cm stages tylenol

8/8/2019 CM Stages Tylenol

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IIPM

PRESENTATIONON

BUSINESS ETHICS

(The Tylenol Crisis)

By:- Abhishek Singh


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Classic Crisis Case:

J&Js 1982 Tylenol Tampering

In this presentation I will cover:

description of the case

impact of the case on theindustry

what was learned

Case Overview


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F our responsibilities:To the customersTo the employeesTo the communities they serveTo the stockholders

W hen the Johnson & Johnson Company faced the Tylenol poisonings in1982 they applied the Four Cs quite effectively. They relied on the valueand strength of their culture credo which also identified the stakeholders


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Tylenol Case Analysis

Background

In the mid 1950s Tylenol became a needed and popular substitute for aspirin for such conditions as flu and chicken pox, since aspirin wasrelated to Reyes Syndrome (liver degeneration, brain edema, 20-30%fatality)

Large market: 100 million users, 19% of corp profits, 13% of year tosales growth, 37% market share of painkillers, outselling other topanalgesics combined

J&J was one of the Best 100 companies to work for

Tylenol became a product trusted by physicians and families alikeNumerous other Tylenol products were developed for an activemarket

J&J strong family corporate culture


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Tylenol Case

The Crisis Begins

September 1982 Extra Strength Tylenolbottles of at least 6 pharmacies and foodstores were opened, & capsules werefilled with cyanide (10,000 x fatal dose)

Media reporter asked PR Asst. Dir Andrews about poisonedTylenol then it hit the news!

7 people died in the Chicago area

CEO James Burke refers to the Credo, alerts to the danger, &assigns team to discover the source

F ormed 7-member strategy team

Stop the killings

Reasons for the killings

Provide protection & assistance to people


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and snowballs!

Police drove through streets with loudspeaker warningsChicago hospital received >700 calls in one dayImmediate stories in major magazines and newspapersOver 100,000 separate news stories ran in US papers

Hundreds of hours of national and local TV coverage>90% of Americans had heard of the Chicago deaths

W idest coverage since Kennedy assassination & Viet NamCopycat tampering 270 reported incidents (36 true)

Tylenol, killer or cure?-- Washington Post

J&J stock fell 7 pointsMarket share dropped from 37% of pain-reliever market to 7%; from$400 million in annual revenue to $70


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Initial Response Phase 1 Crisis response

Immediate alert to consumers not to use any typeTylenol product or resume use until extentdetermined

Live TV satellite feed of press conferences; mediaexposure via 60 Minutes, Donahue, etc.800# Hotline for customers (30,000 calls in Oct-Nov)Toll-free phone for news organizations; pre-tapedmessages and updated statements for distributionStrict production, different lot $, & crisis only inChicago indicated post-production tampering

W ithdrew bottles from Chicago area; ordered recallof >31 million bottles nationally at a cost of >$100 million (against FDA & FBI)It temporarily ceased all production of capsulesHigh public profile and repeated reassurance by Burke

W orking relationship with law enforcement agenciesNotification of health professionals nationwide & FDA


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Initial ResponsePhase 2, PR Rebound

F ive-Point Plan

1. Replaced them with tamper-resistant caplets (triple safety seal within 6months)

2. Incentives : free replacement of caplets for capsules, special coupons($2.50 off) easily obtained

3. New pricing program: discounts up to 25%4. New advertising program: national 1 minute commercial, News & talk

shows,5. New presentations by 2250 sales personnel made to medical

stakeholders

positive press articles regarding J&J, products, & safetyindications of regaining market shareheld up as positive example of ethics & responsibility450,000 e-mail messages


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F orgiveness : win forgiveness from stakeholders and createacceptance for the crisisSympathy : portray organization as unfair victim of attack byoutside persons; willing to accept losses

Remediation : offer compensation for victims and families(counseling & financial assistance)

Rectification : take action to reduce recurrence (triple sealed &increased random inspection)

Effective leadership : clear, visible, consistent role-modeledmessage from beginning by CEO

Strategies

Most public recovery strategies incorporatethe following five components:


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Employee Response

Strong family-oriented culture, we care about our employeesOpen and current communication with employees; 4 videoprograms on the unfolding processEmphasizing plant workers were innocentCEO speech in a week to employees, W ere coming back(wearing buttons)Idle employees given tasks to keep involved & reduce rumoring andboredomIndications of market recovery bolster spiritsCongruence and consistency in demonstrating the Credo


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Consequences Lessons learned

J&J showed that they were not willingto risk public safety even at excessive costJ&J could be trusted all the way to the topthey lived their Credo & having a functionalcredo workedJ&J set a new standard for protection thereby requiring competitors toexpensively follow suit

J&J was viewed as a co-victim of the crimeStakeholder involvement and relationships is essentialOne must anticipate and prepared for crises; expect the unexpectedCynicism: Be aware that 75% of people dont believe companies takeresponsibility for crises or tell the truth

No matter what you do in the beginning, in the end you will have to tellthe truthReact fast, openly and decisively1983 Tylenol Bill by Congress made malicious tampering of consumer products a federal offense

1989 federal legislation to make consumer products tamper resistant


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Report your own bad news dont wait for reporters to root it outSpeak with one voice

Gather facts and disseminate from one info center Be accessible to the media so they wont go to other sourcesTarget communications to those most affected by the crisis,and can affect the mediaIf you cant discuss something, explain whyProvide evidence for your statementsRecord events via video and documents so you can later present your side of the story

(learning contd)


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