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Critical analysis of a project business case chosen by you.
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A crisis can come to the company, not only because of its own negligence but also because of some factors which cannot be explained. Many times such a situation leaves company no escape but to take the blame and start thinking about rectifying it at the earliest. One such example is that of Johnson and Johnson's Tylenol poisoning case.
Tylenol had a 37 per cent market share of the over the counter analgesic drugs in the US in 1982 (Carraher & Paridon, 2015). It constituted a 15 per cent profits of the company. Somehow an unknown individual successfully laced the drugs with cyanide. As a result, seven people died, and there was a widespread panic across the country. The result was that the company suffered a loss of 1 Billion dollars of market valuation. Even though Johnson and Johnson’s was not responsible for this crisis, they handled the situation very well (Adie & Roe, 2013). The figure 1 below shows how the sales of Tylenol increased over the years at a spectacular rate before the crisis.
The Tylenol case is a very classic example of crisis management by a company and how unexpected situation could be handled effectively. The following essay is an attempt to understand the case by doing a critical analysis (Carraher & Paridon, 2015). The broad point of views would pertain to stakeholders involved, ethical issues, cost-benefit analysis, how the crisis was handled overall and what recommendations can be made.
Once it was found that the deaths were connected to the popular pain-killer drug, Tylenol, the next step was to make people aware of the scenario and warn them about the product. The task at hand for Johnson and Johnson was to handle the situation without compromising the reputation of the company. The company followed one of their guidelines of protecting people first and company next, went forward with warning people of the poisoned product and recalling the products back worth more than 100 million dollars (Bai & Yoo, 2013). They stopped all their advertisements for the product as well. These steps show how Johnson and Johnson, despite not being responsible for the poisoning, took the blame. They came up with measures for the safety of their primary stakeholder – the consumers.
Stakeholder Theory states that stakeholder is any individual or entity who had their interest vested with the company. In this case, they would include the medical community, shareholders, consumers, the employees and management of the company and the FDA. The consumers (mainly brand loyalists), the pharmacists and the surgeons were led down to some extent. The employees’ faced a temporary job risk due to the shutting down of the Fort Washington plant. In such a situation, Johnson and Johnson took steps to comfort them by assuring that there would not be any job losses, and it was a temporary crisis. The company’s reputation was entirely tarnished. The main objective of the company was now to win the lost trust of its stakeholders and do it very effectively (Klang & Hackling, 2014).
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