Group 9 Case Study

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Organization and Environment Case Study for Dr. Lewis. Johnson & Johnson

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Group 9 Case Study

  1. 1. Johnson and Johnson by: Floyd Lewis Camille Waddey D’Lawrence White
  2. 2. Company History <ul><li>Johnson & Johnson, also known as J & J, is a large diverse health care firm. The firm dates back to humble beginnings in 1886. The company was founded by Robert Wood Johnson, James Wood Johnson, and Edward Meade Johnson. It began with the Johnson brothers producing dressing in New Brunswick, New Jersey. The next year, the company became incorporated. The company is currently split into three segments: pharmaceutical, professional, and consumer. </li></ul>
  3. 3. Issues facing Johnson & Johnson <ul><li>Rising health care costs, social responsibility, and a difficult economic climate are all external threats to J & J. Competitors are also an external threat, but based on the revenues and sales of the company, competitors are not the most serious threat as of now. Internal threats to the organization include changing top level management and globalization. </li></ul>
  4. 4. Issue cont… <ul><li>The issue of raising health care cost depends on government regulation. As of today, health care costs are high, but that may change with a new president in office. As of 2009, national health care spending is expected to reach $2.5 trillion. This could be a good the thing for the company as far as sales, but it would have a negative impact on their public image. </li></ul><ul><li>J & J also has an issue with social responsibility. The company decided to donate funds to a Virginia-based organization called Human Life International. In this philanthropic effort the company supported an organization that supports abortions. The company provides abortions and abortion referrals. In J & J’s efforts toward corporate social responsibility, they became a target for pro-life organizations. </li></ul>
  5. 5. Analysis <ul><li>In this case, we see that Johnson and Johnson are dealing with issues that could ultimately hurt their company’s reputation and sales. One of the main issues that are currently hurting Johnson and Johnson is the contribution that they made to Planned Parenthood Federation of America, Inc. Planned Parenthood Federation of America is an organization that provided reproductive health care and sexual health information to women, men, and teens (Lawrence and Weber). One main thing that Planned Parenthood Federation of American did was that they provided abortions and abortion referrals. Abortions are any of various surgical methods for terminating a pregnancy, especially during the first six months. From the case abstract, it states that Planned Parenthood is the single largest provider of abortions in the United States (Lawyer Links). Due to this charitable donation, this sparked some outrageous concerns with several pro-life organizations </li></ul>
  6. 6. Analysis cont…. <ul><li>Another main issue that hovered over Johnson and Johnson was the company’s disclosure of information about its donations. The arguments for Johnson and Johnson were that its corporate contribution programs were essential to its mission and values, regardless of its effect on shareholder wealth. However, these charitable contributions on the company web site would be made public and some employees felt that it had potential to hurt shareholder value (Lawrence & Weber). In an attempt to make this plan happen, a group of employees put together a proposal that would in fact publicize the organizations charitable contributions on the company’s web site. In doing this, Johnson and Johnson would also have to display their contributions to Planned Parenthood along with all the other donations to other organizations. </li></ul>
  7. 7. Recommendations <ul><li>We recommend that the company work diligently to raise its image through corporate social responsibility In order for Johnson and Johnson to prosper as a company and not put its reputation in jeopardy, we feel it is best for the CEO, James McCafferty, to not approve of the proposal. This would have saved a lot of time. </li></ul>
  8. 8. Recommendations-con’t <ul><li>If the company wants to display its organizations it has donated to, we recommend that they should do it publicly. They can do this by using the media and not the company’s home page. When Johnson and Johnson displayed the information on their website, it caused them to receive a lot of bad feedbck. Getting the media involved would help change their image. </li></ul>
  9. 9. Recommendations-Con’t <ul><li>We also recommend that Johnson and Johnson continue to help charitable organizations around the world, just not at the expense of the company itself. We feel that Johnson and Johnson should show their concern for health care by lowering their product prices and donating some of their products to the less fortunate. </li></ul>
  10. 10. Rationale <ul><li>The subject of the matter is the issue of social responsibility of Johnson and Johnson to its stakeholders. Being that Johnson & Johnson was presented with a shareholder proposal on charitable contributions they have no choice but to deliberate and see what the strong points are. </li></ul><ul><li>We recommend that Johnson & Johnson should not publicize their charitable contribution information because of the risk it poses for shareholders. J&J is a well respected organization with product lines that are sold and consumed by people every day. To throw this amount of success away over a few words on a web site is ridiculous in our opinion. </li></ul><ul><li>Even though the recommendation is based off what the proposal can do to the reputation of the company, J & J has argued that it is not such a huge risk. HLI has made a separate issue of J & J contributing to Planned Parenthood because it is a pro-life, woman and family organization. But the proposal remains specifically that charitable donations be available online. In response, J & J has said that they are a social responsible and give to a broad range of charities in which they work and live in. Although they do have a responsibility to its shareholders in terms of profits but also to its stakeholders, their credo is very close fitting to stakeholder view of J & J. </li></ul>
  11. 11. Results/Conclusion <ul><li>Overall, Johnson & Johnson is a very successful company and has been doing well for over a century. The company has grown internally by acquiring other brands to increase its competitiveness on a domestic level. Also, the company has moved into overseas markets with its decision to expand globally. The company should thrive in any economic situation as long as it keeps being innovative and socially responsible </li></ul><ul><li>Johnson and Johnson will make good progress if they take in to account certain recommendations made. Their number one focus should be to their shareholders. If they are not happy then what are you to do? They are the ones, besides the employees, that keep the company rolling. Without their investments and input, the company will fall. We think if Johnson and Johnson actually sit down with their shareholders and get their opinions on what they think, positive changes could be made. </li></ul><ul><li>Johnson and Johnson have a good image in the community and should keep this image clean for many more years. They will be a leader in the healthcare industry for a long time. Making a few changes will do the company well and gain mega profits in return. </li></ul>

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