Daily Column – 13th November 2021

Some of the world’s most recognisable corporations are recognising that, if only their business units had their own bedrooms, they’d get a better night’s sleep and be more productive the next day.

Let’s start with Johnson & Johnson, which has been in business for 135 years and is the world’s largest manufacturer of health products in terms of revenue. J&J announced that it would separate its consumer products segment from the division that manufactures medical equipment and medications, resulting in the formation of two publicly traded corporations.

The consumer division of Johnson & Johnson is a powerhouse, and it is home to medicine cabinet staples such as Tylenol and Band-Aid.
Yet it is the company’s prescription pharmaceuticals that will be its major motor, accounting for 55 percent of its sales in 2020.
Several lawsuits have been filed against J&J alleging that its baby powder caused cancer, but company executives assert that the legal fights played no influence in the decision to split up. A distinct consumer business, on the other hand, would allow J&J to be more responsive to changing trends and more swiftly adapt to new technologies.

“De-conglomerating” is a trend that is sweeping the world.

In recent years, some of the world’s most illustrious conglomerates have come to the conclusion that perhaps size does not matter after all. Toshiba, the Japanese industrial juggernaut, announced yesterday that it would be divided into three firms, each focusing on a different area of expertise: infrastructure, electronic and semiconductor products.

Toshiba has been compared to General Electric in the past, and this move is eerie. The 129-year-old corporate landmark, on Tuesday, announced that it would be dividing itself into three parts, acknowledging that a single business simply cannot compete successfully in such a diverse range of industries as they do today.

Can it, or can’t it? As the sun sets on one generation of conglomerates, the light rises on a new generation of conglomerates. Amazon, for example, began by selling books but has now expanded to produce television shows such as The Marvelous Mrs. Maisel and sell green juice at Whole Foods. Alphabet is responsible for the development of driverless cars and the operation of YouTube. They are hoping that new digital technology would help them to avoid the inefficiencies that have plagued faltering companies such as General Electric.

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