Ethical Problems and Solutions with Tylenol and Enron Essays

Ethical Problems and Solutions with Tylenol and Enron Essays Ethical Problems and Solutions with Tylenol and Enron Paper Ethical Problems and Solutions with Tylenol and Enron Paper Ethical Problems and Solutions With Ethylene and Enron I Many large corporations are often are faced with ethical issues that deterred-nine the success of the company. Two of the most famous companies that were faced with ethical dilemmas was Johnson and Johnson and Enron, One oftenest companies was able to deal with their ethical dilemma correctly and it saved the company, while the other company did not properly handle its ethical issues and it resulted in the collapse of the company. In the late sass Johnson and Johnson produced a pain killer called Ethylene. Ethylene was a very successful product in the LIST. Ethylene was responsible for Gig percent fashion Johnnys corporate profits during the first 3 quarters Of 1982. Ethylene was the major leader in the painkiller industry. On Wednesday, September 29, 1982 a sick girl in Illinois took an Extra-Strength Ethylene and later on in the evening was sick and rushed to the hospital which pronounced her dead. This girl was one of seven Chicago residents to die after taking the Extra Strength Ethylene. The following day ( Tuesday, September 30th) the executives of Ethylene where notified about the crisis. Johnson camp; Johnson, the maker of Ethylene, were faced with a huge ethical issue, people where dying trot their product and they had no idea why, should they pull all of the Ethylene products off the shelf in stores and suffer a major lose? Or should they play it out and see what happens? On Thursday afternoon, Johnson ; Johnson announced a recall to all Ethylene bottles that had the code number MCCABE. This meant that they had been manufactured at the companys Fort Washington factory. The Fort Washington plant had distributed in to all states east of the Mississippi River. On the same day the executives of Johnson and Johnson immediately alerted consumers across the nation, thought the media, not to consume any type of Ethylene product. On Friday September 31st, one day after the recall another person was found dead from the Ethylene. This persons Ethylene bottle had the lot number of 1801 MA this lot was not part of Talents original recall. Ethylene was now forced to recall all Of it Extra Straight Ethylene capsules, which it did. A major investigation was launched and it was determined that Ethylene capsules had been laced With cyanide. Johnson and Johnson further investigated into the matter and found that the Ethylene bottles hadnt been tampered with at the factories in which they were produced. This meant a person had taken the bottles from store, and filled them with poison and then returned them to stores. Johnson Johnson reacted to the crisis swiftly; they launched a massive public relations campaign urging the people not to use Ethylene and pushed stored to take the bottle of the shelves. The company also ordered a national recall Of 264,000 bottles Of Ethylene. Unlike today in the 1982 it was highly unusual or a company to recall any of their products. One fashion Johnnys bestselling products was now completely in shambles and many speculated that Johnson and Johnson would never be able to recover from the disaster. However Ethylene was able to recover, Ethylene made preventive measures to prevent anything like this from happening again. Ethylene created a triple seal for all their medications to prevent anyone from tampering with the contents. Ethylene also Set up a 1800 number to give the public updated information and the CEO gave personal messages explaining the problem and hat Ethylene did to prevent this from happening again. Ethylene sympathized with the families who lost love one and gave them money and support, even though they ere not directly responsible for the deaths. Because to the their swift actions, sympathy and extremely ethical decision to pull the product of the shelves, within months Ethylene was back on store shelves with a new and improved new safety seal The recall and re-launch cost Johnson camp; Johnson over $100 million, but in the end, Johnson ; Johnson was praised for its handling of the crisis. Within a year, Ethylenes market share rebounded and they ere successfully able to patch up their brand image in the eyes of consumers. Scholarly Journals Vass quoted saying The Ethylene crisis is Without a doubt the most exemplary case ever known in the history of crisis communications. Any business executive, Who has ever stumbled into a public relations ambush, ought to appreciate the way Johnson Johnson responded to the Ethylene poisonings. They have effectively demonstrated how major business has to handle a disaster. The Ethylene murders were never catch and brought to justice. The one positive outcome of the disaster was that it led all drug makers to develop temperature leas for their products, this was something that was virtually nonexistent before the Ethylene crisis. To further show how well Johnson recovered from their lose; In 1982, Johnson Johnnys stock, had been trading near a 52-week high just before the tragedy, after the tragedy the stock went into a selling frenz y but it manages to recover to its high selling points only two months later. Investors have had little to complain. It you had invested $1,000 in Johnson camp; Johnson shares on September 28, 1982, just before the first Ethylene episode, you would have $22,062 today, after four stock splits. Enron was an American energy, commodities, and Services Company based in Houston, Texas. Before the 21st century began Enron employed over 20,000 people. Enron made money by selling electricity, natural gas, communications, and pulp and paper. Enron claimed revenues of nearly SOCIO billion in the year 2000. Fortune named Enron Americas Most Innovative Company for six consecutive years. Enron was a publicly traded company and was highly trusted by investors. The Enron flourished during the dotcom boom of the ass. In November 1 939, Enron launched Unreasoning. This was the first web-based transaction system that allowed buyers and sellers to buy, sell, and trade commodity products globally. At its peak, over $6 billion worth Of commodities were transacted through Enrolling every day. This site allowed Enron to transact with participants in the global energy markets. On the books Enron looked like it was doing extremely well, and many investors sought to buy their stocks. At its peak, Enron was worth about $70 billion, its shares trading for about $90 each. Enron was considered a blue chip stock and therefore was considered to able very stable and trustworthy. All that came crashing down starting in October 2001, when the company admitted that it had misstated its income and that its equity value was a couple of billion dollars less than its balance sheet. The following is the flow of events that lead to Enrons downfall: On October 16, 2001 Enron reported earnings included unexpected after tax charge of $MM. Following that, on October 22 Enrons stock fell by to $20. 65. This raised some red flags and the SEC asked for disclosure of investment partners. On November 8th, stock price at $8. 41 because of media scrutiny about overstatement of net income and understatement of debt. The media kept on bashing Enron until on November 28 stock trading at just over $1. 00 and finally on December 2 Enron filed for bankruptcy. Enron had made many partnerships with companies it had created, and it used those partnerships to hide from the public huge debts and heavy losses on its trading businesses. At the same time, Arthur Andersen, the Accounting company that audited Enrons books, failed to recognize the companys problems. Some even say that Arthur Andersen was in with Enron on cooking the books, created one of the biggest frauds snarled in history. Enron created offshore entities. These entities made Enron look more profitable than it actually was, and created a dangerous downward effect. In each quarter, corporate officers and management would have to perform more and more financial deception and hiding debts in their off shore accounts to create the illusion of billions in profits while the company was actually losing money. This practice drove up their stock price to new levels, at which point the executives began to work on insider information and trade millions of dollars worth of Enron stock. Many of the executives and insiders at Enron knew about the offshore accounts that were hiding losses for the company; however, the investors knew nothing of this. The COOP Andrew Pastoral led the team which created the off-books companies, and manipulated the deals to give himself, his family, and his friends hundreds of millions of dollars in guaranteed stock revenue, at the expense of the corporation for which he provoked and its stockholders. The Board of Directors and Senior Management was also unethically aggressively promoted shares publicly while privately unloading their shares. All this was done so they could make more money at the cost Of their employees and stock holders, Who at the end Of the day lost all their money and trust in the firm. Kenneth Lay, the founder of Enron was also accused of selling over SIS million worth Of stock in insider trading. He sold another $20 million worth Of stock in the open market. Lays wife. Linda, was accused of selling 500,000 shares of Enron stock totaling $1. 2 million on November 28, 2001 The money earned from this sale did not go to the family but rather to charitable organizations which was quite surprising. Records show that Mrs.. Lay placed the sale order sometime between 10:00 and 10:20 am. News of Enrons problems, including the millions of dollars in losses they hid went public about 10:30 that morning and the stock price soon fell to below one dollar. This was an obvious case of unethical insider trading. Enron initially planned to retain its three domestic pipeline companies as well as most of its overseas assets, However, before emerging from bankruptcy, Enron spun off its domestic pipeline companies as Crosscurrent Energy and sold other assets to Vulcan Capital Management. Enron sold its last equines, Prisms Energy, in 2006, leaving it as an asset-less shell. In early 2007, it changed its name to Enron Creditors Recovery Corporation. Its goal is to pay off the old Enrons remaining creditors. In conclusion many large corporations are often are faced with ethical issues that determine the Success Of the company. Two Of the most famous companies that ever faced with ethical dilemmas was Johnson and Johnson and Enron. Johnson and Johnson made the right ethical decision not to hide their problem from the public but rather to deal with the problem at hand in the most ethical ay, because Of this the company was able to pick themselves up and recuperate their loses.