Johnson & Johnson

Group 6:Shanelle ArcherLakeshia Leach

Latrice LeeBrandon Marsh

George Matherson

Johnson & Johnson and the Human Life International Shareholder

Proposal

Organization and Environment MGMT 418Dr. Sherrie LewisNovember 28, 2009

OUTLINE•Executive Summary

1.Brief Description of the Casea.What are the basic facts? b.What are the characteristics of the company and the market?

•Company Overviewa.Brief Description of Johnson & Johnsonb.Brief Description of Human Life International

•Problem Statement/Key issues1.What are their objectives

a.Shareholder Proposal•What is there view point?

1.Board of Directors Proposala.What is there view point?b.What are their beliefs?

a.Analysis•What problems or opportunity’s do Johnson & Johnson face•What decisions need to be made?

1.Recommendationsi.Which alternative do you recommend? Why?ii.Pros and cons of recommendations

2.Results/Conclusiona.Outcomes of the Case

a.What did we learn?b.How it relates to this course

a.References

Executive Summary

Johnson & Johnson (J&J) started off as a family business but now is a major leading company of making pharmaceutical and medical products.

The Johnson & Johnson credo, written in 1943, emphasized the importance of ethics and responsibility to stakeholders as well as the role of managers in creating ethical organizational cultures.

The problem that we run into with the case of Johnson & Johnson and the Human Life International Shareholder Proposal is that behind this relatively straightforward proposal lies a more complex issue.

Human Life International is a shareholder of Johnson & Johnson and a pro-life organization (opposed to abortion). They proposed an ultimatum as a result of Johnson & Johnson’s life of contributions to Planned Parenthood. Human Life International threatened to boycott Johnson & Johnson’s products to stop them from contributing to Planned Parenthood, while several mutual funds had already decided against investing in the company’s stock or to sell stock already owned.

Company Overview

Johnson & Johnson was founded in 1886 by three brothers. Their first product was a medical plaster used as a surgical dressing to reduce infections. The company has grown to employ more than 115,000 people in 57 countries through more than 230 operating units all over the world.

In 2005, with net earnings of $10.5 billion, sales totaled more that $50 billion (Lawrence & Weber, 2008, p.495).

Johnson & Johnson has made many well-known consumer products, including Johnson’s Baby Powder, Band-Aid brand adhesive bandages, Tylenol, Motrin, St. Joseph aspirin, and Neutrogena skin care products. The company operates in three main business segments: consumer health and beauty products, medical devices and diagnostics, and pharmaceuticals.

Johnson & Johnson’s long history of philanthropic contributions, Robert Wood Johnson has established a foundation that identifies itself as the largest charity devoted exclusively to health issues (Lawrence & Weber, 2008, p.495).

Human Life International (HLI) was founded in 1981 by a Benedictine monk named Reverend Paul Marx and prides itself upon being “the largest international, pro-life, pro-family, pro-woman organization in the world” (Lawrence & Weber, 2008, p.495).

Their mission is “to train, organize and equip pro-life leaders

around the world to promote and defend the sanctity of human life and the dignity of the family”.

Human Life International organizes conferences and missionary trips, distributes pro-life literature, engage in public relations activities, provides grants and supports scholarships, as well as the activities of their affiliates.

They took on positions in various issues involving patient and family rights and Supreme Court appointments and issued press releases on many political charged issues, such as the Terri Schiavo case involving a dispute over whether or not to remove the feeding tube of a severely brain-damaged woman.

Problem Statement/Key issues

Shareholders want all of the company’s charitable contributions to be listed on the company website.

Planned Parenthood is listed as one of the organization.

Planned Parenthood provides reproductive health care and sex education to women and teens, and they also provide and offer referral information for abortions.

Pro-Life organizations will boycott Johnson & Johnson if they continue to support Planned Parenthood.

Analysis

Should Johnson & Johnson make donation at all? They were asked how much money were they giving away

and to whom. Their shareholders wanted to know how their stocks were

being invested and how much profit are they making off the company.

If donations were acceptable in society, then what organizations would shareholders allow their money to be contributed too and why? Shareholders ultimate goal is to maximize profit and provide

longevity for not only personal gain, but the company’s as well.

Johnson & Johnson has a long history of philanthropic contributions and donations to organizations that they feel are operating and benefiting these five areas: women’s and children’s health, community responsibility, access to care, advancing health care knowledge, and global public health.

Is Johnson & Johnson practicing how to be more socially responsible? Socially responsible business practices are where the

corporation adapts and conducts discretionary business practices and investments that support social causes to improve community well-being and protect the environment.

Key distinctions include a focus on activities that are discretionary meeting moral and ethical standards

Recommendations

Johnson & Johnson should recover its market share lost. Market share was lost when investors and shareholders made

their proposal and decided to boycott. The outcome with their shareholders and company investors were being placed in such a bad position, they needed to act fast.

To avoid this situation, we recommend that Johnson & Johnson should recover their market share lost by listening to their shareholders and coming up with some kind of meeting point in the proposal.

Johnson& Johnson should be careful on what companies they give charitable contributions to.When they donated to Planned Parenthood, the shareholder

proposal made it seem like the company was for abortion.Johnson & Johnson should issue a statement to their

shareholders, as well as to the public, on why they invest in Planned Parenthood. This statement should include the benefits and explain the purpose of Planned Parenthood so that shareholders can understand the organization as a whole instead of one area that they disapprove of. This will enlighten the shareholders and sway their votes to agree with Johnson & Johnson instead of going against them.

The company has obligations to its consumers, community, and shareholders, would be to honor what your shareholders are proposing. Johnson & Johnson should strongly consider what

their shareholders are proposing while at the same time keeping the company’s best interest as top priority.

We recommend that there is no doubt that Johnson& Johnson needed to re-establish the Tylenol brand name as one of the most trusted over-the-counter consumer products in America.

We feel Johnson & Johnson needs to maintain a good reputation of company brand name because it is extremely important when being in the industry that they operate in.

Results/Conclusion

The shareholders simply requested that the Board of Directors implement a policy listing all the charitable contributions onto the company’s website, which was a very simple request that Johnson & Johnson could have made to please their shareholders.

We believe that Johnson & Johnson should have adapted the Stewardship Principle in order to balance the interests and needs of many different diverse groups of society while making business decisions. The stewardship principle states that companies that

are privately owned and try to make profits for the stockholders have an obligation to see that everyone benefits from their firms’ actions. Therefore Johnson & Johnson should have taken in consideration the stakeholder proposal.

The proposal was asking for was to post company charitable contributions on the website and ultimately could of promoted long-term profits for the company by keeping some shareholders interested in the company instead of boycotting and leaving.

If Johnson & Johnson were to stick by their credo then they need to protect their stockholders from anything that could threaten their business and take away from growth.

If Johnson & Johnson does list its contributors on the website they may lose consumers in the short run but they will have done what the shareholders wanted and they may possibly gain future consumers because of that choice.

If Johnson & Johnson does not post the contributors it becomes an issue of why they felt the need to have to hide that information from consumers.

The shareholders took an active stance on the social investment of Johnson & Johnson. Social Investment is used when the stock owners produce a

strategy for promoting social objectives. This can be done in two ways: through selecting stocks according

to various social criteria and by using the corporate governance process to raise issues of concerns.

Johnson & Johnson must learn how to balance these two issues and do what is best for the company by using utilitarian reasoning so that they will generate the best possible outcome for the greatest number of people; therefore protecting their shareholders and having their interest at hand while still complying to the companies mission statement and values (Lawrence & Weber, 2008, p.333).

We say that if Johnson & Johnson were to listen to their shareholders and somehow take into consideration their ideas then they could make their shareholders happy while still conducting the same business practices that they have been all along.

Planned Parenthood should still be donated to and supported by Johnson & Johnson.

References

Griffin, Ricky. Pustay, Michael. “Intentional Business” Copyright 2007. Pearson Education, Inc.

Kotler and Lee. “Corporate Social Responsibility” (2005) John Wiley & Sons, Inc. (pp. 144-210).

Kramer and Porter. “The Competitive Advantage of Corporate Philanthropy,” Harvard Business Review, December 2002, http://www.isc.hbs.edu/HBR_Dec2002_Corporate_Philanthropy.htm

Lawrence and Weber. Business and Society: Stakeholders, Ethics, Public Policy (2008). 12th Edition. University of San Jose State, University of Duquesne. Pages 492-500

Johnson & Johnson. (2006). Tylenol Cyanide Incident. Retrieved June 6, 2007, from http://www.jnj.com/connect/

Johnson & Johnson Services. (1997-2009). Our Credo Values. Retrieved October 15, 2009, from Johnson & Johnson :

http://www.jnj.com/connect/about-jnj/jnj-credo/ Weber, A. T. (2008). Stakeholders ; Ethics, Public Policy. In

Business & Society (pp. 492-500). McGraw-Hill companies.