Ethich

4. Impact of chosen business strategies Tylenol capsule laced with cyanide in Chicago After the crisis happened in 1982, Johnson & Johnson abandon capsule, develop caplets and offer coupon for new product if defected product is returned at no extra cost. The company suffers a loss of $1.24 billion due to the depreciation of the company's brand value (ICMR). Tylenol's share dropped from 37% in early 1982 to just 7% by late 1982 (ICMR). However, overall the decision of eliminating its key product in return, company gets good response and admiration from public. Furthermore, it is also considered to be a “model of corporate responsibility for its actions”. Company improves its reputation gradually. Infant Tylenol, Tylenol overdose, liver damage and combining alcohol and Tylenol issues About 12 after the first issue, the firm has to face another scandal which caused by lacking of effective warnings on productions’ packaging. The product is too strong and it is led to consumer’s misunderstandings, so they end up using more than needed. Then, what the company does is start correcting its mistake by modifying dosages recommendation, commercial claims and the labels language. For instance, adding bold warning: “Nothing’s safer”; “Taking more than recommended does...could cause...risks”. The initial issue affects the reputation of company, but because of its goodwill of recalling the bad product of the company in the Chicago case, it gets people’s sympathy as well. In addition, the company does not loss any market share (Jennings, 2011). Even though these issues show the decision makes its image almost at risk, the image at this moment is not that worse. Failure in monitoring and controlling Tylenol quality The third problem happened very recently is about safety issues at factory in May 2010. Even though Johnson &Johnson does know about the problems, it does not take public reaction for alerting. In addition, company does not recall bad quality Tylenol nor notify the FDA about the issue. Even worse, in a reveal is that the company’s checking quality of medicine is so superficially, in particular is the Children Tylenol. It is given in this case that the Johnson & Johnson overlooks the problem, specifically on children’s health. It decides to make seven batches of Children’s Tylenol available over-the-counter anyway despite problem in the three batches. These are very bad and unethical decisions from John & Jonson. Obviously, the reputation is greatly damaged. According to CNN, the FDA and the Justice Department against McNeil two executives for failing to comply with federally mandated manufacturing practice (CNNMoney, 2011). For violation of the Federal Food, Drug and Cosmetic Act, company can face a civil lawsuit. However, because McNeil agreed to terms of a consent decree McNeil have to destroy all drugs that have been recalled since December 2009 (CNNMoney, 2011). In case of violating the decree, regulators can shut down the all production at the plants McNeil properly need to pay fines of $15,000 per day per violation of law up to $10 million annually. Besides, due to David Rosen, a former FDA official, McNeil will have to pay for the outside expert and the new inspections to make sure that manufacturing processes meet federal standards. And there’s millions of dollars in lost sales from drug products that cannot be marketed (CNNMoney, 2011). 4. Cost of chosen business strategies Firstly, when eliminate key product and change the production form and packaging make the cost rises. Because it may need to hire more employees in doing researches and get new technology. However, sales would increase as the firm get consumer’s trust slowly. Secondly giving coupon to get back capsules make cost increases. It is a loss for company as its reputation can be devalued. It is estimated that the company can loss over 1 billion for its reputation’s value (ICMR). Fourthly, modifying the packaging and adding more bold note cost more since the firm spends extra on employment to redo the packaging but buyers still cannot be confident in the products as much as before. To explain, this can happen even when the public show appreciation on being effective of the company, it does not mean they forgive the incidents. Fifthly, ignoring complains, testing irresponsibly, conducting requirement for testing rise the cost because the company have to recall over hundred million productions and pay $15,000 per day per violation and up to $10 million every year (CNNMoney, 2011). Not to mention that it can end up with civil charge which can cost a lot more expensive than that. In future, to fix the problem it will cost so much money for John & Jonson to do heavier advertisings and projects to get buyer’s trust. Bibliography CNNMoney. (2011, Mar 11). Tylenol Maker Cedes Control to FDA. Retrieved June 15, 2011, from http://asq.org/qualitynews/qnt/execute/displaySetup'newsID=10813 ICMR. (n.d.). The Johnson & Johnson Tylenol Controversies. Retrieved June 15, 2011, from http://www.icmrindia.org/casestudies/catalogue/Business%20Ethics/BECG015.htm Jennings, M. M. (2011). Business ethic: Case studies and selected reading. South Western.