Haisum Bhatti | 0812155 | BS-SE VI

Johnson & Johnson and Tylenol
A case study of how to deal with crisis

Haisum 4/7/2011

.. 9 Works Cited....................................................................... 5 How did Company Deal with Crisis ......................... 10 ............................................................................................................................................................... 8 Utilitarianism ...................................................Haisum Bhatti | 0812155 | BS-SE VI 1 Johnson & Johnson and Tylenol http://haisum..................................................................................................................................................................................................... 3 Study Objectives .............................................................................................. 7 Organizational Behavior Concepts in Case ............................................................. 3 Methodology ......................... 8 Lessons for Other Organizations for Dealing with Such Crisis ................................................................................................................................... 5 How did they Re-introduce Product............................................. 3 Background ......................................................................................................................................................................................................................................................................................................................................................................................... 6 Cost and Benefit .................................................................................... 8 Conclusion ............................................................................................................................................................................................................................................ 3 Questions ........ 4 The Real Story ................................................................. 6 Causes of Success .............................. 5 What Happened ............................. 3 Problem Statement .............................................................................................................. 2 Analysis......................................................................................................................................info Contents INTRODUCTION ...............................

However discovery of world of chaos. It was also perceived that everything is predictable if we conduct proper quantitative or mathematical analysis of current state. Neil Bohr and other fellow scientists it was believed that everything in this world was organized and was controllable in some logical way. opted humans to think differently. and the company's response to the Tylenol Johnson & Johnson came under it. quantum. However often situations go out of control of organizations and create chaos and crisis. Crisis need not strike a company purely as a result of its own carelessness or disaster. For decades managers have acted on the basis that organizational events can be controlled.followed by suggestions and precautions for other organizations.Haisum Bhatti | 0812155 | BS-SE VI 2 Johnson & Johnson and Tylenol http://haisum.info INTRODUCTION Before quantum world was discovered in second decade of 20th century by Alan Turing. a situation is created which cannot be blamed on the company. as if nothing was certain and not everything can be fully controlled. forcing organization to take decisions for its survival or dominance. Same perception was linked with organizations. . but the company finds out pretty quickly that it takes a huge amount of blame if it does nothing or messes up in response. This and document how they discusses recovered crisis from & Johnson. Often. One of the classic tales of how a company can get it right is that of Johnson poisoning.

No further research of verifying information is done due to time and resource constraints. . and on internet. Robbins.info Analysis Problem Statement To investigate what should companies do in sudden crisis caused by unusual events rather than company¶s own conduct 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 This study focuses on following main objectives: y y y To study possible causes behind sudden crisis To find out solution for recovery from such crisis To analyze what Johnsons and Johnsons did to recover from Tylenol crisis in 1982 Methodology This case study was searched on internet and not investigated personally.Haisum Bhatti | 0812155 | BS-SE VI 3 Johnson & Johnson and Tylenol http://haisum. Theories discussed are available in book Organizational Behavior by Stephen P.

S. 3) Seek possible ways to turn your crisis into an opportunity. However company didn¶t give up and came back strongly from this crisis.info Background Johnson & Johnson was found by three brothers. Move to the left. either as a company or a person." We've all been there. Johnson & Johnson¶s way of dealing with crisis is good model of how a crisis can be turned into an opportunity for good reputation. or dummy up tight. no more tears shampoo and modern form of medicine packaging along with many useful medicines. 2) Quickly address and resolve crisis issues before they escalate. baby powder. James Wood Johnson and Edward Mead Johnson. meaning "decision. The word crisis comes from the Greek krisis. There are three smart ways to approach crisis situations:(Hook) 1) Avoid a crisis in the first place (a pinch of prevention is worth a mound of cure). found Johnson & Johnson in New Brunswick. New Jersey. In 1982 a drug Tylenol. The bad news is we never know for sure how we'll do until it is test time. Offer an explanation. . It's a true test of what we are. sold by Johnson & Johnson was tempered with cyanide and 7 people died giving a big setback to reputation and sales of company. how we handle ourselves in the middle of a crisis. The good news is we can prepare ourselves in principle. or move to the right.Haisum Bhatti | 0812155 | BS-SE VI 4 Johnson & Johnson and Tylenol http://haisum. Company introduced first commercial First Aid Box. Fight or flee. Robert Wood Johnson. in 1886. U.

faced a tremendous crisis when seven people in Chicago were reported dead after taking extra-strength Tylenol capsules.info The Real Story What Happened In October of 1982. 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.Haisum Bhatti | 0812155 | BS-SE VI 5 Johnson & Johnson and Tylenol http://haisum.2 million. In 1982. . The tampering occurred once the product reached the shelves. It was reported that an unknown suspect/s put 65 milligrams of deadly cyanide into Tylenol capsules.000 more than what is necessary to kill a human. infected with cyanide and returned to the shelves.Additionally. but the company decided the product would not be re-established on the shelves until something had been done to provide better product protection.Not only that. Immediately after the cyanide poisonings. 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. Tylenol controlled 37 percent of its market with revenue of about $1. they halted all advertisement for the product. They were removed from the shelves. Tylenol. its market share was reduced to seven percent. 10. the leading pain-killer medicine in the United States at the time. public announcements were made warning people about the consumption of the product. (Effective Crisis Management) How did Company Deal with Crisis Once the connection was made between the Tylenol capsules and the reported deaths.

Johnson & Johnson had to come up with a campaign to re-introduce its product and restore confidence back to the consumer. Tylenol products were re-introduced containing a triple-seal tamper resistant packaging. Over 2250 sales people made presentations for the medical community to restore confidence on the product.info How did they Re-introduce Product Once the product was removed from the market.of having been slow to act in the face of consumer concern . found their . they offered a $2. the lost production and destroyed goods as a result of the recall were considerable. In addition to the impact on the company's share price when the crisis first hit. 1.Haisum Bhatti | 0812155 | BS-SE VI 6 Johnson & Johnson and Tylenol http://haisum. To recover loss stock from the crisis. the company won praise for its quick and appropriate action. which are more resistant to tampering. they promoted caplets. Furthermore. Johnson & Johnson made a new pricing program that gave consumers up to 25% off the purchase of the product. In order to motivate consumers to buy the product. 2.50 off coupon on the purchase of their product. They were available in the newspapers as well as by calling a toll-free number. 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. Within five months of the disaster. 4. It became the first company to comply with the Food and Drug Administration mandate of tamper-resistant packaging. However.they achieved the status of consumer champion. 3. Having sidestepped the position others have found themselves in . Cost and Benefit The cost was a high one. who had been criticized for less adept handling of a crisis.

Haisum Bhatti | 0812155 | BS-SE VI 7 Johnson & Johnson and Tylenol http://haisum. with complete openness about what had happened. Causes of Success The features that made Johnson & Johnson's handling of the crisis a success included the following: y They acted quickly. 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.info reputation damaged for as long as five years after an incident. That more than anything else established a basis for trust with their customers.(Companies in Crisis What to do when it all goes wrong) In fact. y They showed themselves to be prepared to bear the short term cost in the name of consumer safety. they then sought to ensure that measures were taken which would prevent as far as possible a recurrence of the problem. 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 y Having acted quickly. .

Although it knew that it had not to be blamed for tempering of medicine with cyanide. Create a crisis management team Assign certain individuals to be fully knowledgeable about the company¶s policies and who are efficient in problem-solving to deal with emergencies. meaning that the moral worth of an action is determined by its outcome. When asked by the media what the company¶s policies are about a certain situation. Develop policies Each company or organization should have a set of policies or guidelines to deal with emergencies. but its concern for costumer safety proved beneficial to both customers and organization. Prepare a system that will allow you to respond to the emergency Although emergencies are unexpected by nature. your spokesperson should be able to answer firmly. Appoint a team . a good idea is to hold a brainstorming session with influential members of the organization to identify events that might bring unfavorable publicity. This assures the public that the company's employees are reliable and knowledgeable. 2. Lessons for Other Organizations for Dealing with Such Crisis 1. you can make a list of the predicted problems and implement a plan to possibly deal with them.info Organizational Behavior Concepts in Case Utilitarianism 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.Haisum Bhatti | 0812155 | BS-SE VI 8 Johnson & Johnson and Tylenol http://haisum. 3. It is thus a form of consequentialism. (Utilitarianism) In this case Johnson & Johnson initially risked bearing a loss of nearly 100 Million dollars for greater good of greater numbers. For example.

team members to deal with the victims and emergency officials. Other companies may also learn from this experience of company and prepare their selves for any sudden crisis. . Resources include: lists of contacts for team members. For example. 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. a spokesperson to deal with the media. 4. volunteers.Haisum Bhatti | 0812155 | BS-SE VI 9 Johnson & Johnson and Tylenol http://haisum. Conclusion Coming of crisis cannot be controlled it may come at any time.info leader. However it can be controlled by proper planning and decision making. hospitals and the fire department. as well as emergency officials such as police. However with proper steps and decisions. 5. Distribute an emergency procedures guide This is to ensure that volunteers. Assemble and Organize resources Make sure you have up-to-date information to be able to react immediately without having to do extensive research. they didn¶t only recover from crisis but came out with stronger customer relations. staff and team members know what to do in case of emergency. staff. how to talk to the press as well as how to deal with the safety of the people involved. and others to guide the staff and volunteers.

(n. 2011.org/mgmnt/cntmpory. Crisis Management Moments.d.wikipedia.d. Brief Overview of Contemporary Theories in Management. 2011. from All About Public Relations with Steven R.html Effective Crisis Management.). (n. 2011. C. 2010. 2011.Haisum Bhatti | 0812155 | BS-SE VI 10 Johnson & Johnson and Tylenol http://haisum.). (n. from Wikipedia: http://en.What to do when it all goes wrong.ufl.org/wiki/Utilitarianism .d.). (n. S. Retrieved April 7.info Works Cited Companies in Crisis . R. (n.).aboutpublicrelations. from mallenbaker.mallenbaker.d. from http://iml.jou.htm Hook.net: http://www.edu/projects/fall02/susi/tylenol.d. Retrieved April 7. Van Hook: http://www. from Management Help: http://managementhelp.htm McNamara.). Retrieved April 7.htm Utilitarianism.net/aa021701a.net/csr/crisis02. Retrieved April 7. Retrieved April 7.

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