Acquiring confidence from the mass of people is the way for a company to be competitive in market, Therefore, this is really crucial issue; but hard to accomplish for a company. Particularly, it is certain that to regain confidence from the masses is definitely thorny if they have been damaged by a company or a product of company. However, there is the company, Johnson & Johnson which succeed to re-secure confidence from the public. The company Johnson & Johnson suffered a huge crisis which can make people think the company untrustworthy. There was Tylenol toxic chemicals murders in 1982. Because of toxic Tylenol, seven residents in Chicago who took Tylenol died suddenly. Just after the incident broke out, the market share of Tylenol was declined from 35% to 6.5% and stock price was collapsed from $35 to $8. The worst fact was that the company lost confidence from people. However, the real reason why people died was revealed after three-week investigation. This was not Johnson & Johnson’s fault but one criminal putted toxic chemical into Tylenol in the retail stage. Even though the fact was revealed, Johnson & Johnson took every action to prevent additional tragic deaths. They shared all information associated with this incident and warned people not to take Tylenol until the extent of the tampering could be determined. Furthermore, they picked up every Tylenol on a nation scale which brought them 125 million dollars loss. Even though the company’s ethical decision to resolve the incident incurred them huge loss, they could restore trust and could be acknowledged as a firm and ethical enterprise from people.
The purpose of this report is to inform that the best way to overcome a crisis of unethical business behavior is to abandon the profit which can be got from unethical behavior and to take ethical steps to resolve an unethical problem. The scope of this report includes the background information of Tylenol and Johnson & Johnson, the corporate culture of the company, police investigation on the murders, the company’s countermeasure, and the policy of the company after the close of case. The information in this report was found from the company website, from internet articles, and from the EBSCO host database. This report is limited by factual and scientific information which shows the way Johnson & Johnson dealt with the crisis in 1982.
The report concludes that Johnson & Johnson’s countermeasure and ethical endeavor to resolve the crisis could appeal to the mass and restore confidence from people. The reason why they took ethical step although they knew it would cost them an enormous economical loss was truly based on their corporate credo which states the business should take social responsibilities and should be something more than pursuing profit.
Resultingly, Tylenol manufacturer could successfully overcome the crisis and could re-build sound public relationship. This brought them a huge success which led the company to a world-esteemed company. This case stands for the significance of public confidence on a business field and shows how the enterprise’s ethical attitude can re-secure collapsed public trust.
Trust and confidence that a company gets from the mass is directly related to the prosperity of them. Therefore, we can easily see that many companies are trying to conceal their dark side so that people would not find their unethical fault and not lose the trust toward them. However, the most righteous way to cope with the crisis of unethical business behavior is not concealing the crisis but showing their ethical endeavors to dealing with the crisis. Johnson & Johnson is one of the representative companies which acquired a reputation for taking ethical actions in dealing with an unethical crisis. In this report, the background of the product and the company, the corporate credo they have, and the ethical steps they took based on the credo will be discussed and analyzed.
The purpose of this report is to inform the best way to get through the crisis is to take ethical attitude since this can enhance the public confidence.
The scope of this report includes the background information of Tylenol and Johnson & Johnson, the corporate culture of the company, police investigation on the murders, the company’s countermeasure, and the policy of the company after the close of case.
The information in this report was found from the company website, from internet articles, and from the EBSCO host database.
This report is limited by factual and scientific information which shows the way Johnson & Johnson dealt with the crisis in 1982.
The product Tylenol is a drug of McNeil Consumer Healthcare, a subsidiary company of Johnson & Johnson. This drug is mainly advertised for reducing pain. Reducing fever and relieving the symptoms of allergies, cold, cough, and flu are other effectiveness that Tylenol is advertised for. And, the trade name of Tylenol was made by McNeil’s sales team while using some of letters in chemical name for acetaminophen which is the active ingredient that used in Tylenol:
When Tylenol was introduced in earnest to the market was the spring of 1955. McNeil introduced TYLENOL Elixir for Children which was effective for pain killing. This was the first product of McNeil which contained acetaminophen as its active ingredient. Even though it was mainly for children, the product became to a dominator of North American pain-killer market not long after it was introduced to the public (“History of TYLENOL”). After Johnson & Johnson acquired McNeil in 1959, they started advertisement of Tylenol to the health professionals as a safe and effective alternative to aspirin. The company advertised the product as an effective pain-killer as aspirin, but goes easier on the digestive system. And, this advertisement became the cornerstone of success to Johnson & Johnson. By 1970, sales of Tylenol were increasing about 20% to 30% annually (“A History of Tylenol”).
In 1976, consumers showed their opinion that they could see that Tylenol went easier on the stomach than other pain-killers but, effectiveness of it to reduce pain was relatively weaker than others. Therefore, in order to meet consumers’ claim, Johnson & Johnson introduced Extra-Strength Tylenol which contained 500 mg of pain-reliever. This product was advertised as the most powerful pain-killer which had the most amount of pain-reliever at that
time. (The average dosage was 325 mg for regular and 400 mg for extra strength.) And, this led Johnson & Johnson truly the leader of North American pain-killer market whose market share was up to 35% in 1982 before the Chicago Tylenol murders was occurred (“A History of Tylenol”).
In 1943, Robert Wood Johnson, President of Johnson & Johnson established “Our Credo” in order to advocate the company’s responsibilities to customers, employees, communities, and stock holders. The reason why he established this credo was he saw business as taking social responsibilities that comes beyond the profit and financing concerns. He thought if his company stays true to what is righteous, and moral his business will stay healthy and wholesome. Furthermore, he believed that the decision which is based on the credo, it would do “righteous” thing for both society and the company. Accordingly, the credo made by the president is not just moral instruction but is one of the most profitable ways. At Johnson & Johnson, the credo works as a compass in the rapid change of today’s business (Kahaner). (“Our Credo”).
The first responsibility which has stated on Our Credo is the responsibility to customers. Johnson & Johnson believes that everything they do or provide has to be high-quality and the company has to endeavor to reduce their manufacturing cost to maintain reasonable prices to customers. Moreover, customer’s demands should be serviced promptly and accurately. And, fair opportunity to make a profit for their suppliers and distributors should be guaranteed (“Our Credo”).
The second responsibility is the responsibility to employees. The first principle is that every employee should be considered as an individual whose dignity, merit, and security has right to be recognized and to be protected. The second principle is the fairness among employees (“Our Credo”).
Therefore, compensation and opportunity for employment, development, and advancement must be provided fairly and cleanly. Furthermore, employees’
freedom to make suggestions and complaints should be secured (“Our Credo”).
The third responsibility is the responsibility to communities. Johnson & Johnson promises that they must be a good citizen in the world community who supports good works and charities and takes their share of taxes. Moreover, they have social responsibility to encourage better health and education of the world (“Our Credo”).
The last responsibility is the responsibility to stock holders. Johnson & Johnson committed that the profit that they get would be gained from the fair way only. Additionally, they promised to keep experiments with new ideas, to carry on research, and to develop progressive programs in order to generate profit. And, the profits gathered according to these principles should be realized as a fair return to stock holders (“Our Credo”).
In the autumn of 1982, seven people who took dose of Extra-Strength Tylenol died suddenly in Chicago. Just after the fact that the deaths were related to Tylenol, National news broadcasted the incident nationwide, retail chains started to remove Extra-Strength Tylenol from their shelves, and protest calls from people who took Tylenol were flooded at the company. The market share of Tylenol was declined drastically from 35% to 6.5% and the stock price of Johnson & Johnson was collapsed from $35 to $8. However, the most serious problem was that the company lost confidence and trust from the people (Manning).
Police Investigation of Chicago Tylenol Murders
At first, police investigated every Tylenol production factories whether there were some operational errors or mistakes of Johnson & Johnson in the production stage. However, through the investigation of forensic toxicologists, the fact that cyanide was detected in all of victim’s Tylenol was revealed. Therefore, police supposed that these deaths were not tragic accidents but murders (Kaplan).
Police found that each of the five poison-tampered Tylenol bottles came from different factories. Accordingly, the possibility that the culprit would intervened in the case at the production stage in the factories was disappeared. Police assumed that the culprit would entered many different retail chains in Chicago and added solid cyanide to some of Tylenol capsules. However, since there was no witness who claimed that he or she saw someone was doing something with Tylenol in the stores, police supposed that the culprit would add cyanide at another places. And, after adding cyanide into the capsules, the culprit would put the capsules into the bottles of Tylenol perfectly and put them on store shelves. And, unfortunately, victims bought one of those poisoned Tylenol as usual. After a massive re-call of Tylenol, three more poison-tampered bottles were founded at different stores in Chicago (Kaplan).
Johnson & Johnson’s Response
As murders related to Tylenol, Johnson & Johnson recognized its magnitude and took various countermeasures. Firstly, PR department of Johnson & Johnson actively cooperated with police and with the media to unearth the fact. They tried to reveal and to publicize as much information related to the murders as possible clearly to the public. These measures were mainly directed by Lawrence G. Foster, Johnson & Johnson PR Department Vice President, F. Robert Kniffin, PR Department Director, and Elsei Behner, McNeil Communication Department Director. They set up hotline for thousands of questioners (the media and consumers) and provided every collectable information to them promptly and accurately. Johnson & Johnson publicized information and kept corporation system with the media in order to prevent another unfortunate exposure to the poisons. Moreover, they suspended their advertisement for their Tylenol products, warned consumers the riskiness of Tylenol and requested to help the re-call of Tylenol by using corporation system with the media (“5 Crisis”). (Kaplan).
Also, James E. Burke, Chairman of the board of Johnson & Johnson sent polite letters of condolence to the bereaved although the fact that the Tylenol production company had no direct responsibility for the murders was
revealed. (This was not publicized to the media.) Moreover, even though there was no press of the government or the media, Johnson & Johnson issued a nationwide re-call of 31 million bottles of Tylenol products and exchanged all capsules purchased with solid tablets which incurred them 125 million dollars loss. And, through their own investigation, they found 75 poisonous Tylenol capsules in Chicago. In addition, they offered ten thousand dollars reward for the capture and conviction of the culprit (Fletcher).
Johnson & Johnson’s Policy after the Close of Case
Since Tylenol was one of the most massive money-maker for Johnson & Johnson, they had to find ways to bring Tylenol back to its reputation before the crisis, the number one pain-killer in the United States. As James E. Burke said, bringing Tylenol before the crisis would take time, take money, and be very difficult. However, at the same time, he emphasized the importance of moral imperative in restoring Tylenol to its formal glory (Kaplan).
The most important and urgent thing for Johnson & Johnson was to close the distance with the consumers and to restore confidence from them. Before taking practical steps to restore confidence from the public, they had to do research in order to get to know the then current opinion or confidence that the mass of people had just after the incident. Research showed that most of Tylenol consumers had intention of re-taking of Tylenol once the safety would be perfectly guaranteed. And, above everything else, the most hopeful result they got was that the enterprise image did not get damaged significantly since their active and clear endeavors to resolve the incidents were recognized positively to the people (“Johnson & Johnson and Tylenol”). (Kaplan).
The first thing they did was to reintroducing a new triple-seal tamper-resistant packaging in order to appeal the product’s safety from poison-tampering to the public. The new packaging was first
appeared by December 1982. And, this was the first product in the pharmaceutical industry which met the Food and Drug Administration’s newly
reinforced regulations for tamper-resistant packaging and the national regulation for packaging. Changes are as shown as below:
Figure 1. Packaging of Tylenol before the incident (Left) and after the change (Right)
The left one is the packaging which was used until the change of packaging. The right packaging is triple-seal tamper-resistant packaging. Obviously, there is a change on the cap between two packaging. Cap of the triple-seal bottle has a tape-attachment which prevents any tampering before taking it off. And, the label on the bottles carries the warning: “Do not use if safety seals are broken.” (Bell). (“Apple and Tylenol”).
In order to capture consumers and to advocate the use of Tylenol to them, Johnson & Johnson offered various sales events. During November and December of 1982, $2.50-off coupons for Tylenol were broadly provided by popular newspapers and these coupons were also able to be acquired by calling them. Moreover, 25% of consumer discounts were also provided to approach to consumers closely (Bell).
Evaluation of Resolution
The comeback of Tylenol was a great success. In a short period of time, Johnson & Johnson brought back many things that they lost because of the murders. Most importantly, the company could restore confidence from the public through Johnson & Johnson’s ethical and socially responsible crisis managements based on “Our Credo” and the help of the media. Furthermore, Tylenol recorded 32% of the market share for pain-killer within only 6 months after the incident, which is not much less than 35% of the market share that the product had before the crisis. And, they could grow as much firmer enterprise than before they suffered the crisis (Bell). Lawrence G. Foster, Vice President of Johnson & Johnson explained that the only one compass they used to determine how to handle the crisis was “Our Credo.”
Since the Tylenol murders were the biggest crisis that they ever had, there was no preparation or countermeasure for a tragedy of this national scale. Therefore, the only action that they could take was to bank on the credo which was made 50 years ago. Our Credo drew business as taking social responsibilities that comes beyond the profit of the company. And, since the responsibilities that the company should take was to consumers, to employees, to communities, and to stockholders, David R. Clare, President of Johnson & Johnson at the crisis time thought staying true to these responsibilities would enable the company to meet the society’s need and to make right decisions to get through the crisis. Therefore, they decided to have social responsibility and to work for the public interest despite of the astronomical economic loss that they would have. They alerted customers not to take any type of Tylenol product through the media, stopped the production and advertisement of Tylenol, and recalled every Tylenol from the retails and markets before worrying about the company’s profit (Kaplan).
Without the help of the media, Johnson & Johnson could not easily recover their destroyed reputation through the murders. The first step that Johnson & Johnson took in order to overcome the crisis was to cooperate thoroughly with all types of the media. The reason why this was a crucial decision is that the media was imperative to deliver the company’s voice. Since the company provided vast amount of information, the media could generate numerous news and queries and deliver them nationwide. Therefore, the public could see that the company was truly working for the public interest and trying to resolve the incident ethically. Furthermore, the company was praised for their ethical and socially responsible countermeasure by the media after the investigation was come to close. This was not a small part for Johnson & Johnson to restore the confidence relatively quickly and painlessly from the biggest crisis they ever had (Kaplan).
In conclusion, Johnson & Johnson becomes a global medical devices, pharmaceutical and consumer packaged goods manufacturer today. And, in 2006, Johnson & Johnson was voted as 4th world-admired company by Fortune. This is
a remarkable achievement since this is what they could get after overcoming the crisis which made the company lost the public confidence. The way that Tylenol manufacturer got through the crisis was to take their social responsibility ethically. Therefore, they put the public safety and interest ahead of their monetary profit. The company warned customers not to take any kind of Tylenol, suspended all of their advertisement of Tylenol, and collected Tylenol products on a national-wide scale which incurred them a great amount of economical loss (“5 Crisis”). (Kaplan).
The reason that Johnson & Johnson could make this public-responsible decision is based on “Our Credo.” Their credo shows that their business is having responsibilities to entire of society beyond their management or profit. And, it also states staying true to their responsibilities will grant them prosperity in the long run. The result of the decision of the company which turned to their credo was identical with the result which is stated on the credo, the prosperity in the long run. Even though the ethical countermeasure of Tylenol crisis brought them a huge loss in the short term, this was the shortcut for the company to re-secure the confidence from people and to re-build public relationship. Consequently, Johnson & Johnson’s society-responsible response on the crisis brought them priceless success, the respect and the confidence of the public.