Business Proposal for Johnson and Johnson

ECOX/561
October 7, 2013
Karen Yancey

Business Proposal for Johnson and Johnson Johnson and Johnson is a multinational medical devices, pharmaceutical, and consumer packaged goods company founded in 1886 by three brothers: Robert Wood Johnson, James Wood Johnson, and Edward Mead Johnson (Johnson and Johnson , 2013). In this business proposal the focus will be on consumer packaged goods for Johnson and Johnson. A discussion of whether Johnson and Johnson is elastic or inelastic, and whether the company is a price taker or price setter. Also in the business proposal, a discussion of barriers to entry, how the company maximizes profits and how the company differentiates itself from other competitor and non-price strategies will be discussed.
Market Structure Johnson and Johnson have three distinct segments: consumer packaged products, medical, and pharmaceutical. Johnson and Johnson market structure is oligopolistic. The segment of pharmaceutical is dominated by three major competitors such as Merck, Pfizer, and Novartis. Consumer packaged goods is dominated by Procter and Gamble and Novartis for health care goods such as oral B, pampers, and hair care. Baby products are dominated by Gerber Products and Nestle.
Is John and Johnson Elastic or Inelastic
Johnson and Johnson is an elastic company because it will be affected by changes in the market such as demand for its products and prices in the industry.
Price Taker or Price Setter Johnson and Johnson is a price setter company. The company and its competitors dictate the prices consumers buy for their products. Johnson and Johnson set prices using Consumer Price Index (CPI). The CPI is a government measure which is used to calculate price changes against percent of income (Johnson and Johnson, 2013). As