“BUSINESS ETHICS VIOLATIONS AT

JOHNSON & JOHNSON COMPANIES”

BUSS6066005 – BUSINESS ETHIC

DOSEN: DEVA PRUDENSIA SETIAWAN, S.T., M.M.

DISUSUN OLEH:
AILICIA WIBIKSONO 2540129054 LA29
ALVANIA ARTAMEVIA 2501982506 LA29
CATHRINE NATHANIA CAHYADI 2540126960 LA29
DIVA ALDIRA WIJAYA 2540110262 LA29
FEBBELITA WIBIKSONO 2501969561 LA29

UNIVERSITAS BINA NUSANTARA

TANGERANG
2022
 TABLE OF CONTENT

TABLE OF CONTENT............................................................................................................2
CHAPTER I (INTRODUCTION)............................................................................................3
I. Background of The Paper.......................................................................................................3
II. Purpose of The Paper..............................................................................................................4
III. Problem Formulation..........................................................................................................4
CHAPTER II (THEORY).........................................................................................................5
II. Theory of Business Ethics.......................................................................................................5
III. Business Ethics Approach...................................................................................................6
IV. Principles of Business Ethics...............................................................................................6
CHAPTER III (DISCUSSION)...............................................................................................8
I. Company Profile: PT Johnson and Johnson..........................................................................8
II. Chronology of Business Ethics Violations committed by PT Johnson and Johnson...........8
III. Use of substances that cause cancer....................................................................................9
Settlement of The PT Johnson and Johnson Case.......................................................................10
IV. PT Johnson and Johnson's Violation of the Principles of Business Ethics....................11
CHAPTER IV (CLOSING)....................................................................................................13
REFERENCE.........................................................................................................................14

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 CHAPTER I (INTRODUCTION)

I. Background of The Paper

Business is a word that is often heard in the global economy. The activity of
selling goods and services to consumers for profit by an organization is known as
business. Doing business is not done this way; rather, the applicable obligations,
regulations, or norms must be fulfilled. As a result, business people must practice
ethics in conducting transactions. Business ethics is closely related to company
values or a good way of doing business in order to foster good habits or culture
within the company. This applies not only to companies, but also to individuals,
groups and society as a whole. Good habits or culture will also influence the
behavior of every leader and employee in developing good and fair relationships
with external parties such as consumers.

Leading companies are those that can survive and thrive in a competitive
environment. Johnson & Johnson, an American multinational corporation, is one
of the world's leading companies capable of competing. Johnson & Johnson (J&J)
was a medical equipment, pharmaceutical, and packaged consumer goods
manufacturer in 1886. The company is a well-known brand for its baby
equipment, particularly in Indonesia. This company faced a problem in 1982 when
toxins were discovered in tylenol products. The medication is made by McNeil
Consumer Product Company, which later became a subsidiary of Johnson &
Johnson. This reflects poorly on Johnson & Johnson products. However, the
company restored consumer trust in its Tylenol products in 1986 by making
changes to the packaging that were classified as more complicated.

When starting a business, it is critical to focus on the products or services offered

to customers. This is significant because consumers use the product or service as a
basis for purchasing or using these products and services. This occurs when
people require something. The first thing to consider is the product's benefits.
Then consider other variables (Alma, 2007: 140). Thus, the product attributes of a
product are the main elements that consumers consider important to be used as the
basis for purchasing decisions, both in terms of brand and packaging. Product

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 attributes are the first things that customers notice before deciding whether or not
to purchase a product. As a result, it must be considered by marketing that the
company's goal is to provide satisfaction of consumer needs in accordance with
consumer expectations, which is the main requirement for the company's
sustainable survival (Tjiptono 2008: 103).

Sometimes businesses act in order to maximize profits without considering the

consequences and losses that will be borne by others. Thus, business ethics can be
used as a guideline for the company to carry out daily work based on morals and a
professional attitude, including all employees, management, and parties involved
in the company's operational activities. In 2020, Johnson & Johnson was again
buzzed with cases in which the company was asked not to sell baby powder. This
was expressed by one of the advocacy groups in the United States, where they
allegedly marketed asbestos-containing baby powder. This will raise concerns
because baby powder has been linked to cancer. However, the company is still
selling talc-based products in other markets. Furthermore, in the midst of the
COVID-19 pandemic, it is known that they have plans to avoid their obligations to
litigate the case. This is done by filing bankruptcy documents in order to get
protection.

II. Purpose of The Paper

a. To find out the cause of PT Johnson & Johnson's unethical business.
b. To find out the form of violation of PT Johnson & Johnson.
c. To find out the form of liability of PT Johnson & Johnson.

III. Problem Formulation

a. Does PT Johnson & Johnson apply business ethics in its company operations?
b. What forms of business ethics violations have been committed by PT Johnson
& Johnson?
c. What kind of losses are caused by PT Johnson & Johnson's unethical
behavior?
d. What should PT Johnson & Johnson do as a form of accountability to the
surrounding community?

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 CHAPTER II (THEORY)

I. Theory of Business
The following is the definition of business, according to experts:
a. According to Hooper
Business is everything and the overall complexity that exists in various fields
such as sales (commerce) and industry, basic industry, processing, and
manufacturing and network industries, distribution, banking, insurance,
transportation, and so on, which then serve and enter as a whole (which serves
and interpenetrates) the business world as a whole.
b. According to Urwick and Hunt
A business is any company that makes, distributes, or provides all the goods or
services that other members of society need and are willing and able to pay
for.
c. According to Prof. Owen
A business is a company that deals with the production and distribution of
goods to be sold on the market or provides a price for each of its services.
d. According to Prof. L.R. Dicksee
A business is a form of activity whose main purpose is to gain profit for those
who seek or have an interest in the occurrence of these activities.
e. According to Mc Naughton
Business is the exchange of goods, money, or services for mutual benefit.

II. Theory of Business Ethics

The following is the definition of business ethics, according to several experts:
a. According to Muslich, business ethics is the knowledge of the ideal
procedures for regulating and managing a business that takes into account
universally applicable norms and morality (2004:9).
b. According to Sumarni, business ethics is related to the problem of assessing
business activities and behavior that refers to the truth or honesty of doing
business (1998:21).
c. According to Bertens, business ethics is even broader than the provisions

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 regulated by law and even has a higher standard than the minimum standard of
legal provisions because in business activities we often find gray areas that are
not regulated by legal provisions (2000).

III. Business Ethics Approach

a. Utilitarian Approach
In this approach, every action must be based on its consequences. For that,
before taking action, you must provide great new benefits to society in a way
that does not harm and uses the lowest possible cost.
b. Individual Rights Approach
This approach has a great influence in appreciating and respecting every action
taken by others. However, if the action is considered to result in a split or
conflict with the rights of others, then the action must be avoided.
c. Justice Approach
Every decision maker has the same position, and acts fairly in providing
services to customers, both individuals and groups. This business ethics
approach will provide benefits both in the short and long term.

IV. Principles of Business Ethics

a. Principle of Autonomy
The principle of autonomy requires that business people make appropriate and
good decisions and take responsibility for those decisions. In carrying out this
principle of autonomy, two or more companies can commit to implementing
business ethics with the principle of autonomy. However, each company can
take a different approach to doing so. Because each company must have
different conditions and strategies for achieving its goals.
b. The Principle of Honesty
Honesty is the most basic value to support the success of the company's
performance. Without honesty, business will not last long because honesty is
the main key to business success. This principle must be applied in all
business activities, for example when carrying out contracts with third parties
and employees, being honest with consumers, being honest in cooperation,
and so on.
c. Justice Principle

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 According to this principle, it means that everyone who does business has the
right to get equal treatment. so that all parties involved in the business must
contribute either directly or indirectly to the success of the business. Applying
the principle of justice means that all parties must have positive access in
accordance with the abilities and roles that have been given to support
business success.
d. Principle of Loyalty
Loyalty is one of the important things in running a business. Loyalty in the
company can usually be seen from the hard work and seriousness in running
the business in accordance with the vision and mission. By applying this
principle, it means that you should not mix work matters with personal
matters.
e. Principles of Moral Integrity
Every company must have good moral integrity. That way, the company can
be trusted by the public. Applying this principle means that all business
people, both employees and management, must always maintain the good
name of the company.

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 CHAPTER III (DISCUSSION)

I. Company Profile: PT Johnson and Johnson

Johnson & Johnson (JnJ) is an American multinational company that is a
manufacturer of medical equipment, pharmaceuticals, and packaged consumer
goods. The company that was founded in 1886 was founded by three brothers,
Robert Wood Johnson, James Wood Johnson, and Edward Mead Johnson, in New
Brunswick, New Jersey, USA. The company is headquartered in New Brunswick,
New Jersey, with its consumer division located in Skillman, New Jersey. The
company oversees 230 subsidiaries and operates in 57 countries. The company
employs about 116,200 employees who manufacture products that are sold in 175
countries. Its annual sales reached $65 billion in 2011.

II. Chronology of Business Ethics Violations committed by PT Johnson and

Johnson
Johnson & Johnson is entangled in a case involving one of the powder products
they manufacture that can trigger cancer. As a result, J&J had to pay
compensation to 22 women in the US who claimed the company's powder had
caused ovarian cancer in them. The total amount to be paid is IDR 67.6 trillion.

The following is a summary of the chronology of J & J talcum powder and its
legal cases.
 1893: Dr. Frederick Kilmer discovered Johnson's Baby Powder for the first
time. This baby powder was created to reduce blisters in babies when
wearing diapers. Johnson's Baby Powder was released to the market in
1894.
 1971: The study, conducted by W.J. Henderson of the Tenovus Institute
for Cancer Research, Wales, is the first study to show an association
between ovarian cancer and talc. Of the 13 study subjects who all had
ovarian or cervical cancer, 10 of them found talc particles in their tissue
samples. But the results of these studies do not show why talc causes

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 cancer. In addition, asbestos content was also found in the talc.
 1976: Since 1976, awareness of the dangers of asbestos contained in
cosmetics has been growing. Therefore, the Food and Drug Administration
(FDA) in the US issued regulations so that talc used for cosmetics must be
proven to be free of asbestos.
 2009-2010: The FDA conducted a survey of a wide variety of cosmetic
brands, including J&J, Maybelline, Revlon, Urban Decay, and more. As a
result, none of these cosmetics contain asbestos.
 2013: For the first time, J&J is facing prosecution on charges that its
powder causes ovarian cancer. Deane Berg was diagnosed with ovarian
cancer in 2006. As reported by the New York Post, Berg admitted that he
is not a smoker and is not overweight. The only possible cause of cancer,
according to him, is his habit of using tobacco in his groin since he was 18
years old. Although the judge at trial agreed that J & J powder increased
Berg's cancer risk, Berg did not receive any compensation.
 February 2016 through October 2017: The family of Jacqueline Fox, a
resident of Alabama, USA, sued J & J, alleging that the talc caused ovarian
cancer after 35 years of use. Fox died in 2015, four months before the trial.
Fox won and J&J was required to pay 72 million US dollars, or around Rp.
1.04 billion. But in October 2017, J&J's appeal decision came out, and this
time, J&J won. In addition to getting lawsuits from the Fox family,
according to trulaw.com, J & J is currently facing 9,000 lawsuits for its
talc powder.
 6 June 2018: J & J faces the biggest lawsuit ever. A total of 22 women
sued J & J for compensation for causing ovarian cancer after decades of
use. J & J's attorney, Peter Bicks, has denied allegations of asbestos in
their product and has tested it in their laboratory.
 12 July 2018: The court found J & J responsible for the 22 women's cancer
cases and required them to pay Rp 7.9 billion to each person, as well as Rp
58.9 trillion in damages.

III. Use of substances that cause cancer

Reportedly, there are two ingredients in Johnson & Johnson products that are

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 suspected of causing cancer, namely 1,4-dioxane and formaldehyde. These two
materials have been questioned for a long time since 2009. Finally, in 2012,
Johnson & Johnson agreed to issue two ingredients that were suspected to be
carcinogenic substances as cancer-causing products starting in 2015.

Meanwhile, the basic material that is generally used to make baby powder is talc.
Talc is a mineral obtained from mining that contains substances such as
magnesium, silicon, and oxygen. Talc also functions to absorb moisture and
provide a comfortable and fresh feeling for the user. Powder does have a long
history as one of the cosmetics that is thought to be related to the incidence of
cancer. Prior to the 1970s, the powder was often contaminated with asbestos,
which is known to cause cancer. Since that incident, all powders must be free of
asbestos.

Instead, most companies in the US use corn starch. As a result, the material is
safe, so it has never been associated with cancer. Regarding the case of Jacqueline
Fox, the link between ovarian cancer and the use of baby powder is still a matter
of debate. because, according to health experts, this has not been scientifically
tested. However, they suspect that the powder particles can enter the ovaries and
cause irritation and swelling. If it occurs for a long time, it will increase the risk of
ovarian cancer.
Settlement of The PT Johnson and Johnson Case
In response to the case, the Food and Drug Supervisory Agency (BPOM) provided
several explanations regarding the baby powder products from Johnson & Johnson
that were suspected of causing cancer. Here's the review:
a. The names of the products listed in the report are Johnson's Baby Powder
Cornstarch with Aloe & Vitamin E and Johnson's Baby Powder Calming
Lavender & Chamomile.
b. Based on the cosmetic database search at BPOM, there are nine PT Johnson &
Johnson baby powder products out of 75 existing products. However, the two
products mentioned above are not in the cosmetic notification database.
c. According to the regulation of the Head of BPOM RI Number 18 of 2015
concerning Technical Requirements for Cosmetic Ingredients, talc may be
used in powdered cosmetics for children. There are no restrictions on the

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 maximum level of use or other requirements. However, it must include the
warning "Keep powder out of children's mouths and noses."
d. Now people don't need to worry because Johnson & Johnson baby powder
products that are notified at BPOM do not contain prohibited ingredients that
can trigger cancer.

IV. PT Johnson and Johnson's Violation of the Principles of Business Ethics

A company has a social responsibility to the community or to the environment.
This is a type of business ethics, which is critical because it determines a
company's reputation and credibility. As a result, businesses must practice social
responsibility, also known as CSR (Corporate Social Responsibility). CSR is an
action that has evolved into a type of corporate commitment as a sense of
corporate responsibility to the people and environment around the company, with
the goal of improving welfare and long-term economic development. As a result,
companies can be said to be not only economically responsible, but also socially
and environmentally responsible.

If you look at the case study above, which discusses the products of the Johnson &
Johnson company, you will notice that they are one of the companies that violate
CSR because they have harmed customers by developing products with basic
ingredients that can harm the wearer. The following is some case evidence: in
1982, this company encountered a problem, namely the discovery of poison in
tylenol products. In fact, this product has a very high level of sales, with a 35
percent market share in the pain reliever analgesic drug market. This is equivalent
to 7% of the Johnson & Johnson group's total sales, resulting in approximately
12%–20% of the company's profit. The Johnson & Johnson headquarters then
received word that. The Johnson & Johnson headquarters then received word that
seven people had died mysteriously. The incident occurred in Chicago, and the
victim died as a result of taking Extra Strength Tylenol drug capsules. This is the
first in a series of crisis management cases at Johnson & Johnson. Tylenol
contains cyanide poison, according to an investigation. Although an investigation
into who was responsible is still ongoing, J&J immediately recalled 31 million
bottles of Tylenol from the market and announced that consumers would stop
using the product until further notice.

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 Furthermore, Johnson & Johnson has been sued by tens of thousands of people
who claim that baby powder and other talc products contain asbestos, which can
cause cancer. Women with ovarian cancer and mesothelioma were among the tens
of thousands of people who filed lawsuits against Johnson & Johnson. In fact,
according to a 2018 Reuters investigation, Johnson & Johnson was aware that
asbestos, which causes cancer, was present in the composition of baby powder and
several other cosmetic powder products. However, Johnson and Johnson
maintained that the demands were unfounded and that their talc products were
safe and had undergone thousands of tests to ensure that they did not contain
asbestos. However, in June, the United States Supreme Court rejected an appeal
filed by the company Johnson & Johnson, causing losses of Rp 29 trillion. Where
the money will later be given to the women who filed a lawsuit against Johnson &
Johnson. In the midst of the COVID-19 pandemic, it was reported that this
company wanted to plan to issue bankruptcy letters so that they would get
protection and cause fewer costs. This company also thinks that all problems can
be solved with money, without thinking about the victim's feelings. So, based on
the description of some of the cases above experienced by the Johnson & Johnson
company, this is an unethical CSR act. However, they are not socially responsible
because some of the products they market have ingredients that should not be
used. So, in the end, this is detrimental to other people who use it, not even
prospering.

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 CHAPTER IV (CLOSING)

I. Conclusion
Johnson & Johnson is a market leader in medical devices, pharmaceuticals, and
packaged consumer goods. The company has become a top brand for its baby
equipment products. However, over time, it has been found that harmful
ingredients for consumers have been found. Where the products created by the
company can trigger cancer, they are not in accordance with the function of the
product. Until the products of the company contain unsafe ingredients, they are
examples of cases where the company has violated business ethics and CSR and
does not pay attention to the safety of consumers. Some of Johnson & Johnson's
products have been terminated with many parties feeling aggrieved and filing
claims related to problems with their products. In addition, Johnson & Johnson
had to pay a large sum of money to compensate.

II. Solutions
The case experienced by the Johnson & Johnson company has violated the
principles of honesty and moral integrity and is not in accordance with the
principle of utilitarianism. Where honesty is considered a basic value in
supporting the successful performance of a company. Without honesty, business
will not last long, so these principles must be applied in all business activities. In
addition, if the company has good moral integrity, it will be more trusted by the
community. So, by applying this principle, all business people, both employees
and managers, can always maintain the good name of the company.

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 REFERENCE

Evania, S. (n.d.). MAKALAH ETIKA BISNIS JOHNSON. Retrieved from academia:

https://www.academia.edu/39333191/MAKALAH_ETIKA_BISNIS_JOHNSON

Makalah etika bisnis bisnis yang sangat bermanfaat. (2019). Retrieved from studo: •
https://www.studocu.com/id/document/universitas-diponegoro/pengantar-bisnis/
makalah-etika-bisnis-johnson/18532592

Buntut Kasus Bedak Bayi, Johnson & Johnson Dibangkrutkan? (2021, 7 19). Retrieved
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262016/buntut-kasus-bedak-bayi-johnson-johnson-dibangkrutkan

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Kasus Bedak Bayi Johnson & Johnson, Benarkah Kandungannya Picu Kanker? (2020, 07
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https://katadata.co.id/sortatobing/berita/5f06b0730aac3/kasus-bedak-bayi-johnson-
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