Tylenol Case Analysis: Johnson and Case Study

Johnson and Johnson issued a public relations response immediately naming their number one priority: to aggressively protect any consumer from the potential hazards that may be present in any of their family of products.

Symptoms of the Problem -- Quickly, the crisis reached epic nationwide coverage. The panic that ensued, somewhat as the result of the twenty-four hour media coverage, fueled this panic into a frenzy. One hospital in Chicago, for instance, received 700 calls in one day; while Johnson and Johnson received averaged almost 150 calls per day. Across the country people were admitted into hospitals on suspicion of cyanide poisoning (Tifft, 18). Johnson and Johnson worked rapidly and decisively with the media to disseminate information. When the news spread, copycat criminals began to tamper with the products on the shelves of stores, which only deepened the crisis. Indeed, the FDA confirmed more tampering had taken place, but this did not actually reach the public until much later, the final figure actually 36 units (Church, 27). However, the Food and Drug Administration counted a total 270 incidences of possible product tampering (Kaplan, 1998).

As one would expect, Tylenol's sales and market share plummeted once the crisis was announced. Since Tylenol's name was tied to the tampered goods, they were held indirectly responsible for the deaths of at least seven people. J & J. needed to figure out how to deal with the crisis, protect the public and not inadvertently destroy the reputation of any of their products or even the brand itself. Thankfully, the decision was made to take complete responsibility for the issue and to aggressively and proactively assist in the arrest of the perpetrators and removal of tainted products from the store shelves. Next, the protection of the potential consumers at risk recognizing that not everyone may have heard the news once this crisis was made public. With the onslaught of death, and potentially more death to result, the public and experts felt that Tylenol could not recover from this horrible atrocity. The public also felt that the Tylenol product wasn't safe anymore -- market share continued to drop resulting in an unheard of single digit within a few weeks (Mitchell, 1989).

Identification of Goals - in 1982, Tylenol controlled 37% of the pain killer market, approximately $1.2M and was the leading painkiller in the American market, outselling Anacin, Bayer, Bufferin, and Excedrin. Seventeen to eighteen percent net earnings of Johnson and Johnson were from Tylenol sales. Profits placed Johnson and Johnson in the top half of the Fortune 500 (Berg, 1998). The company had been doing well for years. Stock analysts had actually predicted that Tylenol's market share was poised for up to a 15% growth. In fact, Tylenol was to the product that would lead this company to further success- hat is until the Tylenol laced cyanide crisis came to be. This calamity changed the strategic plan, management goals, and parent to subsidiary goals across the organization -- within a 24-hour period. Instantly, an immediate crisis mode was assumed and a reassessment and reprioritization of their goals and immediate actions required jolted every executive, manager and employee in the organization (Mikkelson, 2004).

Immediate Goals once Crisis was Revealed-

Reacting to the news, when Johnson and Johnson was faced with the initial situation; it had to make some tough decisions that would severely impact the future of the company. Rather than think in financial terms only, CEO James Burke immediately turned to the