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This paper is to provide a detailed critical analysis comparing the two cultures of a USA based company Johnson and Johnson which purchased a European based company Crucell in the same sector, pharmaceutical, in order to expand the business to another level in the field of bio-pharmaceutical.
Approach: The approach taken was to first examine and compare the corporate culture of the two companies to ascertain differences and similarities. Secondly, an evaluation of the culture of the two countries using Hofstede Five Dimension of Culture was undertaken. This process was to assess the problems that will need to be addresses to ensure integration of the two companies and the successful future growth of the business.
Findings: Using McKinsey 7Ss framework, the examination revealed that the two companies were extremely similar in their corporate culture and operated with the same shared values and beliefs, attitude and philosophy. As expressed by Crucell's CEO Ronald H.P. Brus in April 2011, "We are delighted by the prospect of pursuing our mission with the support of Johnson & Johnson that shares our passion for healthcare innovation, our values and our commitment to care for people".
Using Hofsede's Five Dimension of Culture it was revealed that there are minimum differences in the culture of USA and the Netherlands.
List of Tables
Table 1: McKinsey 7S Analysis..........................................................................................8
Table 2: Hofstede Five Dimensions of Culture..................................................................11
List of Figures
Figure 1: Hofstede Five Dimension of Culture......................................................................9
Introduction and Objectives
A critical analysis was undertaken by comparing two cultures, country and corporate, in a US based company which purchased a European based company in the same sector. The acquisition was to promote growth.
The objectives are as follows:-
To perform a cultural comparison of a US based company Johnson and Johnson (JnJ) and the acquired European company, Crucell.
To assess the likely problems that may arise to ensure integration of the two companies and successful future growth.
To propose a solution detailing the Management Style, Structure and Reporting methods using academic framework.
Brief History of JnJ
In 1886, three brothers from New Jersey USA founded Johnson and Johnson, (JnJ). When one thinks about JnJ, the first thing that may come to mind might be baby shampoo or band aid but JnJ is much more than that. It is one of the largest pharmaceutical companies in the world establishing more than 250 operating companies in 60 countries and employing approximate 129,000 persons. JnJ works with partners in health care to touch the lives of over a billion people every day throughout the world (jnj.com).
These are some of the key watch words which make up the corporate culture and inspire and unite the people of Johnson and Johnson
"Caring for the world, one person at a time" (us.linkedin.com/jnj).
"Have the healthiest most engaged workforce for JnJ allowing for full and productive lives." (www.jnj.com).
"Deliver a competitive business advantage to the JnJ Family of Companies, by providing the leadership and resources that enable the well being, full engagement, and productivity of JnJ employees worldwide." (www.jnj.com).
Brief History of Crucell
In 2000, Crucell a global biopharmaceutical company was birthed from the amalgamation of two biotech companies, IntoGene and U-BiSys. Crucell's is located in Leiden, Netherlands and is the largest independent biopharmaceutical company in the world. Crecull has subsidiaries in 11 other countries (www.crucell.com).
In 2010, Crucell distributed more than 105 million vaccine doses in more than 100 countries around the world. Crucell is one of the major suppliers of vaccines to UNICEF and the developing world. Crucell was the first manufacturer to launch a fully-liquid pentavalent vaccine called Quinvaxem. This innovative combination vaccine protects against five deadly childhood diseases in one single injection. Over 180 million doses have been sold since its launch in 2006 in more than 50 GAVI countries. With this innovation, Crucell has become a major partner in protecting children in developing countries (www.investor.jnj.com).
In 2009 Crucell top five vaccines prevented 3.6 million cases of infectious diseases and 819,000 deaths, Crucell focuses on prevention rather than cure and they conduct business with a warm heart and a cool head (www.crucell.com).
Its corporate culture is outlined in its mission statement, "To protect human lives from infectious diseases by bringing meaningful innovation to global health." They do this by discovering, developing, manufacturing and marketing vaccines, proteins and antibodies that combats infectious diseases worldwide (www.crucell.com).
Strategic Objective for Acquisition
JnJ, a US based pharmaceutical company acquired Crucell, a Netherland based bio-pharmaceutical company, in February 2011 for $2.4 billion (bloomberg.com/news). The strategic objectives for the acquisition are:-
To advance JnJ goals with particular emphasis on prevention of infectious diseases
A new platform for growth through diversification
To increase profit
This acquisition enabled the JnJ Corporation to expand its operations to include bio-pharmaceutical products, vaccines and antibodies. Crucell now operates as the centre for vaccines within the JnJ pharmaceuticals group.
With the acquisition of Crucell, JnJ sales for the third quarter of 2012 have increased by 6.5% over sales for the third quarter of 2011 (www.investor.jnj.com) evident of in growth and increase in their profit margins.
Cultural Audit of JnJ and Crucell
"Culture is the collective programming of the mind distinguishing the members of one group or category of people from others" (Hofstede , 2010)
"Culture can be described in a circular fashion where philosophy expresses values; values are manifest in behaviour; and behaviour gives meaning to the underlining philosophy. Philosophy, value and behaviour describe an organisation's culture and culture is the glue that holds the organisation together" (DeWitt, 2001)
The four ethical principles in JnJ credo have created and developed the cultural behaviour of all within the companies. JnJ understands that these four areas - customers, employees, community and stockholder are part of its responsibility as a health care company. Therefore, for JnJ employees there is no question about who they consider as part of their decision. Moreover the credo framework dictates the prioritization of these areas.
The company's primary responsibility is to its customers, the employees are second, the community third and the stockholders are last. The underlining principle behind this framework is by meeting its expectations of the first three areas the fourth will consequently be fulfil as well. These ethical principles are their guide in fulfilling their responsibilities to their customers, employees, the community and the stockholders. (www.jnj.com).
Crucell guiding principles are the Crucell's values which are a unified force within the global organisation. Their mission is "to protect human lives from infectious diseases by bringing meaningful innovation to global health." "Our mission underlies everything we do, from our core business activities to the sharing of scientific knowledge and community outreach programs in countries where help is needed the most We are delighted by the prospect of pursuing our mission with the support of Johnson & Johnson that shares our passion for healthcare innovation, our values and our commitment to care for people.
As articulated by Crucell's CEO Ronald H.P. Brus in April 2011, "We are delighted by the prospect of pursuing our mission with the support of Johnson & Johnson that shares our passion for healthcare innovation, our values and our commitment to care for people".
Table 1 below shows the assessment of the cultural audit of both companies. The theoretical framework McKinsey 7S Model was used to determine the alignment perspective of JnJ and Crucell. In this assessment it can be determined that both companies operate with the same shared values and beliefs, attitude and philosophy. This integration will therefore create minimum problems or issues as this model ensure that all parts of the organisation can work harmoniously.
Table 1: McKinsey 7S Analysis
Johnson and Johnson
To combat infectious diseases by
129,000 in 250 companies in 60 countries
1700 in 12 countries
Technologically and Scientifically Proficient
Fulfilling their responsibility to:
To combat infectious diseases
Providing a broad range of vaccines and antibodies
Ethics and Business Conduct
Labour and Employment
Integrity, Respect, Complementarity, Reliability, Innovation and Passion and Drive
Source: www.jnj.com & www.crucell.com
In conducting the cultural audit of the two companies it was discovered that the core values of the two companies are akin.
Cultural Comparison of US and the Netherlands
In order to ascertain the cultural viability in terms of problems or issues arising from the JnJ acquiring Crucell, Hofstede's Five Dimension of Culture was examined.
Figure 1: Hofstede Five Dimension of Culture
Figure 1 depicts the comparable index of each of Hofstede Five Dimensions of Culture. The comparative research conducted on the countries' culture and the companies' culture based on Hofstede Five Dimension of Culture will identify gaps between the cultures and any issues that may arise in the integration of the two companies.
Power distance is defined as "the extent to which the less powerful members of a society expect and accept that power is distributed unevenly" (Hofstede, 2010).
This dimension shows US scoring 40 and the Netherlands 38. This is an indication that both countries have low power distance. Both managers and employees are expected to be consulted and communication is direct and participative. With this in mind there are no foreseen issues in this area arising from the acquisition.
In an individualism country the society is a loosely-knit social framework in which individuals are expected to take care of themselves and the immediate family only. In a collectivism country the society tends to consider the group first (Hofstede).
From the assessment of this dimension US scored 91 and the Netherlands scored 80. This indicates that both countries are highly individualistic. However from the evaluation of the cultural audit it was determined that both companies' priority is the health of the world which indicates that even though both countries are individualistic, collectivism is a part of their core values.
According to Hofstede, Masculine societies are competitive. The preference is for high achievers, assertiveness and material rewards are expected for success. Feminine societies are consensus-oriented with a preference for caring for the weak and quality of life and being corporative. In the assessment of this dimension, the US culture is masculine while the Netherlands culture is feminine scoring 62 and 14 respectively.
It is obvious that there will be a problem in this area in terms of conflict. Masculine countries resolve conflict at an individual level while feminine countries resolve conflict by compromise. However, there must be adoptability and conformity in order to ensure future growth and completive advantage.
The uncertainty avoidance dimension expresses the degree to which the members of a society feel uncomfortable with uncertainty and ambiguity. This dimension shows that the US scored 46 while the Netherlands scored 53. This is an indication that Americans do not require a lot of rules and there is a larger degree of acceptance for new ideas, innovative products and a willingness to try something new or different. With the Netherlands on the other hand, there is an emotional need for rules and they maintain rigid codes of belief and behaviour. They are intolerant of unorthodox behaviour and ideas (Hofstede).
However, as the management team will not change at Crucell, the format of managing and reporting therefore will not change thus it will be business as usual with little or no interruptions or disruptions.
Long term orientation
Hofstede's long term orientation shows "the extent to which a society shows a pragmatic future-oriented perspective rather than a conventional historical short-term point of view"
In the assessment of this dimension USA scored 29 and Netherlands score 44 which indicates that they are both short-term oriented cultured. The both measure performance on a short-term basis.
It can be understood that both JnJ and Crucell strive for quick results within the work place for their discovery, development, manufacturing and marketing of their products and their overall line of business is in combating infectious diseases. (www.jnj.com and www.crucell.com)
Table 2 depicts the comparison of the US and the Netherlands and Johnson and Johnson and Crucell using Hofstede Five Dimension of Culture.
Table2: Hofstede Five Dimensions of Culture
Source: Students of Group 8 Presentation
Using Hofstede Five Dimension of Culture framework (www.geert-hofstede.com) in assessing the power distance of both countries it is determined that there will be no problems with management as both countries scored low on the index scale (US 38 and the Netherlands 40). As a result, the management technique of Management by Objective which is popular in the US will also be appropriate for the Netherlands (mindtools.com).
Based on Hofstete Five Dimensions of Culture, USA and to an extent JnJ have a competitive Anglo-Saxon culture with low power distance, highly Individualism and masculinity, low uncertainty avoidance and short-term oriented. This is a broad perspective of the dimension as there are many subcultures in the US which will not fit into this profile.
On the other hand, the Netherlands and to an extent Crucell also have a competitive Anglo-Saxon culture with low power distance, highly individualistic and short-term oriented. The differences in the countries culture and the companies' culture are in the dimension masculine and feminine and uncertainty avoidance. Netherlands is a feminine country with a high uncertainty avoidance level.
Possible Problems from Integration
Masculinity verses Femininity
The problem or issue that may arise in the integration on JnJ and Crucell may stem from the outcome of the Hofstede Five Dimension of Culture framework, which indicated that the countries are on different ends of the spectrum in terms of masculine and feminine.
Masculine society strives on being competitive therefore the employees from JnJ who were reared in that society will have that cultural characteristic embedded in them while the employees who were reared in a feminine society Curcell will have the feminine cultural characteristic embedded in their physique.
With the acquisition of Crucell, the different management style may cause conflict because the fast pace that USA/JnJ may be accustom to may be different from the more nurturing pace the Netherlands/Crucell may use. However due the similarities of the corporate cultures this may be a trivial matter.
As stated previously, USA and JnJ are "uncertainty accepting" as indicated by Hofstede and Netherlands and Crucell have a preference for avoiding uncertainty." This may cause a problem in the integration of the two organisations and its successful future growth. However, as the management team will not change at Crucell, the format of managing and reporting therefore will not change thus it will be business as usual with little or no disruption.
The management team at Crucell is made up of five European. JnJ has decided not to change the management team. "Joining the Janssen Pharmaceutical Companies of Johnson & Johnson has not prompted a change of direction in Crucell's approach to responsible supply chain management. On the contrary: we have gained support and resources to move faster and further than we could have done on our own." (www.crucell.com).
The management style is permissive autocrat and also situational leadership. In the biopharmaceutical industry there is no one best way to management, as lives are dependent on the decisions made. The management at JnJ and Crucell must adjust their style according to the situation that they are faced with.
A perfect example of decision making based on the situation at hand occurred in 1982. JnJ was faced with a crisis whereby their product Tylenol was laced with cyanide resulting in 7 deaths. The decision was made to recall 31 million bottles of Tylenol resulting in a loss of more than $100 million dollars. The decision to recall the product enabled JnJ to reintroduce Tylenol and restore confidence back to the consumer (http://iml.jou.ufl.edu).
Choosing the correct management structure ensures the organisation successful future growth. JnJ has decided that with the acquisition of Crucell the management style and structure will not change thereby the company will have little or no disruption in their operations.
As stated previously, JnJ will have a more formal system of reporting and more policies and procedures as opposed to Crucell. However the management of Crucell remains the same and therefore reporting most likely will remain the same.
Conclusion and Lessons Learned
Cross-cultural issues in international business are very important and should be investigated thoroughly before acquiring a foreign based company. All aspects of Crusell should be scrutinised before the acquisition. The culture of the US should not be imposed on Crucell but Crucell must abide by the policies and procedures of Johnson and Johnson. In this case the two companies have very similar corporate cultures and therefore in the day to day business operation they may not encounter any significant issues.
The lessons learned were:-
A company located in another country does not make it a part of the country's culture. For example JnJ located in Trinidad does not make it Trinidadian. The corporate culture of the company is unique to the company no matter where it is located.
Likewise the nationalities/culture of the employees does not change the culture of the company, as the employees must conform to the culture of the company.
However, a company venturing in a foreign country must take in consideration the culture of the country and try to prevent situations that may offend the citizens of that country (e.g. don't sell beef in India or stop tea breaks in England).
Word count: 2387
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Reflection on Personal Experience
Cross Cultural Issues
Trinidad and Tobago is a multicultural diverse country which was ever so evident in the group that the student was assigned to. Groups were formed on the second session of the semester. Unlike the uncertainty that is depicted in the forming stage of Tuckman (1965) Five Stage Model of Team Development, there were no uncertainties in this group as the students worked together as a group in the second semester of year two. The team was more effective because each member knew that others depended on them for achieving the final result and an interest was taken in helping each other where and when they can.
The group consisted of four students, two of African descent and two of East Indian descent, one male and three females. Even though all the students were from Trinidad, the subculture in terms of race and religion was diverse. There were two Christian, one Hindu and one Muslim. The students were also from different cultural backgrounds and social standings, from Laventille, San Juan, Santa Cruz to Cunupia, upper class, middle class and lower class in terms of upbringing. The students also came from different corporate culture which consisted of a Supervisor and a CSR/Teller from a financial institute, and two Administration Assistants from an optical firm and an import/export company.
An intimate relationship developed among the students and a collectivism approach was apparent as the group worked towards finishing the assignment on time. Based on the relationship that had fostered, the true personalities of the individuals were revealed as the students were very open about their lives. Remarks were made that revealed that racism is still plaguing the minds and hearts of persons in Trinidad. This type of thinking could only have emanated from the homes and pass down to the children.
It must be noted that even though some students are exposed to racism, they choose a different part. The student involved has gone against the parents' wishes and is now in a serious relationship with someone of a different race.
The intended goal of this team was to work effectively and efficiently in achieving the goals and objectives of the team. Effectiveness in the leader's role is a matter of leader-member relationship. It has been assumed that the leader is uniquely responsible for the quality and the amount of production by the team. The leader must therefore see to it that the right group goals are set, the group jobs gets done and members are motivated to participate, Benne and Sheats (1948). The leader of the group did extremely well in delegating tasks and motivating members to participate. As expected there were minor differences among team members but due to the students being friends, they were dealt with in an amicably manner.
Lessons were learned from this assignment. Trinidad was ranked as a Collectivistic country in Hofstede's Five Dimension of Culture (Gertz Hofstede.com) and it was so obvious in the manner in which the students bonded and worked together. The success of the whole team was far more important than the success of any one member. When team members understand their position and are able to discuss their differences in style and personalities, it becomes possible for each team member to participate more effectively in different aspects of the creative and problem solving process.
The team's purpose was therefore to build on the strengths of the individuals, minimize conflict and diffuse the occasional miscommunication that would affect the smooth operation of the team in achieving its goals and objectives.