Tuesday, November 16, 2010

Corporate Crisis

Johnson and Johnson had to deal with a major corporate crisis. I think they handled the crisis successfully. The J&J corporation was faced with a problem with one of the most popular products, Tylynol. People were reported dead from the drug. Although JNJ didn’t put the deathly additives in the Tylynol, the company still got a black eye from all the bad press.
The crisis happened in October of 1982, when several people form Chicago were reported dead. The death was linked with Tylynol. What a terrible incident! People died from a drug that JNJ sold! The drug was tampered with. 
Johnson and Johnson had to figure out the best way to deal with the situation. They needed to maintain the company's reputation. They needed to come off concerned. Even though the product was not tampered with by JNJ, they took responsibility by ensuring public safety first and recalled all of their capsules from the market. I think this was the best way to handle the situation. As we learned in class, the consumer/ person it affected comes first. It is a duty of a company to protect people first and property later. 
New media made this crisis especially difficult. The public relations practitioner of JNJ, Robert Andrews, heard word of the scandal from news reporters first. He recalls, "We got a call from a Chicago news reporter. He told us that the medical examiner there had just given a press conference-people were dying from poisoned Tylenol. He wanted our comment. As it was the first knowledge we had here in this department, we told him we knew nothing about it. In that first call we learned more from the reporter than he did from us." It is so important especially with the new media bringing instant communication to be prepared. Andrews needs to have a statement ready in case of a crisis. 
The next step Johnson and Johnson took was to create a seven member strategy team focusing on specific points: protecting the people first and then saving the product second. 
The University of Oklahoma did a case study on the Tylenol Crisis. The case study says, "The company's first actions were to immediately alert consumers across the nation, via the media, not to consume any type of Tylenol product. They told consumers not to resume using the product until the extent of the tampering could be determined." JNJ also stopped advertising and production of Tylenol. They took all the products off the shelves in Chicago and the surrounding area.
The word got out. There were press conferences, an internal video of the press conferences to be circulated around the world, and a 60 Minutes segment about the Tylenol scandal. 
The new ideas that came up from this incident changed packaging forever. JNJ created a new foiled safety seal on the bottles. This was communicated in the press conference. This was a great way to handle the situation to show that JNJ cares because they want to fix their product to help the situation. "Tylenol became the first product in the industry to use the new tamper resistant packaging just 6 months after the crisis occurred," says the case study. 
Johnson and Johnson did a great job in taking care of this situation. I still purchase JNJ products. I take Tylenol quite frequently. JNJ 's company's reputation is still appreciated. Media coverage for the scandal was huge. If the PR people didn't take charge with a well organized and detailed crisis plan, then JNJ would appear careless. 
The case study commends the way Johnson and Johnson handled the crisis. They say, "Scholars have come to recognize Johnson & Johnson's handling of the Tylenol crisis as the example for success when confronted with a threat to an organization's existence." Another critic says, ""The Tylenol crisis is without a doubt the most exemplary case ever known in the history of crisis communications. Any business executive, who has ever stumbled into a public relations ambush, ought to appreciate the way Johnson & Johnson responded to the Tylenol poisonings. They have effectively demonstrated how major business has to handle a disaster." I agree with these statements. After reading about the scandal, I am more informed on the events and people involved. I think JNJ should win a prize for their efforts. 

Tuesday, November 2, 2010

Investor Relations

Bill Weldon CEO of Johnson and Johnson




Johnson and Johnson includes a section on the website for investor relations. The annual report can be found under this tab. When I clicked on 2009 annual report, I was shocked to see a vibrant picture of a family covering most of the screen. There weren't endless amounts of numbers taking over the screen but a clean slick homepage for the 2009 annual report. The top of the page contains tabs labeled Chairman's letter, consumer, citizenship, financial results, shareholder information, etc. I like the clean easy-to-read layout. J & J put effort into posting these results. It makes me want to visit the site because it is easy to find and easy to read. I feel like JNJ takes pride in investor relations because of the fancy layout. 


The goal of the annual report is an opportunity to tell the JNJ story more. Each tab under the investor relations area on the site consists of paragraphs of information about the company and how well it is doing to serve the community. For example, underfinancial results there is information about corporate governance and management responsibility. This section starts off by saying, "Johnson & Johnson is guided by the values set forth in Our Credo, created by General Robert Wood Johnson in 1943. These principles have guided us over the years and continue to set the tone of integrity for the entire Company." J & J informs readers with more information about the company and what it is about. 

The latest letter to the shareholders is written by CEO William C. Weldon. The CEO puts a spin on the bad news he is trying to convey. He blames financial troubles on the "most severe global economic downturn many of us have ever experienced" and "increased competition across our markets." His flowering wording makes the audience feel like JNJ is a powerful company and will never fail you. He says despite all of these hardships, JNJ keeps a strong grasp on the company credo and stays inspired. He concludes with an uplifting farewell, "More than ever, we know that caring for the health and well-being of people is not only an outstanding business but a mission that truly touches lives." Weldon is sending a positive message to readers. He wants everyone to stay with the company through thick and thin. He urges people to never give up in his letter. I get the impression he is a powerful determined man. Investors would most likely feel the same way if not more if they invest money with this company. Investors can come to this site and easily access this letter from the CEO. The fact that Weldon's picture is adjacent to the letter makes the letter more personal. It puts a face to the wording. The overall tone is a bit of concern and a bit motivational. Weldon expresses concern with the first statement, "As I reflect on the year that just passed, and the decades since the founding of Johnson & Johnson in 1886, I can say without hesitation that the year 2009 was one of the most challenging in our history. " He warns readers and gives the bad news first. Throughout the rest of the letter. he takes a turn to say JNJ will "continue to pursue long-term growth opportunities." I have no doubt in my mind that this information is credible. As I am reading the words from Weldon, I want to believe everything he says because it it worded so beautifully. It is easy to read and send a positive motivational message. 

The latest JNJ news release is not as easy on the eyes as the letter to shareholders. Dated October 19. 2010, the article features JNJ's 2010 third quarter reports. It announces a decrease in sales of 0.7%. International sales increased but domestic sales decreased. Weldon sounds credible giving his opinion on the company, "“Our second-quarter results include strong growth in a number of our recently launched products which contributed to solid earnings.” He focuses on the positive rather than the negative. He stresses company action and growth. I see him as a go getter highly involved in the company. This instills confidence in investors because the people need leader to keep everyone on track. When times get tough, it is the leaders job to get into the minds of the employees to keep the ball rolling with company success. The hardships JNJ is facing puts everyone in a gloomy mood. CEO Weldon successfully attempts to motivate the crowd and to encourage investors. The release constantly mentions a decrease in sales here and a decrease in sales there. This is not good news for JNJ. The reason for the decrease in sales has to do with the recall of medicines. Although the release brings bad news, there is no mention of negative opinion. The facts are clearly stated for the investors to read. It is not good news but there are no opinions interjected. I think if someone were to comment about the decrease in sales in the release, then the announcement would take a turn for the worst. The only comment bout the announcement comes from the CEO. He does a great job in keeping investor spirits high.