Executive Summary: Codman & Shurtleff is a subsidiary of Johnson & Johnson which supplied hospitals and surgeons worldwide with over 2,700 products for surgery. Codman is now facing a profit shortfall of two million. A series of actions was decided in order to recover the shortfall, while the decisions made were somehow not aligned with J&J’s group philosophy. Codman managers decided to cut budgets of R&D expenditure which might have negative effects on the long term performance of the firm. The management of Codman ought to choose a better way that has a positive effect on operations in the long run and use a formal process, “stage gate”, in new product development. Subsidiary mangers should conduct planning and control under this basis. Every time when they make adjustment and decisions, they should not only intend to achieve the short term budget, with compromising long-term benefits. We will analyze the planning and control system more in-depth, through following
4.2 Evaluating planning and control system The planning and control system used in J&J is based on the five – and ten-year planning concept which delivers long-term visions for the company. The reason why J&J adapted the five – and ten-year planning concept rather than a moving planning horizon is that managers need to always include in their plans an account of how and why their estimates have changed over time, and also, it shows company an objective way of setting aspirations. Johnson & Johnson is managed on a decentralised basis and comprises about 155 autonomous subsidiaries. According to its excerpt form the 1985 Annual Report, the company is organised on the principle of decentralised management and conducts its business through operation subsidiaries, for the most part, integral, autonomous operations. Direct responsibility for each company lies with its operating management, headed by the president, general manager or managing director who reports directly or through a
