GROUP 7 - BA290 WF 8:00-9:20 PM

THE TYLENOL TRAGEDIES

I. PROBLEM STATEMENT
Johnson & Johnson is a reputable company which holds a very high degree of integrity in the healthcare
industry. Faced with a crisis caused by Tylenol poisonings, Johnson & Johnson had to implement strategies to protect
the companys reputation and prevent further harm this may cause to its stakeholders.

II. POINT OF VIEW

We will take the point of view of James Burke, the chairman of Johnson & Johnson.

III. ANALYSIS
During the last week of September 1982 and first week of October 1982, Tylenol, a McNeil Consumers Product
and the leading pain-killer medicine in the United States at that time, faced a tremendous crisis when seven people
died after ingesting Extra-Strength Tylenol capsules laced with cyanide.
With the crisis outbreak, Johnson & Johnson, the owner of the company McNeil Consumer Products which is
the maker of the Tylenol, exhibited several actions to control and manage the crisis. The main consideration on their
action plan is to ensure the safety of the users of their products and services, which is also projects the companys
credo.

First Phase: Discovery

Gather Information Regarding the Tylenol Crisis

McNeil gathered reports regarding the fatalities and the supposed poisonings of the consumption of the
Tylenol capsules. They also got additional information about the incidents through the help of media.

Inform and Alert the Consumers about the Issue

James Burke, the CEO of Johnson & Johnson, held a press conference wherein he provided all the information
available and honestly addressed all queries with regards to the incident. With the help of media, various
announcements were made to warn the public about the consumption of Tylenol.

Second Phase: Assessment and Quantification of the Risks and the Containment of Potential Damage

Recall the Product

Johnson & Johnson honored its companys credo of prioritizing its consumers safety by recalling all of its 31
million bottles of Tylenol capsules with a retail value of over $100 Million from the market. They also halted all
advertisements for this product for the meantime.

Pros
- Reassured safety in the eyes of the consumer and eliminate the risk of another death
- Development of a new, safer, tamper-resistant bottle
- Recover 70% of the market share within five months following death incident
- Regained customer loyalty and achieved the status of consumer champion

Cons
- Removal and destruction of 31 million Tylenol capsule bottles with retail value of over $100 million
- Market share decreased for the first year
- Millions of dollars spent in removal and bottle development costs

Third Phase: Establishment of a Recovery Plan and Risk Mitigation

Reintroduction of Tylenol to the Market

The management decided to re-introduce the Tylenol products with a new packaging. It came up with the
introduction of triple-seal tamper resistant packaging to the market. The triple seal composed of a glue carton, a shrink
sleeve on the bottle neck and foil covering beneath the cap. McNeil/Johnson & Johnson is the first company to respond
to the national mandate for tamper-resistant packaging regulation from the Food & Drug Administration. Furthermore,
they promoted caplets, which are more resistant to tampering. In order to motivate consumers to buy the product, they
provided an opportunity of obtaining free $2.50-off coupons good toward the purchase of the product. McNeils
salespeople also worked on recovering the former stock levels for Tylenol by implementing an off-invoice pricing
program that provided the buyers with discounts linked to wholesale purchasing.

Johnson & Johnson had succeeded and was able to save its reputation by serving the public through
becoming a company that is willing to do what is right, regardless of the cost.

Tylenol Recovery Plan

To respond to the safety of Tylenol, McNeil established toll-free consumer hotlines in the first week of the
crisis.
Placement of a full-page ad in major newspapers across the country giving consumers the opportunity to
exchange capsules to tablets.
Through communication by letter, Johnson & Johnson urged its employees and retirees to request consumers
to return the Tylenol tablets to the local stores and retail outlets where they had been bought.
A sixty-second spot was broadcasted in October and November informing consumers of the impending return
of Tylenol capsules in tamper-resistant packaging.
Members of the Corporate Relations Department of Johnson & Johnson visited more than 160 congressional
offices in Washington to endorse public service announcements by the FDA on tamper-resistant packaging
and voice support for federal criminal legislation making product tampering a felony.
J&J executives made personal appearances and were interviewed for various print and video feature
presentations, TV and radio shows
Distribution of four videotaped special reports to employees and retirees about the Tylenol crisis and
comeback
In October, J&J quarterly report informed the stockholders of the impact of the Tylenol capsule withdrawal.
Prepared a four-minute videotape for use of television programs covering tamper resistant packaging.
As a matter of policy, J&J and McNeil responded to all consumers inquiries about Tylenol.

IV. CONCLUSION/RECOMMENDATION

Our group agrees with how Johnson & Johnson managed the crisis. The handling of the Tylenol cyanide
tragedy is a great basis for crisis communication strategies. Johnson & Johnson was able to handle the Tylenol crisis
successfully and have effectively demonstrated how major business should manage such tradegy. The company won
praise for its quick handling of the crisis and was able to recover 70 percent of its market share within five months
afterwards. They have shown complete openness, honesty and full disclosure to the public about the tragedy. Media
has also played an important role in this crisis. Johnson & Johnson worked closely with the media and law enforcers.
They took rapid steps toward introducing their new triple protection, tamper-resistant packaging, a step which laid the
basis for similar precautions now used on a multitude of products. They were able to ensure that measures were taken
to safeguard the public from further contamination and possible recurrences.

Johnson & Johnson also encouraged its stakeholders to be more involved in actively resolving the crisis. First,
it communicated with the management and employees by reinforcing its mission statement and dedication to serving
the customers. This instills a sense of community wherein the management and employees have become more
engaged and gained better understanding of the companys mission. Then, they communicated with the customers
and store owners which serves as reaffirmation that the company accepts responsibility - not blame - for the incident.
Additionally, the company acted immediately by recalling products to ensure that no more tampered products were on
the shelves. Because of its openness to communicate and its prompt action, the customers felt that nothing was being
hidden from them, and this earned their sympathy and cooperation. Store owners emptied their shelves quickly as
location of the tainted bottles was conveyed. Moreover, Johnson & Johnson absorbed the costs of the recall which
encouraged the stores to cooperate. By showing that they are prepared to bear the costs for the sake of their customers
safety and by prioritizing the publics interest, they were able to establish a basis for loyalty and trust from their
customers.

After the 2nd Tylenol crisis that Johnson & Johnson faced, they have decided to just drop the production of
Tylenol capsules. Our group agrees with this action as we find it difficult for Johnson & Johnson to recover the costs of
recalling the product whenever it is faced with a crisis.