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Question #1

Answer

Johnon and Johnson Model:
Johnson and Johnson is world renowned company due different products, especially Tylenol. Tylenol is a
pain killer and a fever reducer drug but this drug faced very serious issue when suddenly many of the
user of the medicine started dyeing. At that time the company had to face a very serious issue their
most darling and money making medicine was in danger. At that time the company both of the Johnson
brother came forward and showed very good example of good corporate governance, they accepted
that there was an issue with there medicine formulae and thry not only order to take all the medicine
from the shelves but also informed general public not use their medicine. The company spend almost 31
million dollars during that face but this all resulted in there favor many marketers said that Tylenol
would not survive, it would now not seen in the shelves again. But the companys good code of
corporate governance paid and the company successful not only regained the image of their money
machine medicine but also once again made it number one selling drugs in the market. Here we can
clearly see that Johnson and Johnson had make use of McKinsey market model by accepting there
responsibility and great deal of social work.
Efroze Chemical Industries.
Similar nature of case happened in the Pakistani market, when a product of Efroze killed people. There
was a use of isotope in in the medicine by the company which lowered down the patient blood pressure
and lead to ultimately death. But alaas first Shahbaz Shariff tried ti defend himself and his parties
political image by saying that this is conspiracy against them as the medicine was given free of cost to
the patient of Punjab Institute of Cardiology (PIC).More damage was caused by when the owner of the
company said that the only that batch of the medicines were infected which got stolen from the
companys warehouse rest all of the medicines were free of it. More he claimed that since there
company was 35 years old and has been also exporting medicine from 20 years so it should not be shut
down. But at that time the Governor order to banned the companys medicine and immediately shut
down the company. Unlike Johnson and Johnson the company showed poor code of corporate
governance and never accepted there mistake and nor they played any role for the society as a result
they had to suffer.
How the both issues were resolved and how long it took?
Johnson and Johnson the manufacturer of the Tylenol took very effective steps to resolve the issue, they
not only resolved the issue but also repositioned Tylenol and making top of the selling medical product
in the industry. At the time of situation they took ran two main phases, the first phase was the actual
handling of the crisis. The comeback of both Johnson & Johnson and Tylenol, was the second phase in
the public relations plan. The planning for phase two began almost as soon as phase one was being
implemented. In phase one the company immediately alerted consumers across the nation, via the
media, not to consume any type of Tylenol product. They told consumers not to resume using the
product until the extent of the tampering could be determined. Johnson & Johnson, along with stopping
the production and advertising of Tylenol, recalled all Tylenol capsules from the market. The recall
included approximately 31 million bottles of Tylenol, with a retail value of more than 100 million dollars.
This not only made the FBI to take company action in a positive manner but also made people relies that
company is ashamed of what happened and took responsibility of their actions.
The planning for phase two of Johnson & Johnson's public relations plan, or the "comeback" phase, was
already in the works by the time the first phase had been completed. Tylenol, which had a massive
advertising budget prior to the poisonings, had become the number one alternative to aspirin, in the
nation. The product had 37 percent of the market for over-the-counter painkillers. Because Tylenol was
such a huge money-maker for Johnson & Johnson, the company unleashed a extensive marketing and
promotional program to bring Tylenol back to it's position as the number one over-the-counter analgesic
in the United States.

In Pakistan the Culprits never took responsibility of their action instead they started passing the bucks
around. Shahbaz claimed this to be a conspiracy against the Punjab Government. The medicine was
given free of cost to patients of the Punjab Institute of Cardiology (PIC). Were as the owner of the
company did aspect there mistake but said that some of their stock of medicine was stolen in
September and only that is infected rest of the stock did not possess that material. The Federal
Investigation Agency, meanwhile, closed the factory after inspecting the premises and meeting staff.
The three pharmaceutical laboratories in Lahore which were originally suspected of foul play have been
cleared of any criminal offence. More serious for Isotab, which has been taken off the shelves in
Pakistan and banned across the world. This difference between the two similar incident bit both
handled differently.

What were the measures taken by the companies to handle those issues?
Johnson and Johnson took very effective measures and they not only saved there company but also
made history that how well the issue was handled. Two phases were introduced by them in the first
phase they came in front and took responsibility of their actions, they called of all of their Tylenol
products from the shelves across the country. And also announced themselves and spread the message
through the media that the medicine was infected and should not be used. Then in phase two they
reintroduced their product in the market with new formula and used the help of media and ran very
good as successful marketing, promotional and PR campaigns which was accepted by the people and it
became of the top selling medical product.
Incase of Pakistani incident first Shahbaz Shariff try to mold it as a conspiracy against the Punjab
Government and treated it as political agenda against the Government. The owner of the company
started passing the bucks and giving false statement that their products were stolen and were
contaminated. Rest of the products were good to go. This resulted in FIA sealing the company and
Government banning the export and production of the medicine.

Question No 4.

Analysis of both articles in the light of Corporate Governance concepts, models and theories.
Johnson & Johnson.
If we see J&J and its subsidiaries companies we can say that there is a good Corporate Governance
because as the issue of Tylenol product arises, all the company executive management were shocked
and they set their minds immediately to save the lives of the consumers of Tylenol products. They said
our primary purpose is to save the lives of our consumers and our company profit comes later. The
company fulfills all their obligations towards society, investors and their customers.
Obligations towards society:
There was non-political alignment
Board of Directors are the trustee of their shareholders.
They said that they accept their mistake and they will turn their mistake into good one.
All the company management was effective and efficient inorder to overtake the responsibility
and later own re launch of the product.
The company Executive management gives all the transparency and full disclosures that what
was the actually reason of Tylenol issue
Obligations to Customers:
As a company the first duty is to give high quality product to the customer so that t satisfy their needs
and wants. Johnson and Johnson have been doing so although an issue aroused for Tylenol but the
company first though of their responsibility towards there customer by stopping them to use the
infected product and later on educating them with the reason and came back with all the new and
improved product.
In the case of Efroze Chemical Industries.
As Pakistan most of the companies either national or international level depicts good conduct of
Corporate Governance In the case of that company there was concentration of ownership because they
do not follow the code set in the books of corporate governance. Most common error is that there is no
board and all the company assets are owned by one person and his or her inherits, and they are sole
decision makers. When issue of Isotab arises, only the owner showed up instead of executive
management or board there was no full disclosure of information and political party also try to mold the
situation for there personnel interest. So we can say that Mckinsey Control Model Governance chain lies
there.