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Haisum
4/7/2011
Haisum Bhatti | 0812155 | BS-SE VI 1
Johnson & Johnson and Tylenol
http://haisum.info
Contents
INTRODUCTION .......................................................................................................................... 2
Analysis ........................................................................................................................................ 3
Problem Statement ................................................................................................................... 3
Questions .................................................................................................................................. 3
Study Objectives ....................................................................................................................... 3
Methodology ............................................................................................................................. 3
Background .................................................................................................................................. 4
The Real Story .............................................................................................................................. 5
What Happened ........................................................................................................................ 5
How did Company Deal with Crisis .......................................................................................... 5
How did they Re-introduce Product.......................................................................................... 6
Cost and Benefit ....................................................................................................................... 6
Causes of Success ................................................................................................................... 7
Organizational Behavior Concepts in Case ................................................................................. 8
Utilitarianism ............................................................................................................................. 8
Lessons for Other Organizations for Dealing with Such Crisis ................................................ 8
Conclusion .................................................................................................................................... 9
Works Cited ................................................................................................................................ 10
Haisum Bhatti | 0812155 | BS-SE VI 2
Johnson & Johnson and Tylenol
http://haisum.info
INTRODUCTION
Before quantum world was discovered in second decade of 20 th century by Alan
Turing, Neil Bohr and other fellow scientists it was believed that everything in this
world was organized and was controllable in some logical way. It was also perceived
that everything is predictable if we conduct proper quantitative or mathematical
analysis of current state.
Crisis need not strike a company purely as a result of its own carelessness or disaster.
Often, a situation is created which cannot be blamed on the company, but the
company finds out pretty quickly that it takes a huge amount of blame if it does nothing
or messes up in response.
Analysis
Problem Statement
Questions
What caused Tylenol crisis to take place and how Johnson and Johnson tackled the
crisis?
How should other companies in same situation tackle the problems such as this?
Study Objectives
Methodology
This case study was searched on internet and not investigated personally. Theories
discussed are available in book Organizational Behavior by Stephen P. Robbins, and
on internet. No further research of verifying information is done due to time and
resource constraints.
Haisum Bhatti | 0812155 | BS-SE VI 4
Johnson & Johnson and Tylenol
http://haisum.info
Background
Johnson & Johnson was found by three brothers, Robert Wood Johnson, James
Wood Johnson and Edward Mead Johnson, found Johnson & Johnson in New
Brunswick, New Jersey, U.S. in 1886. Company introduced first commercial First Aid
Box, baby powder, no more tears shampoo and modern form of medicine packaging
along with many useful medicines.
In 1982 a drug Tylenol, sold by Johnson & Johnson was tempered with cyanide and 7
people died giving a big setback to reputation and sales of company. However
company didn’t give up and came back strongly from this crisis.
The word crisis comes from the Greek krisis, meaning "decision."
We've all been there. Move to the left, or move to the right. Fight or
flee. Offer an explanation, or dummy up tight.
1) Avoid a crisis in the first place (a pinch of prevention is worth a mound of cure);
2) Quickly address and resolve crisis issues before they escalate;
3) Seek possible ways to turn your crisis into an opportunity.
Johnson & Johnson’s way of dealing with crisis is good model of how a crisis can be
turned into an opportunity for good reputation.
Haisum Bhatti | 0812155 | BS-SE VI 5
Johnson & Johnson and Tylenol
http://haisum.info
In October of 1982, Tylenol, the leading pain-killer medicine in the United States at the
time, faced a tremendous crisis when seven people in Chicago were reported dead
after taking extra-strength Tylenol capsules. It was reported that an unknown
suspect/s put 65 milligrams of deadly cyanide into Tylenol capsules, 10,000 more than
what is necessary to kill a human.
The tampering occurred once the product reached the shelves. They were removed
from the shelves, infected with cyanide and returned to the shelves. In 1982, Tylenol
controlled 37 percent of its market with revenue of about $1.2 million. Immediately
after the cyanide poisonings, its market share was reduced to seven percent.
(Effective Crisis Management)
Once the connection was made between the Tylenol capsules and the reported
deaths, public announcements were made warning people about the consumption of
the product. Johnson & Johnson was faced with the dilemma of the best way to deal
with the problem without destroying the reputation of the company and its most
profitable product.
Johnson & Johnson conducted an immediate product recall from the entire country
which amounted to about 31 million bottles and a loss of more than $100 million
dollars. Additionally, they halted all advertisement for the product. Not only that, but
the company decided the product would not be re-established on the shelves until
something had been done to provide better product protection.
Haisum Bhatti | 0812155 | BS-SE VI 6
Johnson & Johnson and Tylenol
http://haisum.info
Once the product was removed from the market, Johnson & Johnson had to come up
with a campaign to re-introduce its product and restore confidence back to the
consumer.
The cost was a high one. In addition to the impact on the company's share price when
the crisis first hit, the lost production and destroyed goods as a result of the recall
were considerable.
However, the company won praise for its quick and appropriate action. Having
sidestepped the position others have found themselves in - of having been slow to act
in the face of consumer concern - they achieved the status of consumer champion.
Within five months of the disaster, the company had recovered 70% of its market
share for the drug and the fact this went on to improve over time showed that the
company had succeeded in preserving the long term value of the brand. Companies
such as Perrier, who had been criticized for less adept handling of a crisis, found their
Haisum Bhatti | 0812155 | BS-SE VI 7
Johnson & Johnson and Tylenol
http://haisum.info
reputation damaged for as long as five years after an incident. (Companies in Crisis -
What to do when it all goes wrong)
In fact, there is some evidence that it was rewarded by consumers who were so
reassured by the steps taken that they switched from other painkillers to Tylenol.
Causes of Success
The features that made Johnson & Johnson's handling of the crisis a success included
the following:
• They acted quickly, with complete openness about what had happened, and
immediately sought to remove any source of danger based on the worst case
scenario not waiting for evidence to see whether the contamination might be
more widespread
• Having acted quickly, they then sought to ensure that measures were taken
which would prevent as far as possible a recurrence of the problem.
• They showed themselves to be prepared to bear the short term cost in the
name of consumer safety. That more than anything else established a basis for
trust with their customers.
Haisum Bhatti | 0812155 | BS-SE VI 8
Johnson & Johnson and Tylenol
http://haisum.info
Utilitarianism is the idea that the moral worth of an action is determined solely by its
utility in providing happiness or pleasure as summed among all sentient beings. It is
thus a form of consequentialism, meaning that the moral worth of an action is
determined by its outcome. (Utilitarianism)
In this case Johnson & Johnson initially risked bearing a loss of nearly 100 Million
dollars for greater good of greater numbers. Although it knew that it had not to be
blamed for tempering of medicine with cyanide, but its concern for costumer safety
proved beneficial to both customers and organization.
Although emergencies are unexpected by nature, you can make a list of the
predicted problems and implement a plan to possibly deal with them. For example,
a good idea is to hold a brainstorming session with influential members of the
organization to identify events that might bring unfavorable publicity.
2. Develop policies
leader, a spokesperson to deal with the media, team members to deal with the
victims and emergency officials, and others to guide the staff and volunteers.
Make sure you have up-to-date information to be able to react immediately without
having to do extensive research. Resources include: lists of contacts for team
members, volunteers, staff, as well as emergency officials such as police, hospitals
and the fire department.
This is to ensure that volunteers, staff and team members know what to do in case
of emergency. For example, how to talk to the press as well as how to deal with
the safety of the people involved.
Conclusion
Coming of crisis cannot be controlled it may come at any time. However it can be
controlled by proper planning and decision making. A good example of how to deal
with crisis and make good use of the situation is in Johnson and Johnson’s dealing
with Tylenol crisis they faced in 1982. However with proper steps and decisions, they
didn’t only recover from crisis but came out with stronger customer relations. Other
companies may also learn from this experience of company and prepare their selves
for any sudden crisis.
Haisum Bhatti | 0812155 | BS-SE VI 10
Johnson & Johnson and Tylenol
http://haisum.info
Works Cited
Companies in Crisis - What to do when it all goes wrong. (n.d.). Retrieved April 7, 2011, from
mallenbaker.net: http://www.mallenbaker.net/csr/crisis02.html
Hook, S. R. (n.d.). Crisis Management Moments. Retrieved April 7, 2011, from All About
Public Relations with Steven R. Van Hook:
http://www.aboutpublicrelations.net/aa021701a.htm