Johnson Johnson Case Study Answers (1) 2412e

KEY CONCEPTS IN CASE STUDY Organizational Ethics This incident is a clear case of differing organizational ethics. When the products were tampered with, the senior executives were initially told to do the moral minimum which was removing products only from the area surrounding the incident. This meant that somewhere along the chain of authority, someone believed that this was the right thing to do. There was a clear case of Conflict of Interest in regards to the crisis management resolution. If the senior executives had followed the instructions, they would be adhering to one set of beliefs about what was the "right thing to do", while potentially hurting the lives of others or even the company's overall image. Johnson & Johnson displayed Utilitarianism in their decision making because they disregarded the initial advice and instead removed $100 million of Tylenol product nationwide which was acting in the best interest of the greatest number of people rather than the amount that the executives believed to be necessary. As a result of the product tampering, Johnson & Johnson put research and development into their value chain of production, and discovered the opportunity of a safer seal on Tylenol bottles.

Question 1: Although Johnson & Johnson took a massive short-term loss as a result of its actions, it was cushioned by the relative wealth of the company. Should it have acted the same way if the survival of the firm were at stake?

Response: I believe that Johnson & Johnson should have acted the same way even if the survival of the firm was at stake. The firm responded appropriately to the Tylenol crisis and took the proper steps in removing more than 31 million bottles of the product nationwide. If the firm had done anything less than what they did I believe it would have been detrimental to the company. The survival of the firm would be even more at stake if they didn't remove all Tylenol products worlwide. Customer loyalty would significanlty drop and consumers would still continue to be skeptical about the safety of the produts. The 1982 Tylenol Crisis has gone down in history as one of the must successfully handled crisis management cases. The firm should have acted the same way even if the survival of the firm was at stake.

Question 2: James E. Burke reportedly said that he felt that there was no other decision he could have made. Do you agree? Could he, for example have recalled Tylenol only in the Midwest? Was there a moral imperative to recall all Tylenol?

Response: I agree with James E. Burkes when he stated that there were no other decisions that could have been made. I believe that it was necessary for him to recall the product worldwide and not only in the Midwest. I believe that there was a moral imperative to recall all of the Tylenol. As a consumer, I would not feel comfortable purchasing any Tylenol product knowing that several bottles have been tampered with. The only way I would justify continuing to purchase Tylenol products would be if all products were removed and reconstructed to ensure safety. "James Burke, the company's chairman, was widely ired for his leadership in the decision to pull Tylenol capsules off the market, and for his forthrightness in dealing with

the media." (Rehak, 2002) Johnson & Johnson would not have been able to bounce back from this crisis as successfully as they did, if they only removed the Tylenol from the Midwest. In this case there was no othere decision that could have been made and James Burke made the right choice in recalling all tylenol products nation wide.

Question 3: What was the moral minimum required of the company in this case? Would it favour some stakeholders more than others? How would you defend balancing the interests of some stakeholders more than others? Response: The moral minimum is to recall the bottles from the Midwest region alone, where the deaths occurred. Had they made this decision, Tylenol's executives would have benefited by not having to lose so much money in recalling more nationwide. The shareholders would have been hurt regardless because if the company was not socially responsible, the public would not respect their business and the market share would drop anyway for not taking acceptable precautions and crisis management. The general public is the most important stakeholder to any business that depends on consumers. It is extremely important that the public is pleased and satisfied before any other stakeholders because without consumers, there is no product demand and therefore no business.

Question 4: Imagine that a third-world country volunteers to take the recalled product. Its representatives make assurances that all tablets will be visually inspected and random samples taken before distribution. Would that be appropriate in these circumstances? Would it have been a better solution than destroying all remaining Tylenol capsules? Response: It would not be appropriate for Tylenol to allow a third world country to take the recalled product. Their Credo states, “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers, and all others who use our products and services”. If the product is not suitable to be consumed by North Americans, it would be unethical to consider it good enough for those in a third-world country. Tylenol would also be taking a huge risk by sending the tablets to a third-world country as they could cause more damage to their reputation if some of those tablets happened to also contain the cyanide and result in more deaths. Destroying the remaining Tylenol capsules was the most responsible and ethical choice under these circumstances.

Question 5: Apparently no relatives of any of the victims sued Johnson & Johnson. Would they have had a moral case if they had? Should the company have forseen a risk and done something about it? Response: This was not the first case of such harmful tampering. In New York in 1899, Harry Cornish, the owner of knickerbocker athletic club, was sent a package that contained Bromo-Seltzer (an antacid) before the holidays. He thought it was a silly joke teasing and warning not to drink too much over the holidays. He

took the bottle home and thought nothing of it until a relative consumed some and complained of feeling ill the next day. Cornish tried some of the antacid and itted to it tasting off as well. Turns out the contents had been poisoned. Cornish survived a minor illness following the tasting but sadly, his relative ed.This was a very long trial and likely very public because the appeal process was a landmark in US law which determined previous crimes cannot be used as evidence for unrelated ones (Schwartz 2012).Since other medical products had been tampered before the time of this Tylenol incident, there should have been more awareness of the potential risks to insufficient packaging. The research and development of their value chain should have been a priority before any major incident prompted it. The families would have had a moral case because there should be more preventative measures to protect the public from situations like this. The investigators found that many bottles were either purchased or stolen from a few different locations to be tampered with and eventually returned to the shelves. This should not have been so easy to accomplish by the individual responsible for the poisoning.

Question 6: How well do you think a general credo works in guiding action? Would you prefer a typical mission statement or a clear set of policy outlines, for example? Do you see any way in which the Johnson & Johnson Credo could be improved or modified? Response:

Defining your beliefs and guiding principles is important to running a successful business. If you don't define your beliefs, others--be it friends, associates or the marketplace--will do it for you. (Sugars, 2010) I think that a general credo works really well in guiding action. A credo covers much more than simply where the company is going and why they are there, it covers the values of the company. The credo forces the company to keep the needs of the customer first. In my opinion, the credo works better than a mission statement or a clear set of policy outlines because it covers and defines so much more: companies would have to write out millions of policies in order to prepare for future conflicts and a mission statement doesn’t even begin to cover how to deal with such a crisis. No, I don’t think that Johnson & Johnson needs to improve the credo because it covers all the important categories of people affected: customers, employees, the community and stockholders.

1)

Recalling all Tylenol bottles nation wide

This was the decision that James Burke implemented in order to handle the Tylenol poisonings crisis. This was by far the most effective decision out of all possible choices. Although J&J suffered for the first year after the recall they were able to bounce back and regain 28% market share. Johnson & Johnson did an effective job by immediately recalling all tylenol bottles and informing the public about the incident.

Pros - Eliminating the risk of another death - Market share returned to 28% after the first year - Reassured safety in the eyes of the consumer - Customer loyalty regained - Development of a new, safer bottle

Cons

- The removal and destruction of 31 million Tylenol bottles - Market share decrease by 28% for the first year - 200 million spent in removal and bottle development costs

Recalling Tylenol only in the Midwest

2)

James E Burke felt that there was no other decision he could have made and that eliminating the Tylenol products only in the Mid-West (where the fatalities took place) was not an option. If he did however only recall the products in the Mid-West there would be both pros cons to this decision. It would have saved Johnson and Johnson millions of dollars in the recall process and would have been less work for employees. However, customer loyalty would decrease and consumers not located in the Mid-West would be reluctant to purchase any Tylenol product. Inevitably J&J would not have been able to recover from this crisis as well as they did if they only recalled the products in the Mid-West.

Pros - Less of an expense for the company - Less work from employees and drug store owners - Millions of dollars saved

Cons - Customer willingness to buy Tylenol products - Risk of another customer fatality - Loss of overall brand loyalty and trust - Decrease of Tylenol sales in the future - Risk of lawsuit

3)

Giving recalled products to a third world country

If Johnson & Johnson decided to give the remainder of the Tylenol products to a third world country in need there would be a number of pros and cons to this scenario. It would benefit Johnson & Johnson in not having to destroy millions of products. The products would not go to waste and J&J would have saved a large sum of money in not having to destroy many products that may not have been tampered with.

Pros - Not having to waste millions of Tylenol products - Saving money by selling the products to a third world country - Giving a less fortunate country medicine they desperately need

Cons - Threat of an individual dying from tampered product - Other countries viewing this as unethical and unsafe - Consumers may view the Johnson & Johnson brand negatively

4)

No Recall of Tylenol products

With crisis management a company needs to evaluate every possible scenario when dealing with a dilemma. In order to make the best decision all scenarios need to be considered. Out of all the possible

choices and decisions, this by far would have been the most ineffective. I believe that Tylenol would not exist today if J&J decided to not recall the products what so ever.

Pros -No hassle for company to recall products

Cons - Risk of multiple more deaths to individuals - Public outrage - Multiple lawsuits against Johnson & Johnson - Complete loss of brand trust and loyalty - Millions of dollars lost in future Tylenol sales - Chance of J&J going bankrupt