We will discuss the situation facing Justino. There is not much financial information in the case. However, the implementation issues are worthy of our consideration.
1. Why is J&J Brazil in the situation they are?
Some of the reasons I have observed are as follows:
• Economy plays a role in the situation that they are in now. Rapidly decaying economy and constantly changing economical and regulatory landscape prepares the necessary grounds for J&J Brazil’s downfall. For example, the fact that they were technologically ill-prepared to keep up with the new entrants’ and other competitors’ pace of technological/machine upgrades, is a great example of this. • They did not plan for the opening of the market/removal of barriers to entry. When it happened and they started losing market share, instead of focusing on quality/innovation (R&D), they became focused on cost cutting to make the monthly goals. They stopped advertising and they just started using sales promotions and price cuts. • We can say that they did not have a long term plan and a contingency plan in place. Because of the stable sales and market share for years, they became too complacent and stopped innovating. They just focused on selling and that was it for them. It is extremely dangerous for any company to stop innovating, even if the market landscape and sales are stable. • They became organizationally inefficient. They did not stay true to their Credo. We see that the organizational structure change over time and operational inefficiencies started to rise. The best example for this is the fact that the top management started to make all the decisions by late ‘90s. There is no empowerment or trust left in the company. Another good example is that the 3 smaller companies under J&J Brazil, even though they were merged under one consumer business, they kept their...