A Matter of Trust: Johnson & Johnson Product Recalls

Case Code: BSTR393 Case Length: 18 Pages Period: 2010-2011 Pub Date: 2011 Teaching Note: Available

Price: Rs.400 Organization: Johnson & Johnson Industry: Healthcare Countries: US Themes: Project Finance Crisis Management , Corporate Social Responsibility

Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

The end of 2010 saw Johnson and Johnson (J&J) faced with a set of quality related problems with product deficiencies surfacing in a range of drugs manufactured by one of its units, McNeil Consumer Healthcare (MNCH) in the United States (US). J&J, which had adopted a crisis management approach that is still considered the Gold Standard in Brand Crisis Management following the Tylenol Crisis in 1982, was caught on the wrong foot this time around. The company came in for strong criticism for its failure to respond promptly when a range of products meant for adults, children and infants were reported to be sub-standard. It was alleged that there were continued lapses in J&J's quality control despite repeated complaints from consumers and the Food and Drug Administrator (FDA), the industry regulator.

The company was also accused of taking sluggish and inadequate measures to correct quality deficiencies. Some critics charged that J&J was attempting to conceal the problem by going in for a secret product recall. It was only after a criminal investigation against the company by the industry regulator and a series of hearings by the US Congress's House Committee on Oversight and Government Reform (HCOGR) that J&J CEO William Weldon admitted to lapses at MNCH. Many thought the admission had come much too late, especially going by the standards the company had earlier set. Observers noted that it was quite unlike J&J whose multiple failures and lapses this time around evoked general criticism from society, the regulator, and the government. The brand's reputation was further dented when three of its plants were taken over by the FDA for failing to comply with the mandatory quality standards under a Consent Decree settlement.

After the series of setbacks the company CEO vowed to win back its lost grounds by making fresh investments and creating a new position that would be responsible for overseeing adherence to quality control across the group. Experts, however, were of the opinion that though the corrective measures might help J&J get over the quality problems, the biggest challenge it faced was winning back consumer confidence that had allowed it to command a premium price. There were already reports that consumers had begun to shift to other competing and inexpensive brands.

Issues

This case is most suitable for the courses on Brand Management, Brand Crisis Management, Supply Chain Crisis Management, Quality Control, Corporate Social Responsibility (CSR), Marketing, Strategy, and Business Ethics. It can also be used to explain in some part the significance of the Corporate Governance System and Organizational Structure and Control.

The target audience for this case may be those pursuing their Graduate and Doctoral courses in management, MS program, and programs in marketing, brand management, supply chain management and control.

Contents

Introduction
Johnson & Johnson
The Crisis
The "Phantom Recall"
J&J Crisis (1982): The Gold Standard in Brand Crisis Management
J&J Crisis (2010): Crisis in Brand Crisis Management
A Matter of Trust
Exhibits

Keywords

Brand crisis management, Crisis management, Corporate Social Responsibility, Gold Standard in Brand Crisis Management, Johnson & Johnson, Product recall, Supply chain risk management, Tylenol, USA

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