Shri Vile Parle Kelavani Mandal’s

Narsee Monjee College of Commerce & Economics

(Autonomous)

Bachelor of Management Studies

2023-24
FY BMS
Semester I - Division A

Course Name:
PRINCIPLES OF MANAGEMENT

Title of Assignment:
CRISIS MANAGEMENT CASE STUDY OF JOHNSON & JOHNSON

Submitted by:

Student’s Name SAP ID Roll No

Siddhartha Bargi 45614230027 A057
Hemish Mody 45614230030 A058
Lakshita Tawade 45614230090 A059
Charmi Dand 45614230097 A060
Aryan Kaushal 45614230061 A071

1|Crisis Management Case Study of Johnson & Johnson

 TABLE OF CONTENTS

Sr. No Particulars Page No.

1. Acknowledgement 3

2. Case Overview 4

3. Introduction to Johnson and Johnson 5

4. Subordination of Individual Interest and Leadership 7

5. Authority, Responsibility and Centralization 9

6. Division of Labour, Learning and Adaptations 10

7. Unity of Command and Scientific Management 12

8. Business Ethics and Standardization 13

9. Ways of Crisis Management 15

10. Works Cited 18

2|Crisis Management Case Study of Johnson & Johnson

 ACKNOWLEDGEMENT

We would like to express our heartfelt gratitude to the individuals and institutions that have
played a significant role in the completion of this research project.

We would like to appreciate the efforts of Mrs Sneha Vaskar the faculty for Principles of
Management at our college, whose insights into the vast subject of Management,
Communication and Ethics and its application in Business Management have helped us
deepen our understanding of the subject. We would also like to thank her for her immense
support towards the completion of this Research and Analysis within the stipulated time.

Lastly, we express our gratitude to the authors and researchers whose works served as a
foundation for our study. Their contributions have been enlightening and inspiring, shaping the
theoretical framework of this research endeavour. Their works have been duly cited.

3|Crisis Management Case Study of Johnson & Johnson

 SYNOPSIS OF THE CASE

The Johnson & Johnson Tylenol case is a classic example of crisis management and corporate responsibility. In
1982, seven people in the Chicago area died after ingesting Extra-Strength Tylenol capsules that had been laced
with cyanide. Johnson & Johnson faced a major crisis, as the product tampering not only posed a threat to
public health but also put the company's reputation on the line.

In response to the crisis, Johnson & Johnson took immediate and decisive actions. They prioritized customer
safety over profits by recalling 31 million bottles of Tylenol, costing them over $100 million. The company also
introduced tamper-evident packaging, setting an industry standard. Johnson & Johnson collaborated with law
enforcement, the FDA, and other relevant authorities in the investigation.

Communication played a crucial role in their crisis management strategy. The company kept the public
informed through press conferences and advertisements, advising consumers not to consume any Tylenol
products. They were transparent about the situation and worked to rebuild trust by putting customer safety first.

Johnson & Johnson's swift and responsible actions during the Tylenol crisis are often cited as a textbook
example of effective crisis management. The incident led to changes in packaging and tamper-resistant
measures across the pharmaceutical industry.

(Crisis Communication Strategies: The Johnson & Johnson Tylenol Crisis, 1998)

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 COMPANY LOGO

OVERVIEW OF THE COMPANY: JOHNSON & JOHNSON

1. Establishment and Head office:

Johnson & Johnson (J&J) is an American multinational, pharmaceutical, and medical
technologies corporation headquartered in New Brunswick, New Jersey, and publicly traded on the New
York Stock Exchange. Its common stock is a component of the Dow Jones Industrial Average, and the
company is ranked No. 40 on the 2023 Fortune 500 list of the largest United States corporations.
Johnson & Johnson has a global workforce of approximately 130,000 employees who are led by the
company’s current chairman and chief executive officer, Joaquin Duato.

Johnson & Johnson was founded in 1886, by three brothers Robert Wood Johnson, James Wood
Johnson, and Edward Mead Johnson selling ready-to-use sterile surgical dressings. In 2023, the
company split off its consumer healthcare business sector into a new publicly traded company, Kenvue.
The company is exclusively focused on developing and producing pharmaceutical prescription drugs
and medical device technologies.

It is one of the world's most valuable companies and is one of only two U.S.-based companies that has a
prime credit rating of AAA.

2. Code of Business Conduct:

At Johnson & Johnson, we believe acting ethically and responsibly is not only the right thing to do, but
also the right thing to do for our business. Our Johnson & Johnson Code of Business Conduct ensures
that we hold ourselves and how we do business to a high standard, allowing us to fulfil our obligations
to the many stakeholders we serve.

5|Crisis Management Case Study of Johnson & Johnson

 Effective March 30, 2020, Johnson & Johnson amended its Code of Business Conduct to provide
enhanced guidance on addressing the evolving business environment. Effective January 2, 2023, the title
of our Chairman and CEO, Joaquin Duato was updated. No other content changes were made.

3. Products and Services:

Johnson & Johnson offers a diverse range of products and services across various sectors:
1. Pharmaceuticals: Development, manufacturing, and marketing of prescription drugs and over-the-
counter medications.
2. Consumer Health Products: Includes baby care, skincare (Neutrogena, Aveeno), oral care (Listerine,
Reach), and over-the-counter medicines (Tylenol, Motrin).
3. Medical Devices: Offers surgical instruments, orthopaedic devices, cardiovascular devices, and vision
care products.
4. Diagnostic Equipment: Provides diagnostic solutions for medical applications.
5. Vaccines: Engaged in the development and production of vaccines.
6. Health Technologies: Invests in digital health solutions to enhance patient care.
7. Biopharmaceuticals: Research and development of innovative treatments for various medical
conditions.
With a vast portfolio and global presence, Johnson & Johnson is a major player in the healthcare industry.

6|Crisis Management Case Study of Johnson & Johnson

 A071-ARYAN

SUBORDINATION OF INDIVIDUAL INTEREST TO GENERAL INTEREST:

In the provided case study, we get to see one of Henri Fayol’s principle which is Subordination of Individual
Interest to General Interest. This principle emphasizes that in an organization, the interests of individuals or
specific groups should be secondary to the overall welfare and goals of the entire organization.

 During the Tylenol crisis, Johnson & Johnson showcased the principle of subordinating individual
interests to the general interest in somewhat different, rather reversed manner. They initially kept aside
the organizational goals, i.e., profits and focused more on the public and their safety. We can say that
here, the short-term profits of the company can be termed as “Individual Interest” and public safety as
the “General Interest”.
Though they sacrificed their profits, which is one of many organizational goals, they built an
unwavering and huge amount of trust with the people by their responsive actions, which in turn helped
regain the welfare of the organisation.
 The primary example of putting the collective welfare before individual interests occurred when
Johnson & Johnson immediately chose to prioritize public safety over financial gains during the Tylenol
crisis. Despite the considerable profitability of Tylenol (around 34% market share) and its substantial
contribution to the company's overall profits, Johnson & Johnson made the decision to safeguard the
lives and well-being of the public, even if it meant enduring considerable financial losses.
Also, the decision to remove all Tylenol capsules from store shelves, extending beyond the affected
Chicago area to a nationwide recall, highlighted the company's commitment to the general public's
safety. Despite the substantial financial repercussions for Johnson & Johnson, this comprehensive
product recall again served as a clear demonstration of their dedication to prioritizing consumer safety
over short-term profits.

(Pandey, Nikhil, 2023)

(Kim Y., & Lee Y., 2017)

(Botica, Loren, n.d.)

7|Crisis Management Case Study of Johnson & Johnson

 A058 - HEMISH

AUTHORITY AND RESPONSIBILITY:

Authority is the power, right to command, and decision-making power, and the responsibility is to be
answerable or be obliged for one’s own actions, and decisions, these are the two interrelated terms in principles
of management. This principle of management believes that authority and responsibility should be balanced,
they must go hand in hand to achieve desired organizational goals.

Johnson and Johnson’s Chairman – James Burke demonstrated authority by quickly taking charge of the crisis
and forming a seven-member team to handle it. He represented the company in major press conferences as well
as attending the 60 Minutes and Donahue Show. The company took authority in handling the crisis by
establishing direct contact with the public. They did so by setting up 1-800 hotline for consumers to call and a
toll-free line for news organizations to call and receive pre-taped daily updates. The seven-member team was
given the responsibility to handle the situation, but the ultimate authority lied with James Burke. This ensured
decisions were made effectively and efficiently.
J&J demonstrated responsibility by protecting people first instead of prioritizing profits. The decision to
withdraw all the Tylenol bottles throughout the nation shows accountability and total responsibility for safety of
consumers. This action led to development of sympathy among the public for the company.

CENTRALIZATION:
Centralization is an organizational structure in which a single leader or small group of people makes all
decisions. It's the opposite of decentralization in which decision-making power exists in upper and lower levels
of management. Johnson and Johnson successfully deployed Centralization in management of the crisis. The
company had an efficient central structure under the leadership of James Burke. The seven-member team lead
by the chairman was tasked with decision-making and developing and implementing effective plans. This
ensured elimination of confusion and chaos in the organisation, issues with coordination, cost of crisis handling
and lack of specialization

(Advantages and Disadvantages of Decentralization, 2023)

(Sujan, 2023)
(Team, 2023)

8|Crisis Management Case Study of Johnson & Johnson

 A059 - LAKSHITA

DIVISION OF LABOUR:
The case study provides insights into several principles of management, drawing from the principles stated by
Henri Fayol and F.W. Taylor. One of the prominent principles is the Principle of Division of Labor
 The case emphasizes the vocation of roles and responsibilities within Johnson & Johnson during the
crisis. In the case of the Johnson & Johnson Tylenol crisis in 1982, the application of this principle can
be seen in the coordinated efforts of different departments and specialists within the company.
 During the crisis, Johnson & Johnson quickly assembled a cross-functional team involving individuals
from various departments such as public relations, marketing, quality control, and legal. Each team
member had a specific role, contributing their expertise to address different aspects of the crisis, from
communication strategies to product safety. A strategy team was formed, indicating a division of labour
to handle specific aspects of the crisis. This division of labour allowed the company to respond swiftly
and effectively to the crisis.

LEARNING AND ADAPTATION:

Another such significant principle is ‘Learning and Adaptation’
 The principle of "learning and adaptation" involves an organization's ability to evolve based on
experiences and challenges. In the Johnson & Johnson Tylenol Crisis of 1982, the company
demonstrated this principle by learning from the crisis and adapting its practices to prevent such
incidents in the future.
 After the crisis, the company took significant steps to improve product safety and packaging. They
introduced tamper-evident packaging, which became an industry standard. This development reflects a
commitment to learning and adapting to prevent similar incidents in the future.
 The company not only addressed the immediate crisis but also proactively enhanced its processes to
ensure the safety and trust of its consumers. The Tylenol crisis case serves as a model for companies
facing unforeseen challenges, emphasizing the importance of prioritizing people's safety and well-being
above all else.

9|Crisis Management Case Study of Johnson & Johnson

 A060 – CHARMI

UNITY OF COMMAND:
Henry Fayol's principle of unity of command says that an employee should receive a command, instructions, or
duties from a single superior only. This would avoid any confusion, conflicts or contradictory instructions.
In the case of the Tylenol crisis,

 Single superior: The chairman James Burke formed a strategy team of seven members and solely led
them. This unity and clarity of command helped the company to take swift actions and protective
measures, as there was a clear guideline for the employees to follow.
 Clear communication: James Burke took the lead; he was the person directly communicating with his
employees as well as with various media sources. In Fact, he personally went on the shows “60
Minutes” and “Donahue” to give the public his message.

SCIENTIFIC MANAGEMENT:
Theory of Scientific management also known as Taylorism was given by Frederick Winslow Taylor. It aims at
improving efficiency and productivity in the organization by applying scientific principles to management and
work processes. He believed that there was one best way to perform each task and that it could be determined
through scientific analysis. (VERMA, 2023)

 Data-Driven Decision Making: Johnson & Johnson promptly responded to the crisis based on the data
they received. They reacted based on immediate knowledge and based on it recalled Tylenol nationwide
and informed the public about the same.
 Scientific Approach: Johnson & Johnson's response to the crisis was methodical. They formed a strategy
team, implemented safety measures, and communicated the issue with the public. Following which they
even developed tamper-resistant packaging to prevent such incidents in the future.
 Scientific selection: Frederick Winslow Taylor’s principle of scientific selection which states that
employees should be scientifically selected based on their skills and abilities. In the case of Johnson &
Johnson, a special strategy team based on the abilities of employees was formed which was led by the
chairperson James Burke.

(V. Verma, 2023)

10 | C r i s i s M a n a g e m e n t C a s e S t u d y o f J o h n s o n & J o h n s o n
(Sujan, 2023)

A057 – SIDDHARTHA

The link between the deaths and the tainted capsules was made with remarkable speed, and authorities notified
Johnson and Johnson. As the number of deaths grew—the final total was seven—the firm faced a crisis. The
news could have made the Company consider few serious questions.

Had the cyanide been put in the Tylenol capsules during the manufacturing process or later? Were the deaths
that had already been reported just the first of a very large number? Would the deaths be limited to the Chicago
area? These answers to these questions would play pivotal roles in handling the disaster.

ETHICAL MANAGEMENT IN BUSINESS:

The government had not ordered the company to make a recall. Perhaps the deaths would be local, not more
than seven. Perhaps a temporary cessation of sales until the source of the contamination was determined could
prevent more harm to the public.
Faced with numerous uncertainties, the executives at Johnson & Johnson had to consider various factors that
were certain or predictable- A recall would involve a loss of up to $100 million, the loss was not covered by
insurance, news of a recall could damage the product that Tylenol might never be able to regain public
confidence and its 37 percent of market share, the news and loss would plummet the company's stock and
competitors would try to make Tylenol's loss their gain.

These aspects were definite certainties, while the remainder constituted conjecture and speculation. However,
displaying a reluctance to subject consumers to additional risk—and making a decision that places them in the
Ethics Hall of Fame—Johnson & Johnson initiated a recall of all Tylenol bottles. In the long run, ethical
decision-making safeguarded public welfare, and the company's reputation. The Tylenol case serves as a
prominent example of ethical reasoning, yet ethical dilemmas, whether significant or minor, arise regularly.
Business leaders require effective approaches to address these challenges and reach sound decisions.

STANDARDISATION OF PROCEDURE:
The company took an active role with the media in issuing mass warning communications and called for a
massive recall of the more than 31 million bottles of Tylenol in circulation. In the absence of digital means of
marketing we can observe that the company did a very excellent job at reaching each customer and made it

11 | C r i s i s M a n a g e m e n t C a s e S t u d y o f J o h n s o n & J o h n s o n
certain that they do not consume the suspected batch of tainted Tylenol. The marketing and communication
strength of the company needs to be highlighted.

One of the techniques of Scientific Management as suggested by F.W. Taylor is Standardization. Johnson and
Johnson implemented these techniques in order to avert the crisis by bringing the triple safety seal packaging in
order to avoid further events of tampering the products it also increased quality and safety checks which was
imperative to ensure this never repeated. Standardisation of the process might have led to the improved
efficiency of the company.

(Tylenol (brand), 2023)

(Weighing stakeholders claim, n.d.)

(Rehak, 2002) (Markel, 2014)

12 | C r i s i s M a n a g e m e n t C a s e S t u d y o f J o h n s o n & J o h n s o n
(BUS608: Ethical and Strategic Management, n.d.)

(Bayer, 2010)

Insights into efficient Management of Crisis

1. RESPOND QUICKLY: (Aryan)

In the Tylenol case study, one of the key decisions taken by the company was to respond quickly.
The rapid response from Johnson & Johnson was crucial in taking immediate measures to safeguard consumers
from the potentially tampered product, given that the primary focus during the crisis was ensuring public safety.
This swift reaction played a key role in minimizing harm and preventing further casualties. Tylenol was not just
a contributor to the company’s revenue; it was also a brand widely trusted and utilized by consumers. Acting
swiftly highlighted the company's steadfast dedication to consumer safety, which is a critical factor in
preserving the esteemed reputation of the Tylenol brand and as well as the company itself. The quick and
decisive measures taken were significant in minimizing the potential long-term impact on the product & the
company. If they had delayed their decisions, the consumers might’ve lost trust upon Johnson & Johnson and
their product again, which is clearly not good for any company in any market i.e., losing consumer trust.

Johnson & Johnson's rapid response also highlighted a standard of crisis management that might be seen in a
positive manner/way when compared with competitors dealing with similar situations.

2. PUTTING PEOPLE FIRST: (Hemish)

An important element of Crisis Management comes forward in the case study and that is of Putting People
First. The first question in the company’s mind was “How do we protect the people?” The first step in
protecting the consumers was to withdraw all the bottles of Tylenol from stores across the US. All the
production and distribution were halted with steadfastness and the public was alerted not to use Tylenol until the
crisis was averted. Media was used to spread awareness about the same. Toll free numbers were provided to
handle doubts of the consumers. After thorough Research and Development, a triple safety seal packaging was
introduced to ensure a situation like this never arises again. The Tylenol case study exemplifies how the
principle of putting people first is not only a moral imperative but also a strategic approach to crisis
management.

3. NOT JUST WORDS BUT ACTIONS: (Siddhartha)

Another takeaway from the above case study is that apart from just making statements, holding press
conferences a key aspect of Crisis Management is taking necessary actions which lead to significant changes. In
13 | C r i s i s M a n a g e m e n t C a s e S t u d y o f J o h n s o n & J o h n s o n
the case of the Tylenol, it can be the recall of the entire stock of Tylenol bearing huge amounts of loss. Investing
into the Research and Development for the development of triple safety packaging making sure that

the products remain tamper proof. Actions show the commitment of the company for averting the crisis. They
did not just make a procedure change, but they made a systematic intervention.

4. RESOLVING THINGS TO LEARN AND MOVE FORWARD: (Lakshita)

The relevance of "resolving things to learn and move forward" is evident in the Johnson & Johnson Tylenol
Crisis of 1982 through the company's swift and decisive actions to address the crisis, learn from it, and move
forward.

Johnson & Johnson immediately took responsibility for the crisis, recalling and halting production of Tylenol.
The company worked closely with law enforcement, the FDA, and other relevant authorities to investigate the
tampering incidents. This commitment to resolving the issue transparently and cooperatively allowed for a
faster resolution and demonstrated accountability.

Moreover, the company didn't stop at resolving the immediate crisis. Johnson & Johnson implemented
significant changes, such as the introduction of tamper-evident packaging and improved safety measures. This
proactive approach to learning from the crisis and implementing changes showcased a determination to move
forward and prevent similar incidents in the future.

5. OPENLY ACKNOWLEDGE YOUR MISTAKE: (Charmi)

Tylenol crisis taught a very important lesson - to admit your mistake openly. It showed how important it is to
accept our mistakes and apologize if we are wrong. Johnson and Johnson handled the crisis effectively by
transparently acknowledging their mistakes.

They didn't play a blame game or portrayed themselves as victims. The company immediately disclosed all the
details regarding the contamination and issued an alert to not consume Tylenol. They withdrew and took down
all the Tylenol stock from stores to prevent any further harm by consumption.

They spread awareness through different media, shows and even held press conferences to protect the people.
They established toll free numbers to provide assistance to people. This response showed that in such a crisis
swiftness, honesty and transparency are the most important thing. This approach helped them win the trust and
empathy of the people even at the time when the company was going through a crisis. Thus, accepting the
wrongs and trying their best to make things right helped the brand jump back after the crisis.

14 | C r i s i s M a n a g e m e n t C a s e S t u d y o f J o h n s o n & J o h n s o n
 Works Cited

Advantages and Disadvantages of Decentralization. (2023, Novemeber 18). Retrieved from Vedantu:
https://www.vedantu.com/commerce/advantages-and-disadvantages-of-decentralization

Bayer, R. C. (2010, July 20). Ethical Reasoning in Business. Retrieved from Acton Institute:
https://www.acton.org/pub/religion-liberty/volume-12-number-1/ethical-reasoning-business

Botica, Loren. (n.d.). isentia. Retrieved from The importance of responding to a crisis: https://www.isentia.com/latest-
reads/the-importance-of-responding-to-a-crisis/#:~:text=Three%20key%20elements%20of%20crisis
%20management%20response&text=Responding%20promptly%20and%20adeptly%20empowers,a%20clear
%20and%20impactful%20manner.

BUS608: Ethical and Strategic Management. (n.d.). Retrieved from Saylor Academy:
https://learn.saylor.org/course/view.php?id=707&sectionid=30482

Crisis Communication Strategies. (n.d.). Retrieved from https://www.ou.edu/deptcomm/dodjcc/groups/02C2/Johnson

%20&%20Johnson.htm

Kim Y., & Lee Y. (2017). Crisis Management in the Digital Age: How Johnson & Johnson Responded to the Tylenol Crisis.
Retrieved from Linkedin.

Markel, D. H. (2014, Sept 29). How the Tylenol murders of 1982 changed the way we consume medication. Retrieved
from PBS: https://www.pbs.org/newshour/health/tylenol-murders-1982

Pandey, Nikhil. (2023, October 18). Role of Leadership in Crisis Management. Retrieved from EMERITUS:
https://emeritus.org/in/learn/role-of-leadership-in-crisis-management/#:~:text=You%20should%20also%20note
%20that,a%20leader%20in%20crisis%20management.

Rehak, J. (2002, March 23). Tylenol made a hero of Johnson & Johnson : The recall that started them all. Retrieved from
The New York Times: https://www.nytimes.com/2002/03/23/your-money/IHT-tylenol-made-a-hero-of-johnson-
johnson-the-recall-that-started.html

Sujan. (2023, July 8). Tyonote. Retrieved from Authority and Responsibility Principle of Management:
https://tyonote.com/authority_and_responsibility_principle/

Team, I. E. (2023, October 23). Centralized vs. Decentralized Structures: 7 Key Differences. Retrieved from Indeed:
https://www.indeed.com/career-advice/career-development/centralized-vs-decentralized

Tylenol (brand). (2023, November 4). Retrieved from Wikipedia: The Free Encyclopedia:
https://en.wikipedia.org/wiki/Tylenol_(brand)

V. Verma. (2023, November 24). FW Taylor - Management Theories & Books. Retrieved from Linkedin:
https://www.linkedin.com/pulse/fw-taylor-management-theories-books-vishal-verma

Weighing stakeholders claim. (n.d.). Retrieved from openstax: https://openstax.org/books/business-ethics/pages/3-2-

weighing-stakeholder-claims

15 | C r i s i s M a n a g e m e n t C a s e S t u d y o f J o h n s o n & J o h n s o n
 Declaration of Originality

We, hereby declare that this assignment titled “ Crisis Management Case Study of Johnson &
Johnson” is entirely our own work and that any additional sources of information have been duly

cited.

Whereby declare that any offline/online sources, published or unpublished, from which we have
quoted or drawn references have been referenced fully in the bibliography list. We understand
that failure to do so will lead to plagiarism and severe disciplinary action will be initiated
against us.

We understand that we may be required to present the assignment and /or appear for viva
(Offline and/ or online). We acknowledge it is our responsibility to keep ourselves updated with
the schedule of the presentation/ viva and we will ensure we are available during the same.

Student Name: Siddhartha Bargi Sign:

Student Name: Hemish Mody Sign:

Student Name: Lakshita Tawade Sign:

Student Name: Charmi Dand Sign:

Student Name: Aryan Kaushal Sign:

16 | C r i s i s M a n a g e m e n t C a s e S t u d y o f J o h n s o n & J o h n s o n
Date of submission: 24th November 2023

17 | C r i s i s M a n a g e m e n t C a s e S t u d y o f J o h n s o n & J o h n s o n