development of new products (Johnson Johnson, 2017). Moreover, for the same year, $9.1 billion was invested in research and development so that products can be developed that can meet evolving health care needs and sustain long term growth of the company. These developments of new products are liable to overcome rare health adversity among the communal. Thus, this will attract more customer base, which on the other hand enhances their financial growth of the company and ensures the sustainability of the economy of the company. Impact of Economic Sustainability on Global Perspective Lorek and Spangenberg (2014) depicts that the main purpose of acquisition is to attain additional value to the combined entity so that an organization can eliminate redundancies in business operations and take effective steps for the enhancement of overall revenue. In this context, Johnson and Johnsons decision for acquiring Actelion Pharmaceuticals Limited, allows them to target those patients towards their company who are suffering from rare disease. Moreover, every subsidiaries is liable to perform their business operations and liable to perform all the business proceedings effectively. On acquisition of these independent bodies in other nations only enhances their economic growth and market share that provides more profitability in global perspective. In addition to that, since subsidiaries are from different nations but there are an alignment of the value of these subsidiary companies. Thus, matching the organizational goals and objectives of all these organizations represents a global perspective. In context of, following legislations in fair trades, legal medicine export and import and fair business procedures, Johnson and Johnson able to gain effective reputation in the world community. According to the global fair trade regulations, some of the principles like creating opportunities for economically disadvantaged producers, maintaining transparency and accountability and commitment to non discrimination and freedom of association can be attained (Jaffee, 2014). Johnson and Johnson attain can also attain more transparency through legal medicine import and export. This provides them a brand reputation that this organization trade fairly and take accountability for the better health of the community. Thus, maintaining effective trading policies in operating their business functions will provide them the global perspective of ethical trading. Repurchase the shares back from shareholders provides them global advantage of possessing large free reserves base and use the amount for purchasing other shares and securitiesin the buyback scheme. This allows them to utilize this money in a wise and effective manner either for changing the capital structure of the firm or taking counter-measure against re-issue of shares. Johnson and Johnsons stakeholder repurchase share program make them to avoid hoarding cash. Moreover, in one hand, repurchasing of share results in lesser shareholders and increased independence of the firm but it also help them to focus on their business operations effectively. They can thus, invest that money in research and development departments for further innovations. In addition to that, Johnson and Johnson can use excess cash which was lying idle and they can use it for business expansion for buying more subsidiaries. Lastly, investing in the betterment of RD departments provides the opportunities of leaps in market participation, managing cost management benefits and enhancing marketing abilities. Since Johnson and Johnson is a global company, they must take different strategies for operating their functions in different nation according to the market demands of that nation. Johnson and Johnson already have their innovation centre in many places named Boston innovation Centre, Califormnia Innovation centre, London Innovation Centre and Shanghai Innovtion Centre for bring innovation in three of their business segments- medical devices, consumer products and pharmaceutical devices (Johnson Johnson, 2017). Each of the newly developed innovation is approved by TheFood and Drug Administration(FDAor USFDA) and European Commission (EC), that are the global bodies to check whether or not a pharmaceutical companies is proceeding with an ethical business operations (Johnson Johnson, 2017). Thus, involvem ents of these global regulatory bodies impacts their policy of making innovation of new products that can bring significant financial growth. Reference List Actelion.com. (2017).Actelion Pharmaceuticals Ltd - Shaping our Future. Retrieved 31 May 2017, from https://www.actelion.com/en/index.page Cartwright, S., Cooper, C. L. (2014).Mergers and acquisitions: The human factor. Butterworth-Heinemann. Department of Transportation. (2017).Sustainable Acquisition. [online] Available at: https://www.transportation.gov/mission/sustainability/sustainable-acquisition [Accessed 31 May 2017]. Fried, J. M., Wang, C. C. (2017). Short-Termism and Shareholder Payouts: Getting Corporate Capital Flows Right. Jaffee, D. (2014).Brewing justice: Fair trade coffee, sustainability, and survival. Univ of California Press. Johnson Johnson. (2017). Johnson Johnson Homepage. Retrieved 30 May 2017, from https://www.jnj.com/ Lorek, S., Spangenberg, J. H. (2014). Sustainable consumption within a sustainable economybeyond green growth and green economies.Journal of cleaner production,63, 33-44. Statista. (2017).Johnson Johnson total revenue 2005-2016 | Statistic. Retrieved 30 May 2017, from https://www.statista.com/statistics/266403/total-revenue-of-johnson-und-johnson-since-2004/