Mba501-Week2-Products, Services, And Prices – Free Market Economy
Running head: PRODUCTS, SERVICES, AND PRICES - FREE MARKET ECONOMY
Products, Services, and Prices – Free Market Economy
University of Phoenix
MBA 501
Factors Influencing Business in the 21st Century
Introduction
“Economics: It is the social science concerned with the efficient use of scarce resources to achieve the maximum satisfaction of economic wants” (McConnell & Brue, 2004, p. 3). Economists think and view things/topics in a different perspective. The economic perspective helps for developing effective solutions to price, demand and supply problems.
Johnson and Johnson is one largest healthcare firm in the world consisting of over 250 subsidiaries in 57 countries. The company was founded in 1886 with is first surgical dressing in New Brunswick, New Jersey. Since going public in 1944, the company’s worldwide sales have grown to $61.1 billion at year end 2007. 11% of the sales were due to consumers’ products segment which “makes over-the-counter drugs and product for skin and hair care, baby care, oral care, first aid, and women’s health.” (Hoover’s Profile, 2007). Johnson and Johnson achieved this growth by concentrating on a unique form of decentralized management, being broadly based in human health, following the ethical principles embodied in their Credo, and managing the business for the longterm.
For the price-elasticity and income-elasticity exercise with the end-goal of increasing company revenue, the product Band-Aid of Johnson and Johnson was selected.
History and Revenues of Band-Aid
Band-Aid’s history dates back to 1921 when Earl Dickson invented ready made bandages by placing squares of cotton gauze along an adhesive strip and covering with crinoline. At first the bandage was not very successful selling only $3000 worth. By 1924, the Band-Aids were produced by the machines and the sales rocketed. By the death of Earl in 1961, Johnson and Johnson were selling over 30 million dollars worth of Band-Aid. Band-Aid is a part of...
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