Tylenol Scare of 1982

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Review and Recommendations|
Tylenol Scare of 1982|
Prepared by:
March 19, 2012
Professor Douglas Greenwood
Prepared by:
March 19, 2012
Professor Douglas Greenwood

Contents

Executive Summary3

The Industry5

The Organization6

The Ethical Issue/Problem8

Key Stakeholders10

Event Aftermath12

Recommendations14

Conclusion17

Executive Summary

Law and Ethics often refers to the concepts of moral and legal rights, and focuses on one contemporary dilemma that raises major moral and legal questions. This research paper analyzes the ethical issue that took place in 1982, many people know it as the Tylenol scare of 1982. The ethical problem was faced by Tylenol, known as the most successful over-the-counter product in the United States at the time of the issue. The issue arised when seven people in Chicago were reported dead after taking extra-strength Tylenol capsules. After investigation it was reported that an unknown suspect replaced Tylenol Extra-Strength capsules with cyanide-laced capsules, resealed the packages, and deposited them on the shelves of at least a half-dozen or so pharmacies, and food stores in the Chicago area. Once the connection was made between the Tylenol capsules and the reported deaths, public announcements were made warning people about the consumption of the product. The media added to the issue by creating sensational ways of warning people about the product and breaking the story out by hurting the reputation of the company. At this stage Johnson & Johnson was faced with the dilemma of the best way to deal with the problem without destroying the reputation of the company and its most profitable product. The key stakeholders who were part of the ethical issue were firstly, the consumers. The consumers were the most concerned they were the target and they were not certain if proper precautions were taken regarding the ethical problem. Then came the general public who was panicked when news of the contamination-related deaths broke. The competition can also be considered a stakeholder as pharmacies across the USA reported a significant slowing in the sales of all acetaminophen-based products during the scare and the competitors were significantly affected in an indirect way. Another major stakeholder involved was the media as approximately 180,000 newspaper stories were run in the USA nationally regarding the Tylenol crisis, and hundreds of hours were dedicated to the reporting. It is also obvious that all the shareholders of the company were majorly affected by the problem as there was a 17.24% drop in Johnson & Johnson stock prices. Lastly, many local communities were affected as cities and towns employed emergency services such as police and fire departments to drive through residential areas broadcasting warning through loud speakers. Lastly, recommendations as to how Johnson & Johnson can prevent a similar crisis in the future as well as strategies to effectively handle future crises if they do arise will be examined. Some of the following will be discussed: -Putting security measures in place to screen every individual/employee. -Hiring seasoned qualified staff to reduce human errors in production. -Having staff sign off on production steps.

-Reviewing PR policies.
-Using mass media for public announcements.
-Seeking legal action against false reporting.
The report on the crisis and steps going forward will be concluded on the final page.

The Industry

In the 1980’s, the average pharmaceutical company would invest 12 years and nearly $200 million to get one drug product on the market. This tedious time period consisted of many obstacles such as research and development, clinical trials, government approval for patents, approval from various regulatory bodies and excessive sales & marketing budgets. These high entry barriers did double duty for professionals – they made it difficult for new companies to...
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