To begin with, this paper sheds light on the situation in one of the most well-known companies in the world Johnson & Johnson (J&J), in 2010. It aims at discussing the main features of the difficulties the company faced and how it succeeded in getting through these impediments in time. Moreover, the name of the company is a quality mark for its customers and consumers. Thus, it is due to its powerful corporate structure and quality control system that the company managed to resolve the setbacks in the corporate functioning.
To make it clear, several enormous recalls of the bestseller products of the company resulted in a fall in investors’, customers’, and consumers’ estimation. However, the chief executive, William C. Weldon found out a way out of how to improve on the company’s performance. The case of McNeal failure in providing customers with its high-quality production line is underlined here. It should be mentioned that the organizational structure of the company covers three main lines products, namely: consumer products, pharmaceuticals, and medical devices (Shamsie & Eisner, 2011). The company has 250 businesses spread over 60 countries with a particular extent of autonomy (Shamsie & Eisner, 2011). This was done in order to keep up with the best traditions of entrepreneurship in each subsidiary. Definitely, the parent company of J&J keeps a strict eye on what is going on across its operating companies, and it makes the management and financial operations easier to handle.
Thereupon, the overall structure of the company is like an ant hill where each company operates independently for the sake of the organization’s overall success. With its far-flung influence, each component of the company serves the interest of one of the three divisions it has. Needless to say, some of them are more or less profitable. However, in sum, they form a powerful force in the field of consumers’ demands. The convergence within the company is mainly achieved through giving more independence to businesses it has. Logically, it provides each officer at a particular unit with more abilities to follow the annual plan due to more freedom to think every step toward success out. At the same time, a head of a particular company within the corporation can better realize the significance of what he/she is doing at the moment with more responsibility as if it is for himself/herself.
Thus, the structure of the company is decentralized. On the one hand, it gives more opportunities to J&J in terms of constructive collaboration “by drawing on the diverse skills of its various business units across the three divisions” (Shamsie & Eisner, 2011, p. 387). The combination of knowledge shared among all units gives the company a substantial advantage over rivals. It embraces the features of a top-notch competitor whose efforts are constructed on the basis of close participation within each area of business and between them. The idea of synergy is at the center of the corporate culture. It goes without saying that Weldon seeks agreement between units in order to reach a high degree of profitability at a frantic pace of the company’s development. The CEO believes that through decentralization of the company’s structure “the firm could become one of the few that may actually be able to attain the often-promised, rarely delivered idea of synergy” (Shamsie & Eisner, 2011, p. 387).
On the other hand, a decentralized corporation enables the board of directors to move further in the company’s attainments. The example of Pfizer and some other acquisitions cannot be underestimated in this case. If things go well, then there is a reason to develop the company’s presence in other fields of the world’s competition either in consumer products or in pharmaceuticals and medical devices. The only task of the CEO so that the decentralized form of functioning works well within the company is to make sure he fosters better and constructive communication between the units (Shamsie & Eisner, 2011). This goal is highly appreciated among the heads of companies belonging to J&J.
However, not always the CEO can trace what is going on in the units. First reason is the huge amount of companies. Second reason is a possible mismatch in the managerial structure of each unit. The example of McNeal and Pfizer merging is the cornerstone in this case. The professional background of heads should be double-checked and further revised through reporting on goals achievement. In this respect, decentralization has a particular threat to the corporate stability.
Nevertheless, looking at the company’s performance and the actions by William C. Weldon, J&J should not change its organizational structure. Moreover, even a bad result has much to say about further solutions than about total failure. Strictness and straight-forwardness of Weldon proved his idea of benefits from the corporal synergy right. He was able to evaluate the situation over frequent recalls in no time. It was possible due to his ability to analyze where decay had started. In turn, the decision to implement a better form of quality control was vital to save more money on the recovery of the company’s functional capacity and its reputation, in particular (Shamsie & Eisner, 2011).
Organizational change and reconfigurement are very difficult processes. First off, it impacts much on the financial performance of the corporation as it requires huge sums of money to be invested. It also affects the company’s performance in the eyes of investors. All in all, expenditures will be felt in the short as well as in the long run. The qualification of experts working in the company should be revisited, and it also takes time and money to do that. Second, the change of the company’s structure touches upon possible setbacks in the internal financial flows within units and in respective negative feedbacks to the head office.
Besides, the internal growth of the company with its decentralized structure is overt; even though some mistakes are still made. Weldon is good at making a decision to provide a centralized management, but it is solely confined to the quality control systems (Shamsie & Eisner, 2011). This approach was the only constructive and profitable, so to speak, change that the company needed. The company’s acceleration is possible through maintaining new cutting-edge standards of quality throughout the operational units of J&J.
In the light of the above, the overall characteristics of Johnson & Johnson showed that it is a decentralized corporation with lots of operational units placed all over the world. To make it plain, if the company could function well before the case with McNeal, it can follow the same direction at present. Even though it was a hard decision for Weldon to “create a more centralized form of quality control”, he could have more problems in case of leaving this department cast in the same mould (Shamsie & Eisner, 2011, p. 384). However, he made a smart decision that allowed the company to grow higher since the next fiscal year. In sum, the CEO and his team could sort the entire problem out by means of introducing alleged amendment in the management structure of the key department like the Quality Control Systems. This strategic structural shift resulted in making the company look quite competitive.