Social responsibility ensures that the company behaves in a socially responsible manner. Therefore this is an important part of strategic planning. The issues of social responsibility bring to light the conflict between economic benefit and social benefit. By including social responsibility in developing the strategic plan, the company ensures that its resource allocations are balanced between its own economic interests and the social interests at large. This relates to stakeholder needs and agendas inasmuch as the company focuses on addressing the threats and opportunities facing its stakeholders and taking corrective actions accordingly. For example, if any of its products have a harmful impact upon the customers, then the strategic plan should be able to guide the company in how to take corrective measures so that the stakeholders are satisfied and they can trust the company again. This is in the company’s own interests inasmuch as it impacts on the company’s profitability.
According to Wheelen & Hunger (2010), the role of ethics and social responsibility in developing a strategic plan is to enable at the company to meet the needs and the agendas of all the stakeholders while maintaining its own goal of profit maximization. Without them, the strategic plan cannot be sustainable in the long term.
The role of ethics and social responsibility was apparent in the case of the Tylenol crisis when seven people died after taking extra-strength Tylenol capsules. Before the crisis, Johnson & Johnson controlled 37% of the market. After the crisis, it fell to 7%. The company had to take corrective measures in order to regain public confidence. The company managed the crisis successfully because it was ethically and socially responsible. When they came to know of the crisis, the management immediately conducted a product recall. Then a committee was formed to keep the media apprised of the corrective measures that were being taken. This enabled the company to maintain its stakeholder relations. The product recall caused a substantial loss for the company. This signalled to the stakeholders the company’s adherence to ethics and social responsibility. The company’s public relations department was in close contact with the media at all times. Thus the company ensured that all its activities were transparent and addressed stakeholder needs and agendas.
The Tylenol crisis illustrates the preventive measures that can be taken if the company is perceived to have overstepped an ethical boundary. In spite of the huge losses that the product recall caused, the management was not afraid to communicate with both the internal and the external stakeholders about the issues that had been raised as a result of product tampering. The product tampering might have been done by someone outside the company, yet the stakeholders held Johnson & Johnson responsible for breaking the law. Therefore the management had to undertake preventive measures. These measures were successful because the management paid attention to ethics and social responsibility in strategic planning. As a result, when the crisis fell upon them out of the blue as it were, the managers and the employees had specific guidelines to adhere to in managing the crisis. According to Hill & Jones (2009), this illustrates that the continued success of strategic planning depends upon ethics and social responsibility.
Johnson & Johnson is an ethical and socially responsible company. This is because the company realizes that the role of ethics and social responsibility is to help in developing a strategic plan that defines its own strategic focus by considering stakeholder needs and agendas.
Hill, C. & Jones, G. (2009). Strategic management theory: an integrated approach (9th
ed.). McGraw Hill/Irwin.
Wheelen, T.L. & Hunger, J.D. (2010). Concepts in strategic management and
business policy: Achieving sustainability (12th ed.). Upper Saddle River, NJ: Prentice Hall.