Question

In: Operations Management

16-5 The text notes that it is unclear how effective corporate codes of conduct are in...

16-5 The text notes that it is unclear how effective corporate codes of conduct are in achieving the desired behavior from members of the organization. Identify a recent corporate ethics scandal (e.g. Volkwagen and Dieselgate or Wells Fargo and creating fake accounts) and find the company’s code of ethics online. Provide a summary of the scandal and identify how the behavior that created the scandal violates the code and any ways it did not. Explain how the code might need to be changed to reduce the odds of this happening in the future.

Solutions

Expert Solution

         If you haven’t heard about Johnson & Johnson company, you are probably living under a rock. Johnson & Johnson is an American multinational company, headquartered in New Jersey. The name Johnson & Johnson was in headlines for when US FDA (Food and Drug Administration) regulators found traces of asbestos in baby powder. Asbestos is very dangerous and can cause lung cancer.

       The company recalled thousands of bottles of powder when this discovery was made. A number of people filed lawsuits against the company asking for compensation because they believed that the company knew that its product was contaminated and still continued to sell it in the market. The company, in its defense, claimed that they were not sure if the bottle tested by FDA was the original one or not, if the seal was intact or not and raised many other points.

       The case shocked not only the citizens of US but of the world, in general. More than 13,000 cases were filed against the company and many of these were filed by the loyal and regular customers of J&J. The share prices of the company fell down significantly. A number of women had previously sued J&J after stating that they developed ovarian cancer after using their talcum powder.

         Contrary to what is happening in the corporate life of J&J, their code of ethics is very different. Credo responsibilities, Compliance, Ethics, Fairness and Impartiality is what serves as a guideline for Johnson & Johnson to conduct its business but clearly, these were only listed out but never followed. There have been multiple cases in the past where the company has compensated a number of complaint filers for multiple reasons highlighting the damage caused to them by using the company’s products.

The company should strike out these words from Code of Ethics if it is not truly dedicated in providing the right kind of services to the customers as there are a number of alternative options to replace any product in life.   


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