Class Assignment questions 1 and 2.

lice here noticed by senior executives come along so that you will be ready when--and if this happens to you in real life. We ar munit Johnson & Johnson is a long-established manufacturer of health care products and pharmaceutical drugs. The company is best known by consumers for products such Band-Aids and Tylenol tablets, but it is better known by physicians for minimally inva- sive surgical instruments and highly sophisticated diagnostic systems. It is a firm that has grown consistently over time, with a stock price that went from $12.00 per share in The company has a very unusual Mission Statement, or affirmation of the purpose of the firm, which focuses on corporate duties rather than financial profits. This state- ment has been widely distributed among active employees, and is not considered to be "window dressing," or a hypocritical desire to appear socially concerned while every one really focuses on the "bottom line." This was proven a number of years ago when a person in Chicago, for reasons that have never been discovered, put tablets containing Case 5-2 Johnson & Johnson and the Worldwide Recall of Tylenol 1989 to adjusted for stock splits-$124 per share in 2009. Our Cla ! recei arsenic in unsold bottles of Tylenol on store shelves through that city and the suburbs Six people died. It could not quickly be proven that this had occurred purposely at the retail stores in Chicago and not accidentally at the manufacturing plant in New Jersey. Consequently, Johnson & Johnson removed, in a matter of days, every package of Tylenol from every store in America and abroad, at a cost of more than $100 million, to protect its customers. Those packages were later replaced, free of charge to all retailers and to any customers who had returned unused portions of pur- chased packages, with new drugs in tamper-proof" containers. The senior executives at the time explained that this prompt and complete response was required by the Credo or Mission of the firm: but The mill sho 1. 2. We believe that our first responsibility is for the doctors, nurses, and patients, to mothers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customer orders must be serviced promptly and accurately. . Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their worth. They must have a sense of security in their jobs. Compensation must be fair and adequate and working conditions clean, orderly and safe. Chapter 5 Why Should a Business Manager Be Moral? 127 . Employees must feel free to make suggestions and complaints. There must be equal treatment for employment, development and advancement for those qualified We must provide competent management and their actions must be just and ethical. We are responsible to the communities in which we live and work, and to the world com- munity as well. We must be good citizens-support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative pro- grams developed, and mistakes paid for. New equipment must be purchased, new facilities provided, and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return. Class Assignment The prompt and complete action by Johnson & Johnson was exceedingly well received by consumer advocates and physician groups within the United States, but there was considerable grumbling among financial analysts and fund managers. The general feeling among most of the professionals on Wall Street was that $100 million was too large an amount to spend for all stores in all parts of the world. "They should have just taken the product off the shelves in Chicago where the deaths actually occurred, at maybe a cost of $1 million" was a common comment. 1. What is your opinion on the recall? Should Johnson & Johnson have taken Tylenol off the shelves just in the Chicago area, and waited to see if that solved the prob- lem, or were they correct in removing the product from all stores everywhere in the world? Be ready to convincingly support your position. 2. What is your opinion of the Credo or Mission of Johnson & Johnson? Would you like to work for a company that apparently takes its duties to customers, employees, sup- pliers, distributors, local communities, and the world population seriously? Why don't other companies operate on the same list of priorities, with stockholders at the bottom? brporation and the Treatment of Employees is a new and different type of steel company. Traditional steel ore, coal and limestone in hlart fu