An in-depth Comparison of Tylenol's 1982 Response to the Deaths in Chicago versus 2009-10 Recall
An in-depth Comparison of Tylenol's 1982 Response to the Deaths in Chicago versus 2009-10 Recall Organizational crises have become routine in today's business environment. Crises of different nature are currently occurring, either caused by human errors or technology. The most imperative thing to note is that organizations tend to approach these crises differently. The most recent crisis to have hit a multinational company is the Facebook's data crisis. This is just one of the many examples of large-scale crises. The impact of these issues can be adverse to the customers, governments, the business and the society at large. According to Mishra (1992), a crisis can be defined as a threat to the survival of a system with a short period for a response which often involves an ill-structured instance and where there are insufficient resources to cope with the circumstance. Although some crises may result in a positive outcome, most of them result in negative outcomes. The purpose of this paper is to critically analyze the Tylenol's 1982 responses, and the 2009-2010 Tylenol recalls.
The Tylenol's 1982 Crisis
The Tylenol's 1982 crisis can be regarded as the first major crisis in the history of businesses, and the response was such amazing that the incident is currently used as a case study of how companies should handle crises. Tylenol 1982 crisis happened in October 1982. The then leading pain-killer medicine in the U.S. found itself in a catastrophe when seven individuals were reported to have died in Chicago after consuming extra-strength capsules of Tylenol (Mitchell, 1989). According to reports, an unknown individual replaced the Tylenol capsules with cyanide-containing capsules (Mitchell, 1989). The quantity of cyanide was even higher than what could have been required to kill a human being. It is said that the interference happened while the products were on the shelves. What happened is that the unknown individual deposited these cyanide-laced capsules and sealed them in order to look genuine and sold them to pharmacies (Mitchell, 1989). It is believed that before the crisis, Tylenol was controlling 37% of the Tylenol's market share whose revenue was $1.2 million (Mitchell, 1989). After the crisis, its market share decreased drastically to 7% (Mitchell, 1989). The company immediately made a decision to come out and explain to the public why the company's products which the public trusted dearly had started killing people (Berge, 1990). The company took action to conduct product recalls across the country, and around thirty-one bottles were recalled resulting in a loss of over $100 million (Lazare, 2002). The advertisements about the product were all halted across the country.
The Tylenol's 2009-2010 Recall
Another crisis emerged in between 2009 and 2010 in the J&J Company still concerning Tylenol. The McNeil Consumer Healthcare is the subsidiary that deals with Tylenol. On April 2010, the FDA announced the recall of medicines for children and that marked the fifth of a series of Tylenol recalls since 2009 (Edwards, 2010). While people believe one mistake is a misfortune, five recalls can be attributed to carelessness (Edwards, 2010). The 2009-2010 recalls shows the company's incapability to organize itself. While its 1982 response remains a benchmark for how corporations should respond to a crisis, the 2009-2010 is in contrary to what the company should have responded. The primary reason for the five recalls is lack of attention to details. In September 2009, the company recalled Tylenol after FDA discovered that the product had been contaminated with bacteria (Edwards, 2010). On December 2009, the company recalled Tylenol and other medicines were recalled because of mildew-like odor (Edwards, 2010). In October 2009, there was a theft case in Jacksonville, Fla and the media warned the public not to use Tylenol (Edwards, 2010). In January 2010, the company further recalled even more Tylenol and other medicine brands because of mildew odor and the led the FDA to offer a warning letter to the company on January 15, 2010 (Edwards, 2010). In yet another crisis, children's Tylenol was reported to have been contaminated with "black particles", leading to their recall on May 1, 2010 (Edwards, 2010). These crises were considered to be the worst nightmare considering the fact that the company had made a record during its 1982 crisis. Many people were baffled by the five consecutive mistakes that the company had done within few months as it was expected that they could have avoided further mistakes after the first crisis.
Critical Evaluation of Issues from the Perspective of Business
In both crises, the impact was detrimental. The company suffered financial losses in both 1982 and the 2009-2010 crises. In 1982, the company lost its share price and led to a loss of production and destruction of some stocks due to the recalls. It is estimated that the company dropped market share in the United States from 37% to 7% (Mitchell, 1989). The company was able to win back people's trust after the 1982 crisis due to its quick response, and the management was praised. The quick response was attributed to the company's mission of keeping the consumers first before other resources (Mitchell, 1989). When it comes to the 2009-2010 crises, the company also suffered losses amounting to millions of U.S. dollars. However, the recent crises show business' lack of commitment to ensuring quality products. Although the recalls were recommended, the problems could have been solved through reviewing of the production processes since the contaminations are mainly attributed to the manufacturing processes.
Critical Evaluation of Issues from the Perspective of Government
The government plays a significant role in the healthcare sector. There are various government agencies currently present that monitor the manufacture of pharmaceutical products to ensure they comply with the set standards. When analyzing the 1982 crisis from Government perspective, it can be seen that the Government, by then, could have played a role to prevent such crises. When the news reached the media, the FDA offered a warning and asked customers to avoid the Tylenol capsules until clarification is given (Mishra, 1992). The local law enforcement was later reinforced, and a committee was established (Mishra, 1992). However, what hindered the government from taking further action against the company's misconduct is that product tampering by then was not regarded as a federal crime and thus, the federal law enforcement authorities were not involved on official capacity. When it comes to the 2009-2010 crisis, the government's response was quite prompt and strict. The agency had initially been criticized for not being aggressive in responding to crises. As reported by Kavilanz (2010), the FDA issued a warning letter to the company for failing to react quickly to the complaints raised and failure to resolve the problems since they were first reported. The FDA expressed its concerns about how J&J was responding to the matter and hence, took a severe and strict stand against the company. The FDA made it clear that if the company fails to resolve the issues, further legal action will be taken which may include seizure and injunction as well as nullification of their certificate (Kavilanz, 2010). In this case, the government can be said to have responded well.
Critical Evaluation of Issues from the Perspective of Society
When it comes to the perspective of the society, the most crucial aspect is public relations. With this regard, the role of media comes in handy. According to McQuail (2010), mass communication is mainly regarded based on the fact that media plays a significant role. The media influences the behaviors and perceptions of the society. In the 1982 crisis, the company withdrew all Tylenol immediately in the entire nation although there could have been little chance to discover more cyanide capsules. This showed the company's concern about the public's safety although the action results in loss of millions of dollars. This led the entire society to view Tylenol as a victim of malicious crime (Broom, Center & Cutlip, 1994). In the 2009-2010's, on the other hand, the company received a lot of criticism for their slow response to the crisis. In addition to the negative publicity from news agencies, parents took it to social media platforms such as twitter and facebook to express their concerns. The poor response to the consumer complaints ruined the company's reputation in terms of trust and customer loyalty.
Critical Evaluation of how Issues relate to each other
Both crises relate to organizational response to crisis and maintaining of customer and public trust. Both cases involved similar ethical problems which primarily concern the safety of consumers. It is the duty of an organization to ensure that customers are, at all times, safe. It is essential to maintain product quality along the entire supply chain, and a firm should take responsibility for any fault that happens along the supply chain (Mishra, 1992). In both cases, the issues had a significant impact on financial performance and public image. Millions of dollars were lost in both cases, and the company risked further legal actions which could have led to its closure. The issues are mainly attributed to lack of leadership oversight, overemphasis on profits and decentralization (Mishra, 1992).
Critical Evaluation of Possible Future Implications
The Tylenol recalls are examples of crises that are common in organizations. By analyzing both cases, one is able to understand how the impact that a crisis has on the business, and how best to handle it. Future research should focus on analyzing more crises since every crisis is handled differently. This will form a basis for developing the best strategies for crisis management. As Eaddy (2012) suggested, an in-depth view of crisis management process can give more insights on how to explain different variables of a crisis. Further research on crisis management should look into the timing of the recalls to determine whether there could be a turning point where the media coverage reported wrong information to the public. Timing is essential in crisis management, especially regarding media coverage. If J&J could have responded before the media got the news, the company would have saved its reputation.
Critical Evaluation of Ethical Issues assessing their Implications for Decision Making
The primary ethical issue that emerges is how to handle customer safety. The issues raised, reflect the potential harm that consumers are exposed to by manufacturers who fail to observe quality. Quality is main concern that arises, and the company can be seen to have failed to control the quality and sustain the standards. It is also clear that the company has failed to address customer complaints promptly and hence, leading to financial losses and tainting of public image (Stewart & Paine, 2012). When a crisis arises, it is essential for a company to put customers first. However, it has been reported that the company aggressively continued to engage promotion and advertising efforts in order to raise their sales after the crises. This implies that the company focuses more on profits as opposed to the safety of consumers (Stewart & Paine, 2012).
Conclusion and Recommendations
Although J&J has been regarded as a role model in crisis management for the past two decades after the 1982 crisis, its reputation has been dwindling recently. The company has a good corporate culture and has identified the key stakeholders; but, it is crucial to incorporate the culture into daily activities. Culture defines the organizational values and behaviors whole the organization climate describes the coordination of efforts for determining what should happen on a daily basis. The company should always take action soonest possible and assure public of their safety to avoid panic and possible loss of trust. The company should focus on creating guiding principles that ensure quality products are delivered to the market. In times of crisis, the company should use the media to communicate any fault within the shortest time possible. The company would have protected its public image if it responded fast in both crises.
References
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Broom, G, Center, A. & Cutlip, C.,(1994): Effective Public Relations. Eaglewood Cliff New Jersey: Prentice Mall Inc.
Eaddy, L. L. (2012). Johnson & Johnson's Recall Debacle.
Edwards, J. (2010). The Tylenol Crisis: One recall is a misfortune. CBS News. Five looks like carelessness. Retrieved from https://www.cbsnews.com/news/the-tylenol-crisis-one-recall-is-a-misfortune-five-looks-like-carelessness/
Kavilanz, P. (2010). Tylenol recall: FDA slams company. CNN Money. Retrieved from http://money.cnn.com/2010/01/15/news/companies/over_the_counter_medicine_recall/index.htm
McQuail, D. (2010). McQuail's mass communication theory. Sage publications.
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Mitchell, M. (1989). The Impact of External Parties on Brand‐Name Capital: The 1982 Tylenol Poisonings and Subsequent Cases. Economic inquiry, 27(4), 601-618.
Stewart, K. L., & Paine, W. S. (2012). Johnson & Johnson: An ethical analysis of broken trust. Journal of Academic and Business Ethics, 5, 1.
