Equity Project Essay

3147 Words Feb 7th, 2014 13 Pages

The main activity of Mead Johnson Nutrition Company is producing infants and children nutrition products and dietary supplements. It is most famous for the series of poducts such as Enfamil and Nutramigen. Mead Johson provides dietary products that suits the young human body and improves its health and growth. The company has special product lines for children suffering from nutrition problems and infants with deceases that require special diet.
The company, in conjunction with pediatrists and other medical professionals, is conducting wide researches to develop their products.
Presently, Mead Johson Company has eight families of products that are available in the markets worldwide. Three manufacturing facilities in
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Source: Morningstar.com, Growth, Profitability, and Financial Ratios for Mead Johnson Nutrition Company (MJN) (http://quote.morningstar.com/stock/chart.aspx?t=MJN®ion=USA&culture=en-US) (accessed September 24, 2013).

According to the graph above, from 2009 to present, MJN has been performing better than the S&P 500 benchmark.
Mead Johnson's current ration is 1.65, which is well below the industry average of 2.30. Therefore, its liquidity position is relatively weak. Quick ratio is also lower than the industry average, however, it still can pay off its currents liabilities not rrelying on inventories sales.
According to the latest news, the company, which market share in China is about 50%, was faced with the fine of $33 million for anti-competitive activities in the market of China. That means that MJN has to increase prices for its products, which may result in decrease of sales. Nevertheless, Mead Johnson had stable pool of consumers worldwide because it provides unique products on which it has patents.
To keep stable revenues, the company can increase its market share in China by opening more facilities (factories) in the local economy. China’s market is very big and the MJN can take an opportunity to broaden its distribution channels in the local market and be competitive with the Chinese brands.
To keep stable revenues, the company can

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