QAB020X601S: Business Ethics and Responsible Management Report on J&J

This report analyzes the ethical issues surrounding Johnson & Johnson's marketing and sales of opioids, focusing on the company's practices and their impact on stakeholders. The introduction highlights the importance of ethical considerations in business, especially in the context of increasing competition. The report identifies the ethical challenges related to the aggressive marketing of painkillers, which led to addiction and loss of life. It examines the role of business in society, referencing theories like Milton Friedman's and Edward Freeman's, and applies ethical theories such as utilitarianism and deontology to evaluate J&J's actions. The report identifies stakeholders affected by the company's practices, including customers, shareholders, and the company itself, and provides examples of good and bad ethics. The recommendations include reviewing policies, providing voluntary disclosures, conducting audits, and managing practices according to business ethics principles. The report also covers ethical leadership, compliance, and integrity, concluding with a reflection on ethical leadership and management in the context of the company's culture.

Business Ethics and Responsible Management
QAB020X601S
2/23/2020
Student’s Name

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Contents
Part 1 (a) Report to the Senior Management of the company.........................................................2
Introduction..................................................................................................................................2
Ethical issues................................................................................................................................2
Role of Business in Society.........................................................................................................4
Stakeholders.................................................................................................................................4
Example of good and bad ethics..................................................................................................5
Recommendations........................................................................................................................5
Part 1 (b) Ethical Theories...............................................................................................................6
Description of theories.................................................................................................................6
Application of theories.................................................................................................................7
Critique.........................................................................................................................................7
Recommendations........................................................................................................................8
Part 2................................................................................................................................................9
What is ethical leadership............................................................................................................9
How compliance and integrity can be maintained.....................................................................10
Conclusion.................................................................................................................................11

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Part 1 (a) Report to the Senior Management of the company
Introduction
For every business, consideration of the interest of all stakeholders is a necessary thing to do. In
today’s time where competition is increasing rapidly, businesses need to do something in
addition to their legal duties. Here the role of ethics comes into light. This report will address
marketing policies adopted by Johnson and Johnson (the company) with respect to the marketing
and selling of drugs. In addition to this, the report will make its focus on ethics and the
stakeholders who are involved and affected by the practices of the company. The purpose of the
report is to provide a summary of the policies and practices of the company and the impacts of
the same and to provide some recommendations to make the situation better.
Ethical issues
To start this report this is to state that the company has adopted a false and dangerous sales
campaign that caused addiction among consumers. Many people have lost their loved ones due
to the overdose of an opioid. The medicine is not just a painkiller but it makes people addicted to
the same. The company has aggressively pushed sales of the subjective painkiller and due to the
same people from different countries have started using the same (Varney, 2019). The company
has done so to increase its product sales and to ensure the same in the future too. Every business
is likely to follow certain ethics. Business ethics shows a pathway to organizations following the
same they can be moral. Now one may surely have a question regarding reason for being ethical.
To answer the query this is to state that the company should look after the marketing strategy of
the company from an ethical perspective as the same is necessary for creating a long-term
customer base and to ensure sustainable business progress. In addition to this, the current

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strategy where the company is selling strong painkillers is also defeating brand image and
goodwill of the same. Direct customers, as well as other members of society, are one of the
important stakeholders of business where the company is required to make the decisions and
adhere to the practices that are in their best interest. According to the principles of business
profits, the company should not only focus on profits but also understand the expectations of
other stakeholders. Many ethical models demand business to keep the health and safety of people
at first consideration, even before profit. The company should look after the issue as it is
affecting the health of millions of people whereas the lead work of the same was to cure them.
As the company is engaged in the marketing of drugs, the same is likely to encounter many of
the ethical challenges. The first type of ethical challenge that can be there is related to providing
information about that drug. Providing additional information such as health claims, details of
the products and side effects of the medicine is important (if there is any) (Radenković et al,
2019). Failure in providing any of the essential information leads to ethical issues. The company
should follow higher ethical standards else it can turn into ethical challenges. For instance, the
advertisement of the drug must not provide a false impression of the fact that the overdose of the
same will not lead any adverse impact or physician consultation is not required before
consuming that drug. In addition to this, the company is likely to face ethical challenges where
the same gives an impression of the fact that the use of a drug is necessary even there is no sign
of illness or poor health conditions. In addition to marketing tactics, pharmaceutical companies
have many financial resources to offer to doctors for scientific meetings. Medical conferences
are another area where the company may face ethical challenges. One such ethical challenge is to
provide gifts and other entitlements where the purpose of such a conference does not remain
scientific or professional anymore. Providing such gifts and entitlements to doctors and

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prescribers of medicine can compromise with their integrity and objectivity. When doctors
prescribe medicine with the intention to promote the same, it seems the biggest ethical issue.
Role of Business in Society
Actions of a business reflect how responsible or irresponsible a business is and therefore the
subjective company needs to take care of marketing and advertising strategy. Different scholars
have prescribed their different theories and approaches while explaining the role of business in
society. For instance, as per Milton Friedman, a business has a liability to manage its activities
and to earn profits in a way that lead-free competition without fraud or deception (Watson and
Prevos, 2009). It means as per Milton Friedman, the role of a business in a society is to earn
profits. Another theory was given by Edward Freeman according to which a business has a social
responsibility. It focuses on all the stakeholders rather than just shareholders.
Many other models have also been developed that highlight responsibility and role of business.
For instance carroll’s pyramid model of corporate social responsibility. As per this model, a
business has four major responsibilities that can be checked by looking after following diagram:-

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(Carroll, 2016)
These ethical challenges lead to many adverse impacts on the image of the company. Ethics
seems as a commitment of a company and any breach of the same reflects that the company has
failed to fulfill its promises. Due to unethical activities, society loses its faith in the business and
stop considering the same is legitimate. These ethical challenges increased the level of public
health issues. As soon as the case of opioids came into life, millions of people started considering
Johnson and Johnson an immoral or irresponsible entity. Company has failed to provide “fair and
right” product. Not only the consumers but it also affected regulators, politicians and researchers.

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Stakeholders
The issue is related to unethical market and advertising practices hence it is required to check the
stakeholders that are likely to affect by the same. The very first type of stakeholder is a customer
as they consumed a product that is expected to make them used to it. It adversely affects their
health and in this manner, customers are likely to affect directly. Due to this unethical practice,
many people have already lost their trust in Johnson and Johnson, which also affected sales of its
other products. It was claimed that the company has affected more than 400,000 lives (McGreal,
2019a). This affected value for shareholders and return on their investment. In addition to this,
the company has received an order to pay $572m as penalties for pursuing a false sales campaign
(McGreal, 2019b). It also affected the financial status of the company and shareholders have
affected by the same. The next stakeholder is the company itself that has lost its brand image in
the eyes of the rest of the stakeholders and became a company that only cares about profits and
never considers ethics in practice. The ruling where said penalty was decided is also likely to
affect other drug companies as they would have to pay additional and special consideration to
their marketing strategies.
Example of good and bad ethics
There are examples of many businesses that act reasonably such as Sanofi and Genentech. These
companies have very well reputational scores and work in a very risk-free manner due to their
good choices. On the different side, many other businesses are there which are not reasonable
such as GlaxoSmithKline and Pfize. These businesses have experienced penalties and received
many warnings from regulators due to their bad/unethical choices (HU, 2019).
Recommendations
To conclude this report, some recommendations are presented hereby. By adopting these
recommendations, the company may do better in the future. The first recommendation is to

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review its policies and practices on time. It is far clear that the company has pursued unethical in
recent times and therefore now needs to maintain an internal control system for the same. The
second recommendation is to provide voluntary disclosures that can further improve
transparency and improve the image of the business. In addition to this, the audit seems to be a
good recommendation where the organization should timely make an audit of its actions and
their results. By doing this, the company can understand the area where the same needs to
improve. Lastly, Johnson and Johnson should manage their practices according to the principles
of business ethics considering the interest of all the stakeholders.
Part 1 (b) Ethical Theories
Description of theories
As identified in the above section, the company is hereby required to modify its practices
according to the rules of business ethics, in this part of the case study, the focus will be
developed on the two most significant ethical theories. The two of the theories selected for the
discussion and application here are utilitarianism and deontology. Starting the discussion on first
theory i.e. utilitarianism, this is to state that the same focus on the goodness of a greater number
of people (Shermer, 2018). As per this theory, an ethical task is that which lead good result to a
large number of people. In other words, this can be stated that this theory decides right or wrong
based on the consequences of an action rather than the action itself. It takes the interest of others
into account. Another theory is deontology, which uses rules to make a distinction between right
and wrong. Philosopher Immanuel Kant has given this theory (Corrigan and Farrell, 2010). It is
duty-based ethics. It requires people to follow their duties and rules and believes that only those
actions are ethical that is done following the duties (bbc.co.uk, 2020). This theory does not look

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after the cost and benefit of action but only check whether an action was pursued as per duty or
not. Therefore here to say that under utilitarianism theory, a key aspect is the result of an action
whereas in deontology the key aspect remains action itself.
Application of theories
Now to apply these theories to the case study of Johnson and Johnson this is to state that as per
utilitarianism, the company should not have been done so and by adopting aggressive marketing
strategy and selling a product that adversely affected the lives of many, the company has failed
to maintain good ethics. The reason behind the same is that it affected a large number of people
negatively and the result of this action was only good for a group of stakeholder i.e. shareholder
that too for a short period. In the long term, shareholders are also likely to face loss for the
reasons for unethical activities carried by the company. Similarly, if to check the actions of the
company considering deontology theory, again the actions of the company do not seem ethical.
As mentioned above, this theory demands a person or an entity to work following their
respective duties. Here being a pharmaceutical company it was the obligation of Johnson and
Johnson to prepare and provide medicine that can treat the patient most efficiently. However, the
company forgot the interest of patients and made strong painkillers that made them addicted. It is
a clear breach of duty as an organization. Setting aside the dangerous consequences that this
action lead, the action itself was immoral. Despite knowing the fact that some of the drugs
prepared by the company could increase the level of dependency among patients, the company
continuously sold them where the same could not justify long-term use of subjective drugs. Here
the company only focused on the profits and forgot its people. It can be stated here that by doing
so the company has breached its duty to remain fair and moral.

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Critique
After the above-mentioned discussion, it is clear that the actions of Johnson and Johnson were
not ethical. Nevertheless, it does not mean that these theories are perfect and there are no
disadvantages of the same. If to discuss the pros and cons of utilitarianism, this is to state that it
has a simple application. The company could act ethically by simply considering the outcome of
their course of action in the given case study. However, the outcomes might be unpredictable for
the same as well as happiness is subjective, which cannot be evaluated. In addition to this, the
theory forgets the moral of actions and only focuses on outcomes. It means it considers an action
ethical if the result of the same lead happiness to many despite the immorality of the action itself.
These points reflect the disadvantage of utilitarianism.
Now moving towards the other theory that is deontology this is to state that the lead advantage of
the same is to create moral absolutes. It emphasizes the value of each person and provides
certainty. If Johnson and Johnson would have to manage the affairs according to this theory no
issue would have been there as it might demand to sell only those products that are not likely to
make consumers addict. Nevertheless, the other side of the coin is also necessary to check here.
The theory also has some disadvantages. Firstly, it creates a paradox as it only considers the
morality of an action. Further, the theory does not incorporate self-defense ideas
(connectusfund.org, 2019). Many times, an action or duty creates an issue for many but
deontology does not consider such situations and count those actions as ethical.
Recommendations
Now to provide recommendations for improvements to the company based on the studied
theories this is to mention that as per utilitarianism the company should check what result its

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policies and practices can bring to its stakeholders. Further if the same does not know what is
ethical or not then the same should pursue those activities which are in the best interest of the
greater number of people. For instance, it should develop and market only those drugs that are
suitable to the health of the public, as it would lead good results to all the consumers,
government, and society. Similarly as per second theory i.e. deontology. Johnson and Johnson
are required to follow their duties that are beyond earning profit. Here the company can improve
itself by thinking about the morality of its action that surely does not relate to the marketing of
strong drugs.
Part 2
This part of the report is not related to the case study, but it is focused on ethical leadership
whereby the focus will be made on the aspects, which creates an ethical leader, and the process
following which a leader can pursue ethical leadership.
What is ethical leadership
Before moving the discussion to the ways to becomes an ethical leader, the first meaning of
ethical leadership needs to consider. Ethical leadership can be understood as the one in which
individuals demonstrate an act for the common good that is appropriate and acceptable in each
area of their life (villanovau.com, 2020). Different ways and steps can be followed to become an
ethical leader. Firstly, a manager needs to understand that being ethical is not an act but a whole
process to do. Further managers should develop a code of ethics and should identify their values
in addition to generate procedures and policies. To maintain compliance in an ethical as well as
unethical business, it is necessary to avoid the occurrence of ethical dilemmas at first instance.

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The lead act of a manager is to decide on their business and in such a situation, an ethical
manager needs to take his/her decision by adopting different ethical frameworks. To produce
better quality outcomes it is recommended to take decisions in a group as it reduces chances of
error or wrong decisions. It also increases the creditability of decisions.
How compliance and integrity can be maintained
Our lead focus here is to check how compliance and integrity can be maintained. To maintain
integrity a leader needs to adopt some behavior where first he/she is required to keep his/her
words. I have seen leaders in a trap usually where they fail to keep the promises. By doing so
they lose their trust and confidence in the team and fail as a leader. Secondly, for increasing and
maintaining integrity it is also necessary to make fair decisions. A leader is required to do what is
correct to do as per the virtue of fairness. Let me provide an example. In my previous
organization, the human resource manager was clear about the qualification of a candidate
seeking a new post. The top management has selected a person even when the same had not a
suitable qualification but was relative to one of the directors. After this incident, I personally stop
respecting my top management in the way I used to. It clearly shows that to maintain integrity in
the organization. One of another thing to consider here is practicing non-judgment (Lattimer,
2016). A manager need not be judgmental about anything or anyone. Although it is human
nature, yet he/she should try to understand each aspect of an incident before reaching up to any
decision. The reasoning behind the same is that if a manager would take decisions being
judgmental then there will be high chances to take wrong decisions. Integrity is not only about a
person but it is also about the behavior of one with others. I have seen many people at my

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workplace who always take credit for others. These people also include senior management who
takes the credit of the work of their team members to show themselves hardworking in the eyes
of top management.
In addition to the above points, I would also focus on my communication as an ethical manager.
There is no issue when the news is good but what about the situation where there is bad news to
communicate. Many times I have seen managers where they hide some news from their team
members as they feel that the others would be a worry after knowing the same. However, in the
capacity of an ethical manager, I think it is important to be straight and to discuss every situation
to maintain a good level of honesty and integrity.
Similarly, to maintain compliance in an organization, an ethical manager is required to ensure
that the overall policies and procedures are feasible to follow for individual departments
(convergepoint.com, 2020). The manager needs to understand that lastly, the employees of
business pursue regular activities hence he/she should train the employee on compliance policies.
By adopting a risk-based approach to compliance management seems another good option that I
would personally suggest as being an ethical manager.
Conclusion
To conclude this part of the report I would say that a manager can take the business to the high
standard by adopting the discussed behaviors and by making small changes in the current
practices. Integrity can be ensured by being nonjudgmental, adopting virtue of fairness and
communicating each news in a fair and straight manner. Further compliance can be maintained
by developed overall compliance management structure and by providing appropriate training. In
addition to these, some other measures such as the adoption of the value of forgiveness and the
use of cross-functional teams also seem a good option.

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