J&J's Quality Control Draws Scrutiny

Johnson and Johnson recalled bottles of infant and children's Tylenol in August 2009 after learning that the medicine could be contaminated with bacteria that can "cause serious respiratory infections like pneumonia in patients suffering from weakened immune systems" (WSJ). Though recalled in August, it was not made public until September. J&J's corporate responsibility is in question. Though previous events, such as 1982's quick and public recall of tampered bottles, have strengthened J&J's image, they will have to work hard to gain back their customer's good will. J&J sells a large variety of products, so pulling Tylenol from the shelves for a short period of time will not harm the company financially.

J&J should have immediately warned the public when this issued arose. As stated in the article, the variety of products sold by J&J aids it the company's ability to pull Tylenol from the shelves without monetarily harming them. With customers now on edge due to the safety of their purchased products, as well as lack of trust they now have in J&J, the company may now lose more clientele than if they were to publicly announce the recall when it first happened.

Wall Street Journal, print. (29 September 2010)

Bed Bath & Beyond Posts Higher Net

Over the course of this past year, Bed Bath & Beyond Inc. has been a model for other house ware businesses, exceeding its own profit predictions again and again. The business has only been able to further increase its revenue as a result of Linens ‘N Things’ drop out from the market. Acting as a leader in the industry, Bed Bath & Beyond capitalized on this loss of competition by reducing its advertising costs, a heads up and logical financial move by the company.

Bed Bath’s improvements are evident. In the latest period of this past year, it increased its profit by 34% and its revenue by 12% since last year. The company had predicted a sales increase in the high single digits by the end of the year, and it generated 7.4% increase, which was on the upside of the prediction. In addition, the company’s gross margin rose by .5% as well.

As a result of such steady improvement, Bed Bath continues to grow. In just the latest marking period of this year, the company has opened seven new stores.

http://online.wsj.com/article/SB10001424052748703860104575508262854850010.html?mod=WSJ_Consumerproducts_leftHeadlines

P&G's Impact In The Consumer Product Industry

Proctor & Gamble (P&G) is currently the most influential and largest producer in the consumer products industry. P&G has more than 250 brands and focus on five main categories: laundry and cleaning, beauty care, paper goods, food and beverages, and health care. Their major brands include Crest, Charmin, Downy, Pampers, and Tide, Pantene, and Pringles. They believe in sustainability and have a high environmental awareness. P&G is always innovating and reformulating products to make sure they are safe in respect to human health and the environment. P&G’s strong marketing strategies and high sales performance have continued to pressure other consumer product companies and have secured them as the leader in the industry.

Recently, an article was published in the New York Times on how one of P&G’s brands, known as Cascade, has been experiencing issues with their dishwashing detergent. Responding to a recent environmentally friendly law, detergent makers had to cut back on phosphate, a crucial ingredient of dishwashing detergent. Consumers have been extremely disappointed with the efficiency of Cascade’s detergent and say that they are running their dishwashers twice in order to fully clean their dishes, which is resulting in more unnecessary water consumption. As a result, Cascade is doing their part to protect bodies of freshwater; however, they are losing consumers rapidly.

http://www.sustainability-index.com/djsi_pdf/Bios06/CBR_ProcterGamble_06.pdf

http://www.nytimes.com/2010/09/19/science/earth/19clean.html?ref=procter_and_gamble

Unilever in Advanced Talks to Buy Alberto Culver

In this Article of The Wall Street Journal on September 27, 2010, it is stated that Unilever wants to buy Alberto Culver Co., a company that makes hair products. They will pay "$35.50 cash", which is more than the price said prior to this one. The Alberto Culver Co. consists of products made by TRESemme, Nexxus, St. Ives, and Noxzema. This purchase is happening one year after Unilever purchased Sara Lee Corp for $1.72 billion in cash.

Unilever includes brands such as Dove, Degree, and Suave. Its sales are up 7.9% for these products and the total sales for the entire company are up 3.8% from last year.

The acquisition would put Unilever in competition with Procter and Gamble. This would also increase Unilever's presence in North America.

If this purchase does go through, the competition in the Consumer Product Goods Industry will increase. Unilever will probably become an even more prominent company in this industry and will then have more control.

http://online.wsj.com/article/SB10001424052748704082104575516451048694186.html?mod=WSJ_Consumerproducts_leftHeadlines

Compass to Buy Ergo Baby Carrier

Compass Diversified Holdings Inc. has decided to buy Ergo Baby Carrier Inc., a newly emerging baby products company. Compass has looked to support small to medium sized companies that have the potential to grow despite the upset state of the economy. Ergo has proven its potential, gaining revenues of $22.8 million in 2009.

By merging with Compass, Ergo will benefit greatly, for Compass will further diversify the products the growing business offers. Not only will consumers now associate Ergo’s reputation with Compass, but they will also have a wider variety of products to choose from. This should increase consumer demand for Compass products. At the same time, Compass, investing in leaders of niche markets, will benefit from Ergo’s top notch specialization in baby carriers, baby backpacks, and other products that reflect this particular niche.

http://online.wsj.com/article/SB10001424052748704394704575496222162050434.html

P&G's Merge With Gillette

In 2005, Proctor & Gamble merged with Gillette Co. in a $57 million deal, creating the world’s biggest consumer-products enterprise.  The combination brought the marketing strengths of P&G, whose products are marketed towards women, together with Gillette’s high profit brands which are marketed towards men. News of the merge immediately sent Gillette’s shares up 12 percent; however P&G dropped 2.7 percent. The merge was said to result in the elimination of about 4 percent of the combined workforce of about 140,000. The merger created a company with revenues of more than $60 billion.

                P&G has remained one of the most successful consumer products enterprises. In 2006, revenues went up 12.6% and its ranking went up to become the 24^th largest corporation in America. Since 2005, stock increased up until around 2009 when the economic crisis hit and stock prices plummeted. However, since the stock market crash, stock prices for P&G have been increasing at a steady rate.

http://money.cnn.com/quote/quote.html?symb=PG

http://www.msnbc.msn.com/id/6878219/

http://money.cnn.com/magazines/fortune/fortune500/snapshots/1389.html

The Green Paper Company: Using the Eco-Friendly Environment of Today for a Profit

The Green Paper Company, as according to their website (greenpapercompany.com), emerged in 2008 as the industry's first "reliable source for post-consumer recycled stationery." All products are composed of 30%-100% recycled material. Their products are also produced in mid-west USA with US materials, contributing to the lessening of their carbon footprint (e.g. shipping distance is decreased). Not only are their products green, but the methods in which they make them are, as well. Any component of their process is eco-friendly, from "paperclips to pens."

Today's society has become very aware of our environment. Damaging effects of careless consumers in the past, such as CFCs in hairspray used by many females, have left a huge imprint on our world today. Many up and coming businesses,like the Green Paper Company, are taking the consumers' preference of "green" into account when starting up. Existing companies are launching new lines of eco-friendly products to keep up with such competitors. One example includes Clorox, which has a new line called Green Works, which is comprised of natural household cleaning products. The green trend has created a new branch for starting businesses and has forced older businesses to accommodate to the new consumer preference.

http://www.clorox.com/

greenpapercompany.com

NewPage Group Inc.

According to www.hoovers.com, a well respected financial reporting website, NewPage Group Inc. is a new company which formed between April 2008 and June 2008. This company produces paper (about 4.4 million tons every year) and sells its paper and paper products. It is part of NewPage Corp, one of the largest producers of coated and specialty paper in North America. This is a private company with 8,503 employees.

Since this smaller company joined a larger one, it added to the old company's competitiveness because it could help make more products for less money. Since this company already had a larger company to connect to, they were not bothered by this highly competitive industry. Had they had to start on their own, they would have needed to have a huge amount of resources in order to affect the competition. Therefore, this company affected the competition because they helped make NewPage Corp. more competitive.

http://www.hoovers.com/company/NewPage_Group_Inc/ryxtcxi-1.html

J&J Bids $2.3 Billion for Crucell

Johnson & Johnson has put down a bid of $2.3 billion to buy a part of Crucell "that doesn't already own a bid" so that Johnson & Johnson can have more control in the area of vaccines. Johnson & Johnson has already stated that if it does gain control of Crucell, they will keep all "senior management and its existing facilities."

However, a representative of Crucell, shareholder Gertjan van der Baan, says that this bid is too low due to the potential of the company if it does join up with Johnson & Johnson.

Johnson & Johnson wants the control of vaccines because vaccines have more sales and profits than prescription-drugs with not as much competition. As of now, Crucell and Johnson & Johnson are working together to make a vaccine for all flu strains which is in its early stages of production.

If Johnson & Johnson buys Crucell, Johnson & Johnson will earn a very large profit from these vaccines. The price of buying the company will probably be covered by profits from the vaccines in a short amount of time. But what if the vaccines do not help the company enough? Will the vaccines still have been considered a "good buy" if Johnson & Johnson is still helping humanity in the long run because these two companies can work together to make better vaccines than we have today? Or will there be no affect because the vaccines are already available to the consumer through Crucell so nothing will change if Johnson & Johnson buys Crucell?

Avon: The Company For Women

For nearly 125 years, Avon’s goal has been to help women achieve empowerment. They believe in “commitment to such critical areas as economical empowerment, environmental stewardship, and production responsibility." They have given tens of millions of Avon Independent Sales Representatives the opportunity to earn money in order to provide for their families and potentially "realize their personal dreams." Avon’s foundation and who they strive to be is based on five key principles of trust, respect, belief, humility, and integrity. 

Avon is committed to the well-being of women and society by contributing to philanthropic efforts such as supporting a cure for breast cancer and an end to domestic violence. By 2010, Avon will have contributed over $1 million to philanthropic funds. By 2012, they also have plans to reduce energy consumption by 10%, GHG emissions by 10%, and water consumption by 7%. They strive to maintain their commitment of being a “socially responsible, ethical company that is watched and emulated as a model of success.”

http://responsibility.avoncompany.com/page-88-Welcome

Colgate Palmolive Company: Ethics and Society

Colgate Palmolive Company has three fundamental values: caring, global teamwork, and continuous improvement. Colgate Palmolive focuses on being ethical in all situations dealing with “Colgate people, customers, shareholders and business partners,” as well as protecting the environment. Working throughout the globe allows the Company to grow through technologies and talents abound in other nations. Products and services are continually enhanced to provide better goods for customers.

Seeing as one of Colgate Palmolive Company’s values is continuous improvement, they have and continue to achieve environmental good-doings in order to protect and better our environment. They have reduced waste and packaging. They had goals set up between the years of 2002 and 2010 to exceed environmental regulations: “reduce energy use per ton of production by 25%, reduce CO₂ emissions per ton of production by 25%, reduce water use per ton of production by 40%, [and] reduce wastewater contaminants by 30%. “ Not only do their good deeds protect our world, but “it makes good business sense.” This is so because it proves to the community that this company cares about society, increases support for Colgate Palmolive.

http://www.colgate.com/app/Colgate/US/Corp/LivingOurValues/CoreValues.cvsp

Electronic Mirrors Sell Lipstick and a Makeover

Major sellers, for example Wal-Mart, are beginning to test what are called "virtual mirrors" in their stores. This new function was created by a small start-up called EZface Inc., and its idea is aiding in larger competing companies' sales.

The service offers an individual kiosk to a consumer in which she can select an number of different makeup applications. At the push of a button, the consumer can simulate her appearance with the addition of the stores makeup.

The service that Wal-Mart is providing for EZface makes one wonder whether the startup would survive without a larger facilitator. Cosmetic companies may not feel the need to place EZface services within their stores. Although L'Oreal has updated its website with new customer functions that use the IBM technology behind EZface, L'Oreal has not established kiosks in stores. In light of corporate social responsibility, Wal-Mart is a good corporate neighbor in this case, aiding in another company's growth. This improves Wal-Mart's overall reputation as well as its sales.

http://online.wsj.com/article/SB10001424052748703700904575391213196820750.html

J&J Stepping Up Fight Over Drug

In this article, Johnson & Johnson states that they want to be paid for damages done by Merck & Co while Johnson & Johnson was trying to "dissolve a partnership for the anti-inflammatory drugs of Remicade and Simponi." However, Merck says that if they do pay the damages, the affects would "have a 'material adverse affect' on its financial position, liquidity and operational results."

The dispute will be heard later this month over a minimum of twelve business days. Three federal judges will listen to the case and then decide within twenty business days after the trial who wins the case. The winner of the case will get the ownership of Remicade, a drug that treats arthritis and gastrointestinal disorders.

The fight began last year when Johnson & Johnson was doing business with Schering-Plough who was then bought by Merck. Johnson & Johnson wanted to keep their terms of distribution of drugs but Merck would not agree.

Ethics play a very large part in this dispute. Is it ethical for Johnson & Johnson to dissolve their partnership? Or is it ethical for Merck to not allow the dissolve? Johnson & Johnson's Credo of Values states that it is their promise to put their customers first. I don't think they are doing this by trying to dissolve these medications that could help people. Yes, they may lose some money because of the drugs, but they will be sticking by their values. Also, Johnson & Johnson has a huge profit. How much could this one product affect them, assuming there is not a giant recall once it is out on the shelves? However, they also say that it is their responsibility to keep prices low and give their suppliers and distributers the opportunity to make a fair profit. If not dissolving the product means that prices rise and they lose profit, this is not the right thing to do.

It seems to me like Johnson & Johnson is stuck between a rock and a hard place. Their position is complicated and unless we know the outcome of dissolving the drugs or not dissolving the drugs, we cannot judge whether Johnson & Johnson is making the ethical choice.

http://online.wsj.com/article/SB10001424052748703720004575477512417209570.html?KEYWORDS=Johnson+and+Johnson

Estee Lauder, Elizabeth Arden Swing to Profit

Estee Lauder Company and Elizabeth Arden Incorporation both increased profits this past fiscal quarter due to an increase in consumer purchases.

Estee Lauder saw a decrease in fragrance purchases and an increase in skin-care products, and as a result, the company reconfigured their pricing; international purchases, especially in Asia (and particularly China), have increased, part of which is due to duty-free stores in airports. Estee Lauder’s fourth-quarter profit was reported to be $23.9 million.

Elizabeth Arden saw an increase of purchases in both departments. Profits can be accounted to higher income-tax benefits due to an increase in those sales, as well as decreasing costs and bettering technology. Elizabeth Arden’s fourth-quarter profit was reported at $2.3 million

Due to markets in other areas of the world, Estee Lauder was able to make a profit this past quarter, as opposed to losing money as in the following year. The increase of travel in Asia, especially China, had great impact on the profits accrued. The duty-free stores in international airports allow foreign consumers to purchase products without being charged extra fees. Seeing the trend in international travel, it would be wise to fill more shelves in more airports with such beauty products; the benefits and profits are evident.

http://online.wsj.com/article/SB10001424052748704407804575425083509669028.html

"Shoppers Still Stick To Payday Purchases"

Recently it has been noticed that many consumers are sticking to the “paycheck cycle”, although the economy has been improving. The “paycheck cycle” consists of consumers buying products typically during the first week of the month in the U.S and then cutting back on spending as they run out of money. The cycle is typically driven by people who are living from “paycheck to paycheck.”


Consumer companies have been having a difficult time figuring out how to appeal to consumers and use this system to their. It’s been important to learn how to time promotions and when to increase the stock of demand for certain products. The more-affordable brands have been most affected by this system because shoppers with low incomes and those receiving government benefits are the ones who need to stock up on necessities at the beginning of the month when they first receive their paychecks.

It’s important for consumer product companies to understand this cycle and increase discounts during times when consumer spending increases. They need to work with consumers and their habits in order to succeed in this economy, especially when we are in a recession. It is likely that this cycle will become habit and it’s going to become necessary to work with it rather than against it.

http://online.wsj.com/article/SB10001424052748703618504575459563277106940.html?mod=WSJ_Consumerproducts_leftHeadlines

Estée Lauder's Counter Makeover

Estee Lauder cosmetic company has recently altered its selling to be more consumer- friendly by making its products more easily accessible in department stores as well as showing more overall customer concern.

The company originally lost sales as a result of inconvenience in stores. Customers could not easily browse products, price tags were somewhat hidden, so the buying process was tedious. In consequence, department stores’ profits, which account for a third of the beauty industry’s profit, dropped by 9% in the past year in comparison to the mere 1% overall industry decline.

Estee Lauder has incorporated a new counter design, placing its products out in the open for browsing. The chain Macy’s agrees with this change saying consumers like to “browse independently,” so the company has evidently become more costumer-friendly. This move along with the addition of new stores and television ads has increased consumer demand. In particular, Estee Lauder has given away around 400,000 free samples of Advanced Night Repair eye treatment. This is not all. The company follows up on each consumer’s opinion of the product ten days after receiving it to show more consumer consideration, a key aspect to making a customer love a product.

In reflection, consumer awareness is crucial. The fact that sales doubled during the week of this free product give-away reveals that consumers appreciate that companies keep their interests in mind.

To Wash Hands of Palm Oil Unilever Embraces Algae

Unilever, producer of Dove soap, Vaseline lotion, Magnum ice cream and other mainstream products, is committed to the use of algae as a source of getting natural oil. This is instead of using palm oil which can be harmful to the environment. Unilever recently invested in a company called Solazyme Inc., which "harvests" this algae, because there was an increasing amount of pressure to become eco-friendly.

This algae will not take the place of natural oils any time soon (it might take up to seven years for this to happen) because this new process needs to be tested on humans and changes need to be made. However, algae is seen to have great potential.

The process through which Solazyme "harvests" the oil is somewhat simple: they use plant-matter as food for microalgae which naturally have the ability to make oil without harming the environment.

Other companies such as Nestle and Kraft are also looking into alternatives to natural oil. Solazyme, among other things, is also trying to use algae in fuel for the Navy.

If companies like this are able to use oils from algae, demand will increase because people who are trying to promote saving the environment will be more apt to buying these products. This may take a long time to perfect, but it is on its way. Overall, the companies who are pursuing this alternative will benefit because of the huge push for eco-friendly products.

http://online.wsj.com/article/SB10001424052748703720004575477531661393258.html?mod=WSJ_Consumerproducts_leftHeadlines

Regulators: Rash Not Pampers's Fault

The Pampers brand of Procter & Gamble Company had been under inspection by the U.S. Consumer Product Safety Commission and Health Canada to declare the effect the new Pampers Dry Max diapers had on skin. 4,700 reports of diaper rash were reported to the CPSC, but about 85% of reports followed the national attention surrounding the allegations.

Pampers comprises 11% of Procter & Gamble’s revenue. P&G lost sales during the controversy, but has since increased revenue. With the report from CPSC stating there is “no link between the company’s new Pampers Dry Max diapers and reports of diaper rash,” it can be inferred that revenue will continue to rise because, as a society, we tend to return to our old habits, which include purchasing familiar brands, like Pampers.

http://online.wsj.com/article/SB10001424052748704206804575467820450509254.html

Heavy P&G Promotions Pinch Profit

Proctor and Gamble, due to the recession, has been having a difficult time making profits overall within the consumer goods industry. As of August 4th, P&G was up five percent in their sales due to publicity. However, they had to lower their prices so the company's overall prices were less than expected.

Usually, Proctor and Gamble offers high-end products but because of the hard economic times had to put out more products which the consumer would be more likely to purchase. They used price promotions and created new products to try to get consumers to purchase their goods, raising the amount of products sold overall; changes in prices lowered sales by one percent as a whole.

Lower prices of Proctor and Gamble products is beneficial for consumers because they are able to purchase more products for less money. Lower prices are also beneficial for the company overall because people will return to the corporation later, even after prices have risen again.

http://online.wsj.com/article/SB10001424052748703545604575406873653461804.html

"Cost Savings, Sales Help L'Oréal's First-Half Profit"

After a difficult year in 2009, the world’s largest cosmetic company by revenue, L’Oréal, has had an operating profit increase of 21% to €1.67 billion this year. They launched a series of initiatives such as new lines of cheaper and more basic products outside their existing brands of Maybelline, L'Oréal Paris, and Lancôme. L’Oréal has been taking advantage of emerging markets in China, Brazil, and India where new western brands products are in high demand. They have expanded their production of new products such as deodorant which has captured a larger range of shoppers. L’Oreal has also benefitted from cutting back on their job perks and traveling cost, however, they have not decided to let up on advertising and research spending.


L’Oréal’s higher price tags on its products have given the company an advantage compared to other companies with tighter margins. By taking advantage of new emerging markets, L’Oreal is going to continue to grow and continue to pressure other cosmetic companies. Their strong rebound from the economic crisis will continue to uphold their reputation as the world’s largest cosmetic company.

As consumers, we will continue to be affected by L’Oréal’s profits as we are bombarded with advertisements selling Maybelline lipstick, L’Oreal’s Paris’s hair product line, and Lancôme fragrances. As business students, this company’s profit is important because it will affect all cosmetic companies in the consumer product goods industry.

"Panasonic Says US Flat-Panel TV Sales Slowing": Knowing One's Consumer Demand

A combination of a “deteriorating economy” and over production of smaller sized televisions by U.S. manufacturers has caused a significant decrease in sales for Sony and Panasonic. Ironically, an optimistic sales benchmark for these products is supposed to be one aspect facilitating future economic recovery.

-Sony’s sales increase prediction: 67%

-Panasonic’s sales increase prediction: 33%

It makes sense that inventory of LCD televisions has recently increased as a result of a recuperating economy after an economic slump in early July and beforehand. Supply is now higher, allowing Sony and Panasonic to lower their prices, in turn attracting more demand from consumers. Supply should continue to bounce back.

-2 extra weeks of inventory in U.S.

A decrease of sales in China could be the result of a decline in trade with foreign nations. For either country in the trade relationship, a lack of supply and higher prices might have repelled consumers significantly. Panasonic or Sony may have also attained a surplus of smaller sized televisions, those in lower demand, and they are now lacking in sales.

Above all, it is important for these two companies to understand the specific consumer demand which is larger sized televisions, for people tend to replace their old televisions with newer and larger models at low prices.

-Television depreciation: 20%-30% per year

My Article

http://online.wsj.com/article/SB10001424052748703632304575451620301585114.html
I'm writing about this article. It's titled Cost Savings, Sales Help L'Oréal's First-Half Profit.
-Lisa

First Post

Hey Connor, Molly, and Kelsea,
This is our blog! Just remember to post what you're writing about right when you decide!
-Lisa