Codman & Shurtleff, Inc.
Introduction and Issues
Codman & Shurtleff was launched in 1838, focusing on the design and fabrication of surgical supplies. Years later, Johnson & Johnson acquired it in 1964. Today, Codman & Shurtleff, Inc. is still one of many subsidiaries of Johnson & Johnson. It continues to supply the medical profession with surgical tools, equipment, implants, disposable materials and many other medical supplies.
This case discusses the planning and control system of Codman & Shurtleff, Inc. It focuses on the reporting relationships, five and ten-year plans, financial planning, and budget revisions and reviews. One major issue is that the company is ...view middle of the document...
They have a shared philosophy that guides the policies of each division. Per the case, those philosophies are “a basic belief in decentralized management, a sense of responsibility to our key constituents, and a desire to manage for the long term.”[ii] The case has made it very clear that short-term profits are not a focus of the divisions. To instill this philosophy throughout the employees, bonuses are not based on profits only. They are based on an overall performance over many years.
Another important attitude of Johnson & Johnson is that decentralization should not eliminate challenges and healthy conflicts from corporate headquarters. “Healthy conflict is about what is right, not who is right”[iii] is an important philosophy that they instill at the corporate and subsidiary levels. This statement says a great deal about Johnson & Johnson, as well as Codman & Shurtleff and the other subsidiaries. It is a company that doesn’t appear to be as political when an employee comes up with an idea or new strategy. It says that anyone can express his or her ideas and he or she will be taken seriously, rather than discarded before even considering the idea. It also says that the company will not allow itself to become stagnate, which could be detrimental to its existence. Today’s environment has become very complex; thus, the existence of companies is dependent upon new strategies and ideas. Instilling this philosophy throughout the organization will enable the company to thrive in its business.
The structure of Johnson & Johnson’s organization is of the divisional form. The diverse groups are divided into separate divisions. As a division of Johnson & Johnson, Codman & Shurtleff is completely autonomous, as are all of the other divisions of Johnson & Johnson. Because they are held accountable for their performance, the company must have a high degree of control. Key players in Codman & Shurtleff are Gus Fleites (vice president of Information and Control) and Roy Black (president).
Although Codman & Shurtleff is treated as an independent operating company, it still must report to the corporate headquarters. Stated in the case, Roy Black reports directly to Hebert Stolzer at Johnson & Johnson. He must sell the ideas and concepts to Johnson & Johnson. The five and ten-year plans are drawn from the bottom line and worked up to sales. Per the case, corporate is only interested in estimates for unit sales, sales revenue, net income and return on investment. The strategic plans must enable the company to reach these goals; therefore, a written plan of how the objectives would be met is a requirement.
Within Codman & Shurtleff, there is a functional structure, which includes the following departments: manufacturing, marketing, new business development, information and control, human resources, international, finance and research and development. Each department is expected to possess...