Johnson &Johnson (J&J) is one of the leading American corporations that was founded in 1886. J&J has its headquarters in Brunswick, New Jersey, while its consumer division is in Skillman, New Jersey (Stewart & Paine, 2012). The company is primarily tasked with producing and packaging medical devices, consumer goods, and pharmaceuticals, with one of the latest production being the COVID 19 vaccine. Some of the common brands under J&J include Band-aid, Tylenol medications, and Neutrogena skin and beauty products. According to a report released towards 2020, J&J has approximately 250 subsidiary companies and undertakes its operations in about 60 countries, while most of its products are sold in more than 175 countries. Since J&J is one of the largest companies in the most valued companies due to its credit ratings of AAA. The success of J&J Company can be attributed to its strategic decision-making framework. Most of the members in this company use this framework in decision-making, especially those requiring critical thinking and analysis. Since J&J falls under the pharmaceuticals industry, it has been faced with various challenges. This aspect has resulted in it having a negative reputation from its customers in the global markets. This essay, therefore, seeks to expound on the business, legal, and some of the ethical issues affecting the J&J Company.
Background Information regarding the J&J Company
J&J’s success story can be attributed to its ability to plan strategically while operating in the pharmaceuticals industry. Since its primary mission is to make diversity and inclusion in its daily operation, J&J has heavily invested in research and development (Stewart & Paine, 2012). On most occasions, the company often relies on innovative ideas from different stakeholders in expanding their businesses. Although the company has been in operation for the past 130 years, it has successfully grown its brand across different market segments (Stewart & Paine, 2012).
J&J also focuses on conducting its activities in an environmentally friendly manner. As a result, it has strived to take the necessary safety precautions when conducting its activities. One way the company has considered the wellness of its employees and enhancement of the society at large is by including more than 500 fortune companies in their activities (Stewart & Paine, 2012). Including the 500 fortune companies have always laid a foundation for enhancing the quality of life of individuals in the entire globe by carefully researching the effectiveness of their products. Since the company is also tasked with producing products used by mothers and children, J&J has collaborated with them to ensure that it releases products that can adequately cater to their needs (Stewart & Paine, 2012).
Johnson and Johnsons Management Strategy
For a long time in history, J&J has been involved in loosely managing its subsidiaries. It is believed that loosely managing subsidiaries is one factor that has contributed to the company’s global success. When managing the subsidiaries, J&J allowed them to be almost completely autonomous. This act encouraged innovations among the subsidiaries since it encouraged the entrepreneurial spirits of individuals working in the firms. Although most of the subsidiaries under J&J were historically successful, assessing its external and internal environment reveals that the company would also reap big when the subsidiaries were grouped.
For more than 130 years that J&J has been in operation, it has encouraged inorganic growth through acquisitions. These acquisitions are among the factors that enabled the company to diversify and grow while at the same time remaining competitive. With more than 250 subsidiaries, J&J has grouped its product lines into three divisions: consumer products, medical devices, and pharmaceuticals. Although the consumer products division is more popular, J&J gets higher profit margins from medical devices and pharmaceuticals. Under the pharmaceuticals division, the firm sells products such as Procrit, one of the effective drugs used in managing anemia, and Risperdal: used in managing schizophrenia. With the emergence of the Coronavirus towards the end of 2019, the firm also engaged in various researches. This aspect led to the production of the Johnsons and Johnsons Corona Virus vaccine.
Economic and business leadership Issues affecting J&J Company.
J&Js expansion was primarily attributed to the heavy acquisitions it made when actively operating. Most of these acquisitions primarily feel under the healthcare sector. Over the past decade, the company bought more than 70 different firms, an aspect that contributed to the tremendous growth in its operations base. For instance, towards the end of 2014, J&J made its last acquisition of Alios BioPharma, one of the firms primarily concerned with producing therapeutic medications used in managing viral infections. Despite its success, its leadership has predisposed the company to suffer from diverse legal and ethical issues in various courts within the U.S. and community.
Leadership issues brought by the company’s CEO
William Weldon is among the CEOs who have worked at J&J for a long. Under Weldon’s leadership, he believed that the company’s Credo was to create products that would reach its wide customer base. From the time when Weldon assumed the leadership position at Johnson’s Company, he embraced the decentralized approach in running the company’s operations (Rondinelli, 2017). According to Weldon, a decentralized approach is ideal in a company since it helps in promoting innovations and trains leaders who can effectively handle different businesses. With the decentralized approach, all the subsidiary firms under J&J undertook their activities autonomously with minimal supervision (Rondinelli, 2017). One factor that made Weldon believe that decentralization is key to innovation was because it brought together people of different skills, thoughts, and technologies. Combining ideas from different people helps create technologies and products that are key in fulfilling customers’ unmet needs (Rondinelli, 2017).
Despite the leadership approach Weldon embraced, it predisposed J&J Company to suffer from various quality-related issues. Before Weldon took the leadership position at J&J, he had previously served as a sales representative. Most sales representatives were tasked with distributing the products to different customers while working under strict targets (Rondinelli, 2017). Having served as a sales representative, Weldon was highly obsessed with meeting the sale’s performance targets, which made some important production aspects lag. Most individuals who were not satisfied by Weldon’s leadership tactics believed that his team was mainly concerned with fulfilling the company’s short-term goals (Rondinelli, 2017). As a result, it had to cut down on its costs, which led to the company producing substandard products.
With an increasing number of complaints concerned with the substandard consumer products produced at J&J, the Food and Drug Administration (FDA) took the initiative of conducting various inspections at its different subsidiary firms. An inspection at two McNeil consumer healthcare plants revealed that they had significantly violated various manufacturing standards. McNeil is one of the subsidiary firms under J&J and was primarily tasked with manufacturing a wide range of over-the-counter medications (Rondinelli, 2017). Due to the gross violations, the FDA ordered the temporary closure of the two firms and recalled some of its products from the market. Weldon instituted various measures to improve the quality of its products, including allocating approximately 100 million to the McNeil plants (Rondinelli, 2017). Subsequently, Weldon appointed different manufacturing executives and consulting firms. Despite Weldon’s efforts, the public had already gained a negative perception of the quality of the company’s products. As a result, their sales significantly during this financial year (Rondinelli, 2017).
Quality issues linked to the Company’s DePuy hip replacement equipment.
Apart from the quality issues at the McNeil manufacturing plant, DePuy, a subsidiary of J&J, was also brought on the spot for manufacturing substandard artificial hip replacement equipment. The defect in the company’s artificial hip replacement shed many metallic pieces after it had been implanted. Despite the quality issues emerging from the artificial hip, J&J did not recall the products immediately but did that five years later. With numerous patients complaining about the company’s defective artificial hip, Weldon used approximately $3 billion in compensating all the affected patients (Rondinelli, 2017).
The massive quality issues facing J&J prompted Weldon to step down as the company’s CEO in 2012. However, the company immediately appointed Alex Gorsky to be in charge of the firm’s medical and diagnostics unit (Rondinelli, 2017). However, Gorsky was also faced with various criticisms. Different individuals and stakeholders believed that more quality-related issues would emerge since the company had failed to manage its 250 subsidiary firms. With many people criticizing J&J, Gorsky was required to use diverse strategies to ensure that more quality-related issues would not emerge in the company (Rondinelli, 2017).
Legal Issues affecting Johnson and Johnson Company.
J&J Company is involved in the production of a wide range of products in its three divisions. Despite it being one of the successful companies with a good competitive edge against its competitors in the pharmaceutical industry, it has been faced with a wide range of legal issues affecting its products, including Vaginal mesh implants, baby powder and the Corona Virus vaccine that it recently produced (Otto, 2020).
Vaginal Mesh Implants.
J&J vagina mesh implants are one of the products used by various women in the U.S. and Canada. With the involved women suffering from various complications, the women decided to file different lawsuits against the company. Subsequently, California and Washington states filed a lawsuit against the company by stating that it constantly used deception against its customers (Otto, 2020). A this point, different women, including those residing in Australia, filed lawsuits against the company by stating that they had suffered irreparable a delibating pain after the vaginal mesh implants started eroding in the surrounding tissues and organs, an aspect that made most of them have infections and complications.
A large section of women who filed this lawsuit argued that the company failed to warn hospitals and surgeons about the risks associated with using the implants. According to the numerous messages shared among the company’s executive team, the findings indicated that the company was aware of the risks associated with these mesh implants but still produced and distributed the product (Otto, 2020). Towards the end of October, J&J, in collaboration with one of its subsidiary branches, reached a settlement with 41 states and the District of Columbia. According to the suits on the vaginal mesh implants, most courts noted that the company failed to disclose the risks associated with using the implants (Otto, 2020). The increasing suits against the product resulted in the company recalling this product from the market. Additionally, the company used approximately $ 117 million in compensating most of the affected women.
Baby Powder.
J&J is involved in the production and distribution of baby powder in different countries globally. Despite the powder being one of its bestselling products in the U.S, Canada and other countries, it has been subjected to more than 26,000 lawsuits. Most of the individuals filing this lawsuit claim that talc, one of the primary ingredients included in the powder during manufacture, is contaminated with asbestos hence predispose children and women to develop cancer (Otto, 2020).
Towards the end of 2016, J&J was ordered to compensate the family of a woman $ 72 million who had died of ovarian cancer in 2015. Since the company was satisfied with the verdict, they swore to appeal at the higher courts (Otto, 2020). According to the existing literature, at the start of March 2017, more than one thousand women in the United States sued J&J with claims that it was covering up that Johnson’s baby powder predisposed its users into developing cancer. The court rulings saw J&J being ordered to compensate $70 and $ 347 in punitive damages to the affected women (Otto, 2020).
Those claiming that the baby powder was harmful believed that the company primarily targeted black women. According to one of the lawsuits filed by the National Council of Negro Women, they believed that J&J mainly targeted black women in their business strategy, although it did not warn these women about the dangers associated with most of the products they were selling (Otto, 2020). Despite the increasing lawsuits levelled against the company concerning its baby powder, J&J has maintained that their baby powder is safe for use and does not predispose one to suffer from cancer. However, with the company’s increasing costs in compensating most of their customers, the company halted supplying the talcum-based powder in the U.S. and Canada (Otto, 2020).
Covid 19 Vaccine
The coronavirus pandemic is one of the aspects that pushed different companies to engage in the mass production of a vaccine. Since different variants were ravaging different parts of the globe, finding a solution quickly would lay a foundation for preventing more mortality cases in the developed and underdeveloped countries (Mahase, 2021). It is at this point that J&J entered into a partnership with Catalent Company to help in the large-scale production of THE Covid 19 vaccine. Their partnership resulted in expanding their production activities to one of Catalent’s facilities situated in Italy. Further engagements in the company resulted in J&J striking a deal with a Spanish Pharmaceuticals (Reig Jofre) to take part in producing the vaccine. The company believed that by the European Union giving it the mandate to supply the vaccines, it would help most disadvantaged countries (Mahase, 2021).
In April 2021, the U.S. regulators, including the FDA, halted the rolling out the Janssen vaccine because it predisposed its users to contract a rare neurological condition known as the Guillain-Barre Syndrome (Mahase, 2021). Subsequently, the emerging reports indicated that most individuals who had used the vaccine were at risk of developing blood clots. The immunization reports indicated that approximately six cases of blood clots and low platelet count had been reported in the United States. With such cases being brought out to the public, J&J noted that it would conduct investigations alongside the regulator involved in its production and distribution (Mahase, 2021).
According to the findings from the investigators, it was established that although the chances of developing the neurological condition were rare, most people who received the J&J covid vaccine were 3 to five times at risk of developing the condition when compared to people who received the Moderna or Pfizer vaccine (Mahase, 2021).
The J&J covid vaccine has also been marred with numerous quality issues, an aspect that led to a halt in their production. For instance, during the production period, Emergent Bio Solutions accidentally mixed up some of the ingredients used to manufacture the vaccine. As a result, the FDA delayed giving authorization to the plant to continue with its production (Mahase, 2021).
Ethical Issues affecting Johnsons and Johnson’s Company
The production of the Covid 19 vaccine has put the J&J Company in the limelight for embracing morally comprised procedures when producing their vaccines. Many Catholic ethicists are encouraging every person both in the U.S. and the entire globe to shun away from the Janssen covid vaccine. Most of these ethicists believe that J&J used abortion-derived cells when producing the vaccines. As a result, the Catholic Church encouraged individuals to go for vaccines that have the least connections with abortion-derived cells. According to a statement released by one of the Catholic bishops, people should choose other vaccines such as Pfizer or Moderna over Johnson and Johnson; the other vaccines only used abortion-connected cells when conducting confirmatory testing and not during its development and production.
When analyzing the J&J Covid vaccine and AstraZeneca, they used PER.C6 and HEK-293, components derived from aborted children in 1985 and 1972. Having used aborted components, most ethicists, especially from the Catholic Church, believe that these vaccines are morally compromised.
Although getting immunized against the Corona Virus can be used as a stepping stone for preventing hospitalizations and adverse outcomes when one contracts the condition, taking a vaccine with aborted components is related to evil. As a result, the Catholic Church constantly encouraged people to avoid using Covid Vaccines that used abortion cells to a lesser extent or did not use the contents completely.
Internal Analysis and Issues affecting J&J effective operations
Conducting an internal analysis in the J&J operating environment is key to revealing some of the issues affecting the company’s smooth operations. One of the major strengths of J&J Company is that it has a renowned brand name in most of its domestic and international markets (Alhosnai et al., 2021). This has enabled it to attract different market aspects, leading to its high profit margins in every financial year. Despite its success in the past year, the recent control issues related to some of its products, including baby powder, vaginal mesh implants and the ethical issues related to the Corona Virus, it continues to maintain its presence in more than 175 international companies (Alhosnai et al., 2021). The fact that the company encourages innovativeness through research, development and acquisitions has laid a foundation for the company to maintain a competitive edge against some of the companies in the pharmaceutical industry.
Despite possessing a wide range of strengths, the weaknesses in the company may predispose it to more lawsuit issues if they are not addressed promptly. One of the main weaknesses relates to the company’s vulnerability to suffering various quality control issues because most firms under its leadership operate as independent subsidiary units (Alhosnai et al., 2021). The other challenge relates to difficulties in effectively managing more than its 250 subsidiaries, their dependence on innovative products by heavily investing in research and development and marinating a tradition of hiring its leaders from within the company. Allowing every firm to operate as an independent subsidiary leaves them with minimal supervision, leading to the emergence of quality issues (Alhosnai et al., 2021). When analyzing the lawsuits against their products, some of these issues could be prevented if they put quality and safety measures at the production stages. However, since most firms were also operating independently during production, it leaves various loopholes that can lead to errors during production. During the Johnson and Johnson Covid vaccine production, the personnel working at the production plant accidentally mixed its ingredients. The accidental mixing of ingredients at the production plant shows how a lack of close supervision predisposes the different personnel into making mistakes (Alhosnai et al., 2021).
The company’s culture of selecting its leaders from within is an additional factor that may predispose J&J to suffer quality control issues in the future. Although employing leaders from within is not a big issue, the fact that some of these leaders tend to be stepped up into corporate culture hence overlooking certain issues affecting the company’s operations (Alhosnai et al., 2021).
Value Chain Analysis: When analyzing the company’s value chain, one of the J&J main strengths lies in its heavy spending on research and development. Constantly investing in research and development has enabled the company to create highly innovative products that can fulfill its customer’s needs (Otto, 2020). J&J ALSO has a unique supplier program that helps it in collaboratively working with the subsidiary firms located in different countries. Despite such strengths, one of the weaknesses in J&J’s relates to the operation of its value chain.
J&J has been in operation for the past 130 and has maintained an outstanding brand image to its customers. However, under Weldon’s leadership, the company started experiencing numerous quality-related lawsuits from different customers and states. Although the defects in the McNeil consumer healthcare products, baby powder and DePuy are some of the leading quality issues that have affected the company in the past years. As a result, failing to institute the necessary corrective measures may result in the company having a distorted image, hence reducing its revenue collection (Otto, 2020).
Johnson and Johnson Primary strategic issue
J&J Company embraces a decentralized approach in running all its 250 subsidiary companies located in more than 60 countries. By decentralizing their management practices, all of these firms have often been left to operate independently with minimal supervision from their executive team. The decentralized management system is one of the primary factors that resulted in the company suffering major quality issues in most of its products, including the accidental mix-up of ingredients during the production stages of the Covid vaccine. With the company facing numerous quality and legal-related battles, it needs to develop a management strategy that will help it maintain healthy competition amidst its quality control-related issues.
Since the early years of its inception, J&J has maintained a competitive edge will use this same strategy in conducting its operations. However, with the company rapidly expanding its operations globally through its numerous branches, the company must adopt a unique management strategy. Adopting a different strategy will result in the effective management of the subsidiary branches hence preventing the emergence of quality control issues and erosion of the firm’s trusted brand image. The following recommendation would help J&J go a long way in addressing its company management issues.
Adoption of the Strategic Business Unit structure (SBU)
An SBU refers to creating divisions within a company that are independently managed. Businesses that embrace this type of management structure often have an individual vision, mission and objectives and most of their operations are run independently. On most occasions, the mission of the individual division is different from the parent company and is used to guide its operations. J&J has three distinct divisions involved in the production of consumer products, medical devices and pharmaceuticals. By allowing every division to set its objectives and vision, planning and management will be much easier. Although the three divisions will not be completely autonomous in an SBU structure, backing up the SBUs with diverse research and development programs will encourage innovation, hence making the company experience reduced quality control issues.
Conclusions
J&J is one of the leading successful companies globally, an aspect that has been attributed to its research and development programs. Its global success has also enabled it to gather numerous financial resources to produce high-quality, innovative products. Despite such success, the recent quality control issues may result in J&J losing its dominance in the global markets. Embracing the SBU structure in its operations will result in every division embracing high-quality standards during production and distribution.
References
Alhosnai, K., Kharbanda, K., Almazrouei, H. S., Alzaabi, A. I., Aldhanhani, W., Mostafa, S., … & Nobanee, H. (2021). Financial analysis of Johnson & Johnson in light of the COVID-19 vaccination research developments. Available at SSRN 3896177.
Mahase, E. (2021). Covid-19: the U.S. suspends Johnson and Johnson vaccine rollout over blood clots.
Otto, B. (2020). On the evolution of data governance in firms: the case of Johnson & Johnson consumer products North America. In Handbook of data quality (pp. 93-118). Springer, Berlin, Heidelberg.
Rondinelli, D. A. (2017). Decentralization and development. In International development governance (pp. 391-404). Routledge.
Rosenblum, H. G., Hadler, S. C., Moulia, D., Shimabukuro, T. T., Su, J. R., Tepper, N. K., … & Oliver, S. E. (2021). Use of COVID-19 vaccines after reports of adverse events among adult recipients of Janssen (Johnson & Johnson) and mRNA COVID-19 vaccines (Pfizer-BioNTech and Moderna): update from the Advisory Committee on Immunization Practices—United States, July 2021. Morbidity and Mortality Weekly Report, 70(32), 1094.
Stewart, K. L., & Paine, W. S. (2012). Johnson & Johnson: An ethical analysis of broken trust. Journal of Academic and Business Ethics, 5(7), 1-10.
