Republic of the Philippines

DON HONORIO VENTURA STATE UNIVERSITY

The Johnson & Johnson Tylenol Crisis Case Study

Subject:

Management Principles and Dynamics

Submitted to:

DR. MA. ANTONETTE M. GUINTU

Submitted by:

LEA M. BANTING
MBA-IA
SUMMARY

In the years leading up to 1982, Tylenol dominated the over-the-counter painkiller

industry with a controlling 37 percent share of the market. Consumers everywhere

counted on Johnson & Johnson (J&J) to deliver a product that was consistently effective

and trustworthy. The empire that Johnson & Johnson had carefully nurtured was

critically threatened in October of 1982 when seven people in the Chicago area died

from ingesting Tylenol Extra Strength.

The victims ranged from a 12-year-old girl who woke up with flu symptoms to a mother

who had just given birth to her fourth child. All seven victims were seemingly unrelated

and had died under the same mysterious circumstances with no evidence of foul play.

The first responders were dumbfounded by the string of deaths. What did all of these

victims have in common? Helen Jensen, a nurse from the public health department,

was combing over the details from an inventory taken at a house where three victims

died when she made a startling realization: There were six missing Tylenol Extra

Strength pills and three dead people — could the Tylenol be the culprit? Upon voicing

this lead, the perceived absurdity of poisoned over-the-counter medication trounced her

argument.

Further investigation proved Jensen right, and we now know that a still unidentified

suspect removed the Tylenol bottles from the shelves of drugstores, laced the capsules

with 10,000 times the lethal dose of potassium cyanide, and returned the bottles to the
shelf. Consumers across the nation, plagued by fear, halted all purchasing of Tylenol

products, and J&J’s market share quickly fell to 7 percent.

MAJOR PROBLEM IN THE CASE

The major problem in the case of J&J Tylenol Crisis is loss of reputation, revenue,

confidence, or loyalty between employees and managers or between consumers and

suppliers.

FORMULATED ALTERNATIVES

I. Damage Control in Crisis Management

Methods of damage control are necessarily linked to the situation, so it is naturally

difficult to offer specific ways to contain damage for all circumstances. In some cases,

media relations may help resolve a crisis situation. In some situations, resolution and

damage control may be achieved within hours, while others may take years to bring a

recovery. Damage control may be limited to online or Internet access, such as steps

taken to address the case of the Craigslist.org killer or police departments engaging in

profiling a serial killer and judging the risk of them striking again.

The key to limiting damage is for individuals of a crisis management team to stop and

ask themselves whether they are doing everything possible to manage a crisis, protect
human life, and restore public confidence. Depending on the magnitude of a crisis, a

company, business, or entity may experience little fallout, or it may end up facing

questions and accusations in a room full of media.

Preventing drawn out impact from a crisis or emergency means taking immediate steps

to not only face the emergency but also to admit it and determine to resolve it as quickly

as possible. This is especially important for public companies or those that are

extremely visible in public and private sectors.

Damage control should immediately address situations that involve loss of life, threaten

human life, create a sense of panic, offer special vulnerability to the media, or entail

moral offenses, such as kickbacks, bribes, or conspiracies.

A company that has lost consumer confidence and loyalty may find restoring them to be

an uphill battle. However, a company that efficiently and quickly meets a crisis, such as

Johnson & Johnson did during the Tylenol scare of the early 1980s, may very well

increase the loyalty and confidence of consumers because of the efficiency,

determination, and focus on addressing the problem and also the steps taken to reduce

the risk of the incident happening again.

To restore public confidence and loyalty, any entity experiencing a crisis or emergency

situation should offer full transparency as quickly as possible in addressing the situation,

discussing what the company or corporation plans to do about it, taking responsibility for

it, and implementing an appropriate response.

board member taking bribes or kickbacks to making sure backup generators will start up

during a power outage. Damage control often saves a company's reputation, but more

importantly it can save tens of thousands of lives if quick action is taken, responsibility

accepted, and response focused on reducing the impact of a crisis.

2. A Crisis Management Checklist

Organization, information, and practice make up the foundation of successful crisis

management planning. A crisis management checklist offers crisis teams the ability to

track steps or options for a wide range of scenarios. The checklist may address

preplanning, determining risk, assessing building safety, recommendations, contacts,

and corporate policies in one report or document that may be updated on a regular

basis.

Whether a crisis management team prepares a checklist for steps to be taken in the

event of natural disasters, traumatic incidents, emergencies, the unexpected death of a

chief executive officer, a rogue employee, an alarming drop in financial security, or

product tampering, a checklist will provide an excellent tool for assessing and

developing a crisis management plan for a specific organization or company.

Such a checklist may be developed in a three-ring binder, as a computer document, or

as a monthly report disseminated to crisis team management members, boards of

directors, administrators, managers, and supervisors, depending on need.

unexpected scenarios make up the foundation of effective crisis management.

Establishing an effective crisis management team, clearly defining functions, roles,

leadership, and responsibility, and considering human psychological factors when

putting crisis management into action are among the main responsibilities of crisis

managers.

Always expect the unexpected and determine weaknesses in a contingency or

emergency response plan before it needs to be put into action. Learn from the lessons

or failures of others. Ensure safety, protect human life, and engage in damage control to

recover both public and internal confidence.

Optimistically, most businesses will never need to implement a crisis action plan, but the

unexpected often happens when we are least prepared for it. Therefore, be

prepared: Plan, react, and respond.

3. CRISIS COMMUNICATION (BEST ALTERNATIVE AND ITS IMPLEMETATION)

It has already been pointed out that a crisis usually evolves over time and that it can

often be prevented before it actually surfaces into a major threat. However, problems

can be overlooked and some crises cannot be prevented. That is why organizations

need to be prepared when problems develop into crises. Research and experience from

past incidents of management during crises have helped form important guidelines to

aid in the communication process.

The first step in preparing for a crisis is to define a team that will manage the crisis. The

members of the crisis management team are different in every organization. Since

crises come in different forms, the team should represent all divisions of a company.

“When managers must respond to myriad audiences and problems under stressful

conditions, they need to know the theories and practical dimensions of organizational

behavior, organizational communication, ethics, strategy, and public relations” (Barton,

1993, p. 33). The team needs to be small, capable of moving fast, and able to make

decisions. It has to have influence in the organization (Gottschalk, 1993, p. 398).

Crisis Audit

The second step in preparing for a crisis is to look for warning signs. These warning

signs are referred to as prodromes. Organizations look at the vulnerabilities to a

potential crisis similar to the way a doctor treats a patient. Prodromes, in the medical

field, are predictable events that provoke something like a migraine. In the same way,

the crisis team looks for prodromes in the organization. The team measures each type

of prodrome according to vulnerability, priority, and action. This type of analysis is often

called a crisis audit (Fearn-Banks, 2002, p. 66). The first step in a crisis audit is to make

a list of the possible crises that could potentially happen in the organization. Once the

types of crises are identified, each type should be analyzed. There are different ways of

conducting this audit and there is no particular way that it has to be formatted. Kathleen

Fearn-Banks from the University of Washington provides one example of how to carry

out an audit. To analyze each type of crisis two questions must be answered: (1) how
likely is this crisis? And (2) how devastating can the crisis be? By answering these two

questions, the crisis team can prioritize the importance of each issue (Fearn-Banks,

2002, p. 24-25).

The Crisis Communication Plan

The Crisis Communication Plan (CCP) is a document that addresses each potential

crisis situation as thoroughly as possible. The CCP should be organized so that the

practitioners can quickly turn to each section. The crisis team should encourage

employees to keep copies of the plan in various key spots so that at least one copy will

be readily available at the time of a crisis. Copies of the plan can be stored at the office,

at home, at alternative plant locations, and even in someone’s car. No one can predict

what will happen when a crisis hits. It can prevent use of an organization’s headquarters

as well as keep members of the team from fulfilling their role. That is why the document

should be easy to follow and easily obtained by key players. Obtaining Advance

Approvals Parts of the CCP may require governmental and organizational approvals.

Lack of clarity about approval for the use of chemical dispersants was one of the

difficulties encountered by Exxon during the Valdez oil spill. These approvals should be

obtained in advance. If governmental authorities cannot give approval ahead of time,

clearance procedures should be carefully outlined, together with names, addresses, and

telephone numbers (including emergency numbers) of all involved individuals. The

organization should also review and update the plan on a regular basis so that there is a

clear understanding of what would happen if the plan were to be executed (Lerbinger,

1997, p. 26)
The Spokesperson

Another important component of communicating effectively during a crisis is having the

right spokesperson. The person most qualified for the job depends mostly on the crisis.

In most cases, the CEO acts as the single voice. If the crisis is of sufficient magnitude,

the CEO may be the only credible person to handle the job. However, there are times

when the CEO is not the best person to inform the publics of the situation. Before the

crisis occurs, a resource list should be made to identify who may be the right

spokesperson for each type of crisis. Legal issues should have a lawyer; health issues

should have a doctor; and financial issues should have the chief financial officer. It is

important to select an expert that can address the issue promptly, completely, and

continually throughout the course of the crisis (Gottschalk, 1993, p. 399). The primary

responsibility of the spokesperson is to manage the accuracy and consistency of the

messages coming from the organization. It is important that the spokesperson be able

to work with the media, which involves listening and responding to the media at a rapid

pace. The spokesperson is doing his or her job in a time of high stress; the organization

is in a crisis and the media wants answers immediately. Therefore the spokesperson

must be able to handle stress well (Coombs, 1999, p. 72). The choice of a

spokesperson may involve more than just expertise and speaking style. The

spokesperson must appear pleasant on camera. This means that the speaker should

cultivate style elements that cultivate the perceptions of control and compassion.
Activate Crisis Management

When planning for a crisis, it can be difficult to capture the feeling of urgency that is

present when the crisis actually occurs. Once someone detects an accident or problem

and judges it to have the potential of reaching a crisis threshold, that person must begin

the crisis activation process. The person who detects this crisis should start by

contacting the manager of the crisis team or whoever is on the contact sheet in the CCP

(Lerbinger, 1997, p. 40). Once the crisis team is contacted, it is important to get the top

people of the organization in a room or on the phone as soon as possible to work out a

game plan. Plant or facility managers and legal teams are there as well as management

and communication teams. (Blazek, 2003) The CCP will also provide a list of possible

headquarter relocations, if necessary. The first response by the organization should be

to ensure that the situation is brought under control and that all the facts are gathered.

Reveal Your Own Bad News At Once

Sometimes it is not the crisis itself that hurts the organization. Poor communication with

the media can ruin the reputations of unprepared institutions. “The news media are

society’s watchdog and, whether liked or not, judge the behavior of organizations.

Because they serve as society’s unofficial designators of a crisis, their judgment of a

particular event affects how an organization and its management are perceived by the

public” (Lerbinger, 1997, p. 31). Therefore, the way the crisis team handles the media is

crucial. It is always best to get your own bad news out first. It shows that the

organization is upfront and honest about the problem and it also indicates that the

company is taking an active role in finding a remedy to the problem. Silence will not
benefit the organization when a crisis occurs. “Silence is a very passive response. The

use of silence reflects uncertainty and passivity by the organization. Passiveness is the

exact opposite perception an organization should be attempting to create” (Coombs,

1999, p. 115). This passiveness shows a lack of control in the situation. When the

organization will not step up and take control, then other outlets, such as the media, will

define the crisis situation. It does take time to process and understand the situation. The

quick response after a crisis does not mean that the organization will have the whole

story. “A crisis team might have to go before the media with an incomplete story. That is

okay. There is no crisis management sin in telling the media that the team does not

know something but will provide the information as soon as possible” (Coombs, 1999, p.

116). Being upfront and honest will prevent future misunderstandings when more

information is found. Instead of saying “no comment” organizations can tell the public

that the information is not yet available but will be sent to the media when it is received.

Regardless of how much the organization has to present to the media, it is important to

quickly establish that the organization has control and wants to work with the media, not

against them.

An organization that reveals an inaccurate fact could face not only credibility problems,

but legal setbacks as well. The media wants to know the cause of a crisis. For the

organization handling the crisis, the source of the problem is not always clear, especially

in the beginning. If the spokesperson starts to speculate and answer the media with

what appears to be the cause without confirming it, the statements could be seen as

slander. Unless facts have been proven, the spokesperson is risking credibility when he

or she points to the source of the crisis. Using confirmed facts decreases the risk of
facing legal problems when there are already enough components of the crisis to deal

with.

Structure the Command Post

Depending on the nature of the crisis, the crisis team should designate a place to gather

the crisis team and handle the media. The site allows for organization and control over

the flow of information. The command post will allow the organization to achieve control

because “it will function as a central point through which all information will flow; a place

where key members of the crisis team will be able to meet, discuss, and effectively

handle the situation; and a site where press conferences can be held to disseminate

information to the public” (Dougherty, 1992, p. 39). This command post is usually placed

at the site of the crisis event as long as it is accessible. The organization should inform

the media of the location. Transportation and sleeping quarters may also be arranged

for them. The media should be assured that the organization is in control and is

prepared to handle the media’s presence (Lerbinger, 1997, p.25).

Conduct the Necessary Fact Finding

The organization needs to collect all pertinent information necessary to cope with the

crisis and to keep the public well informed. The important facts of the crisis will want to

answer the five Ws- who, what, where, when, and why- and how (Lerbinger, 1997, p.

41). Finding all the important facts not only helps the organization solve the crisis, but it

allows the public to be well informed and perceive the institution as in control and

proactive.
Speak With One Consistent Voice

Speaking with one voice does not necessarily mean that there is only one person that

can respond to the media. “Rather speaking with one voice means coordinating the

efforts of the official spokespersons and discouraging other organizational members

from becoming unofficial spokespersons” (Coombs, 1999, p. 117). There can be

multiple spokespersons that have the same information and can give consistent

responses to the media. All employees must be aware that there are people who will

fulfill the spokesperson role and that they cannot act as an unofficial spokesperson. The

CCP will prepare employees to refer media inquiries to the correct authoritative sources

(Lerbinger, 1997, p. 43). The organization should send out a company-wide memo or

email explaining the situation and how to deal with media inquiries. When employees

are kept up-to-date and informed the entire organization can respond with a single voice

and stay on the same page.

Maintain Credibility and Continue To Take Action

The initial response is an important foundation for how the organization handles the

continuing coverage of the crisis. As mentioned before, a crisis is dynamic and new

information could appear each day. The way that the organization handles the

information is critical to its relationship with its publics. A company’s ability to deal with a

crisis successfully is dependent upon the ability of senior management to be honest

with itself and its constituents, as well as the media. One important reason for our firm’s

success in this field is the fact that while we’re advocates for our clients, we urge them

to take the high road during a crisis campaign by remaining factual and realistic.
References:

https://www.communiquepr.com/the-tylenol-murders-a-case-study/9950/

https://www.biznews.com/thought-leaders/2013/11/15/five-key-lessons-from-tylenol-crisis

https://www.missionmode.com/5-crisis-management-truths-from-the-tylenol-murders/

https://etd.ohiolink.edu/!etd.send_file?accession=muhonors1111086836&disposition=inline