The Tylenol Crisis

Johnson & Johnson is widely known by PR professionals as a leading, iconic company who handled an extreme crisis in the best way possible.

In 1982, seven people in Chicago mysteriously died after ingesting Extra Strength Tylenol. The news spread around the world almost instantly, causing a nationwide panic. The cause of the deaths unraveled days later when two off-duty firemen made a connection between Tylenol and the deaths. The Tylenol capsules turned out to contain 65 milligrams of cyanide each, which is about 60 micrograms more than it takes to kill a human. Johnson & Johnson spoke to the media immediately, releasing a statement that there was no possible way for the tampering to have taken place in any of their plants. They came to the conclusion that since the deaths had only occurred in Chicago, the tampering occurred throughout different stores in the throughout the Chicago area.

Johnson & Johnson's true colors were shown when they had to put a crisis management plan into action fast. The best thing that J&J did was to place customer safety before the companies profit and other financial concerns. Within the first few hour of the crisis, they alerted the media not to consume any type of Tylenol product. In addition to alerting the nation, they stopped all production and advertising of Tylenol and recalled all capsules from the market. The recall included 31 million bottles of Tylenol, with a retail value of more than 100 million dollars.

Johnson & Johnson barely showed concern for themselves. Their main focus was to get to the bottom of the deaths. They offered a $100,000 reward for the person responsible for the tampering. They dealt with the families of the victims individually doing all they could to make up for their losses. J&J were praised for their responsible actions all around the world. The media compared them to other companies who had put themselves first in crises, ruining their reputation and their companies. Newspapers portrayed them as a company that demonstrated how a major business should effectively handle a crisis. Less than 6 weeks after the crisis, Tylenol was back on the market with new safety seals on all bottles, warnings about use if the safety seals were broken and tamper-resistant packaging. This crisis benefited Johnson & Johnson in the long run. It helped define them as a company and built their positive reputation.

Global Communications

The Johnson & Johnson Procurement organization is a global organization. Each J&J company around the world has its own procurement organization that partners with a line management to create a supplier network. Johnson & Johnson has procurement centers in Asia, Canada, Latin America, Middle Eastern Europe & Africa. They also implement 13 category teams each with leaders who represent J&J operating companies. The product teams are organized by categories such as chemicals, external manufacturing and information technology. The teams work to strengthen the supplier network that provides J&J businesses exceptional quality products and services at low costs, innovative ideas & solutions, and tremendous supply continuity and suppliers with a focus on environmental social responsibility.

When you think of Johnson & Johnson, it is common knowledge that they are a global company helping millions of people all around the globe. When navigating their website, I found it quite difficult to find out about their global communications. The information above is as in depth as their website takes you when talking about their global operations. I came across one page that allowed you to choose which country you were from and than the website would be translated into that particular language. There were many reports on their worldwide contributions from previous years and many press releases about their philanthropic efforts as well.

One particular report I read was about their efforts with Africa. In Kenya, J&J partnered up with the Mission for Essential Drugs & Supplies (MEDS) and Project Mercy to provide a drug called Tibozole, which treats Oral Thrush, at significantly low prices to small, community based-groups who suffer from disease. Oral Thrush is a symptom of HIV which produces painful lesions in the mouth that can spread to the esophagus. In Kenya, 886,000 patients have received donations of the drugs from J&J, MEDS and Project Mercy. The income that MEDS accumulates from selling the drug is used to issue grants to local organizations in Kenya dedicated to improving community health. Johnson & Johnson then matches the grant amounts and donates it to non-profit organizations focused on HIV/AIDS treatment and prevention.

Despite their wide range of "giving", I expected to find more about how their business operations work globally. I think that they should make their web page easier to navigate when it comes to global communications. While exploring different areas of their site, they often mention "helping people all around the world", although I did not find it  easy to find what countries they actually do business in. I did find many stories of how they have contributed to specific countries, such as Hong Kong, Somalia and Pakistan, but other than that it seemed to only focus on the U.S. I think that they should have a tab on their main page that is strictly for global communications. This could go into specifics about where they have operations, who runs them and how they differ from the companies in the U.S, if they do at all. If a company is going to portray themselves as "global", it is vital to have an easy, accessible way to contain information about their global communications.

Investor Relations

2010 was what Johnson & Johnson's Chairman, William Weldon defined as "a year to be severely tested on numerous fronts". With an overall worldwide sales decrease of 1.3 percent operationally, they made $61.6 billion during the last fiscal year. In the Chairman's letter addressing the 2010 Annual Report, he speaks about facing the challenges of global economic downturn, a loss of patent exclusivity on major pharmaceutical products and the disappointment of the McNeil Consumer Healthcare product recalls. In turn J&J introduced new products, expanded business in emerging markets and continued their tradition of caring for their customers and clients.

With the several factors impacting the the health care industry, such as the U.S. health care reform, J&J expects to continue facing the challenges of the slowdown on medical devices and consumer business in 2011. Although they do have high hopes and continue to grow earnings while maintaining investments for future revenue and earnings growth. With these new investments they plan to develop a number of new products that should bring them back up during this tough global economy. Despite the sales decline of 1.3 percent, there adjusted earnings per share increase a total of 2.8 percent, $13.3 billion.

As for the McNeil Consumer Healthcare product recalls, Weldon promised to restore the the high levels of quality and compliance that people expect of Johnson & Johnson companies. He pledges to do so buy learning from that experience, addressing problems at their roots and ensuring that only the highest quality products reach their customers, which he expects to earn back trust and respect.

Johnson & Johnson holds their Credo to a high bar, stating that the source of their enduring strength is a fundamental commitment to their Credo and an operating model that has served them well for decades. The values articulated in their credo help them in every aspect of their company from upholding their reputation to maintaining their accounting and financial responsibilities to their shareholders and investors. They do their best to ensure that financial data is reported accurately in a way that facilitates the understanding of this data. To show this they contain a system of internal accounting controls, encourage strong and effective corporate governance from their Board of Directors and continuously review their business results and strategic choices, as well as focusing on financial stewardship.

Johnson & Johnson is a publicly funded company. It seems that even though they has faced some ups and down during the 2010 year, they keep solid objectives and tactics as to how to continue running a well established group of companies. They do their best to create competitive advantage, fulfill disclosure obligations and make sure their stocks and bonds are well valued in the market place.