Crisis Monitoring and Communication - Essay Example

Table of Contents Table of Contents 2 Introduction 4 Crisis stages 5 Crisis management 6 Contingency plans 6Formulating a contingency directive 7 Escalation Preventive Measures 8 Crisis communication 8 Case study: The Johnson & Johnson Tylenol disaster 9 The 1982 Tylenol tragedy 10 Johnson & Johnson’s reaction 11 Product re-introduction 12 Tylenol’s crisis tackling model 13 Conclusion 14 Bibliography 15 Crisis monitoring and Communication The art of successfully managing a crisis in a business refers to the procedure of deciding of appropriate lines of action that will help a company to manage negative effects resulting from the occurrence of a disastrous happening. The occurrences usually involve the daily activities of a company in terms of business, and they usually posses the potential of ruining it (Elizabeth, 2002:56). The relevant decisions are usually implemented during, or just after the end of the situation. To the company administration, this usually implies the quick formulation and implementation of decisions regarding its overall business future, and any misconceptions can cost the company its relevancy. This process usually demands much planning before acting in order to help the company and its heads to assume the best position in tackling a crisis. Crisis communication is an art that involves the public relation arm of any business (Alan, 2010:34). Crisis communication refers to the company operations involving its communication avenues in reference to the sudden occurrences of events that tend to affect the business’ overall image and strategy. Its primary function is to show all involved stakeholders that the situation is being handled effectively. Thesis statement: this paper seeks to expound on the fields of crisis management and communication, their purpose, and their relevancy to various business operations. The paper seeks to research on the appropriate methods to handle crises in business in a way that the business will emerge untainted and still earning due respect and relevancy to all stakeholders and its target market. This paper will expound on the Johnson & Johnson Company. It will place special focus on how it successfully handled its Tylenol crisis in 1982. Introduction A crisis has numerous definitions depending on the particular approach towards the subject. In a broad definition, a crisis is major predicament that negatively affects the practicability of a company. Crises communications and handling methods usually exhibit unique characteristics, which include uncertainty regarding the exact cause of the disaster, potential implications and methods of actions, and the ever-present imperative that any decisions are made fast due to the limited time at hand. From another approach, a crisis is a happening that can interrupt normal business activities and potentially devastate the company, or possesses the latency to damage the institution’s workers and its overall public image gravely (Janine, 2000:109). Though such situations happen on a virtually daily basis in companies, a crisis is such an occurrence or situation that has reached or exceeded a critical level in terms of potential damage. Generally, the major characteristics of virtually all business crises are: The aspect of shock The absence of relevant information regarding the crisis, a factor that is most experienced at the outset of all crises The rapid growth in magnitude of subsequent events in comparison to the initial effect Crises almost always succeed in inflicting panic among involved individuals Crises usually influence managers to tend to make decisions that only place intense focus on the short-term results and effects Crises, usually at their outset, provide only a limited amount and chance of control among the company’s administration heads. Virtually all crises exhibit the factor of unpredictability of the nature and point of attack regarding subsequent effects Usually the negative results that emanate from the occurrence of a crisis are numerous and wide in range. However, a business can reap positive advantages and benefits from a crisis if its management triumphs in handling the crisis in the right manner (Preston, 2005:107). Crisis stages Various stages encompass the occurrence of a crisis. The pre-crisis period refers to the time duration just before the happening of a critical situation. After the end of a crisis, the company management extensively analyzes the happening during that time in order to try to discover the particular events that caused the crisis. The warning stage refers to the point at which the management identifies the potential effects of an event. It is at this point that the company distinguishes a certain event and determines whether it is a crisis or not. The crisis point refers to the actual instance when an event begins to cause notable effects on the usual business practices. The recovery period is the duration during which the company management is working on restoring the previous state of affairs in the affected departments of the company operations. At this time, the company has already dealt with a crisis, and is now working on analyzing the effects of their countermeasures. The post-crisis stage refers to the time after the successful end of a crisis. During this period, the company is analyzing the whole happenings, and is now investigating the possible factors that triggered the onset of the disaster (Preston, 2005:160). Crisis management Crisis administration is the supervision and synchronization of a company’s processes and actions whilst reacting to an episode that exhibits the latency to harm a company’s workforce, working frameworks, operation capability, assets, and exterior image. Crisis management usually involves the successful implementation of preventive actions, and the successful attacking of the unpredictable nature of events. Business ventures always set up possible emergency plans in line with the recognition of the fact that crises are bound to happen suddenly and without warning. These plans differ among various establishments, depending on their particular nature of business activities, products, services, and their various market bases. The process of formulating appropriate emergency measures involves two main issues (Preston, 2005:92). The comprehensive preparation of a certain company for the possible advent of conventional and foreseeable critical happenings The necessary preparation steps to aid the venture face unanticipated and undesirable happenings The main purpose of planning is to diminish the possible and actual effects of a predictable occasion, and to outline how best the company will manage to recommence its ordinary business actions after the end of the catastrophe. As a result, this calls for all ventures to take the necessary actions to formulate a relevant contingency model to use in the event of a catastrophe. Contingency plans All appropriate and well-though emergency plans possess similar characteristics. Good contingency plans aid in the identification of substitute lines of action that can be adopted by the business readily in case the normal state of affairs change as time passes They outline comprehensive supportive measures and guidelines that ensure the continuity of crucial company activities whilst during the occurrence of a disaster They comprise of strategies and principles that will help in augmenting the company’s general activities after the end of the catastrophe, and ways defining how the venture will avoid the repeat of the crisis Formulating a contingency directive Various steps determine the successful procedure of drawing up a good plan. This is essential in making plans that comprehensively cover all business sectors and departments of a company, as it ensures that the company will be ready for all aspects and forms regarding the various types of possible crises (Randall, 2009:65). The company administration should distinguish the need for contingency planning The management should strive to spot all possible crises regarding the venture, in addition to highlighting all the potential unfavorable effects of varying forms of crisis conditions The plan should clearly outline the specific results of all latent crises The plan should possess steps for the effective assessing of the specific potential damage of all risks The plan should be capable of helping the business administrators to establish a good hazard approach tactic to thwart a disaster and to tackle a crisis The business heads should then analyze the plan and allocate responsibilities accordingly The company should finally replicate possible occurrences in order to explore the success of each plan Escalation Preventive Measures These measures are important in the successful detection, control, and prevention of catastrophes in all business units. The setting up of escalation directives is an essential factor in businesses. These regulations usually act as guidelines for the company workforce in the event of a catastrophe. The measures usually involve the training of company personnel in the effective methods of discovering probable crises and the effective avenues in dealing with them. Low-level employees are usually in the best position to identify critical events before they escalate to a critical and unmanageable level. Thus, all business chiefs should incorporate their entire workforce in all plans regarding the management of crises in the company. This will offer them a good and reliable chance in the early identification and prevention of such events. This has numerous benefits, which include the saving of enormous resources that go to tackling an already fully developed catastrophe (Luecke, 2004:99). Crisis communication In all situations, effective communication avenues regarding a crisis can determine the continued success of a venture and the preservation of its clean image among its market bases and the public in general. Thus, this demands all companies to have a good public relations policy to use in times of disastrous events. A public association chart can brief of detailed depending on the particular area of application and the size of the business in question. However, a detailed plan proves much more adequate I dealing with such situations. A good plan is presented in a detailed and comprehensive manner to ensure that all involved people and departments perfectly acknowledge the intensity of the situation and help them to identify and perform their individual roles accurately and efficiently (Kathleen, 2010:43). Throughout the progression of conveying crisis information, there is a prevalence of the absence or inaccessibility of adequate information (Constance, 2009:77). As a result, most of the involved parties incline to search for the information in media sectors. Thus, the company information arm should always strive to offer accurate, relevant, and detailed information as soon as possible. This will drastically reduce the possibility of speculation. Speculation usually thrives on unfounded and sketchy information, which, in most cases, tends to affect the company negatively (Peter, 2008:75). Timeliness is a major factor that influences the successful communication concerning a crisis in a venture and how the venture is reacting. This is crucial to supporting the company’s disaster tackling methods to success. Research has revealed that the particular method that an institution uses with regard to communication in the event of a catastrophe influences its rate of success in tackling the problem. In all communication strategies, avoidance and denial of real crises only results to the worsening of an already critical situation, usually with far-reaching negative implications towards the company’s image among the community. In addition, this can result to the public losing respect and trust for the company and its products, a factor that can force a company to collapse. Thus, all companies should strive to develop a good communication policy concerning the occurrence of crises. This will ensure that the company’s market sector will support the company all through instead of shunning it (Judy, 2002:98). Case study: The Johnson & Johnson Tylenol disaster Apart from being one of the most outstanding ventures in the United Sates, the Johnson & Johnson venture is also among the prime healthcare businesses universally, and among the most expanded, in terms of the particular nature and type of products that it offers to the drug market. The company has classified its business activities into three major sectors, which include the pharmaceutical, professional, and consumer departments. Its pharmaceutical sector accounts for about 39% of the venture’s total revenue and close to 60% of its operating proceeds. The business’ professional segment rakes in about 35% of the business’ entire revenue and about 26% of its total working profits. In addition, its end user segment is responsible for about 24% of the company’s total annual profits and 11% of operating returns. The company’s pharmaceutical goods, which are on offer under brand names such as Centocor, Janssen Pharmaceuticals, and Ortho-McNeil, consist of medications appropriate for psychological disorders, family planning, oncology, gastroenterology, and pain administration. The professional subdivision deals with medical operations and patient supervision tools and parts, disposable contact lenses, body-joint substitutes, and investigative goods (Noel, 2002:42). The conglomerate’s famous range of user goods includes such varieties as the Johnson's childcare range, the Neutrogena hair and skin care products, the Motrin and Tylenol pain prescription drugs, the O.B. and Stayfree women goods, the Reach oral hygiene line, Band-Aid wound dressing and bandages, the Imodium A-D stomach treatments, Mylanta abdomen drugs, and the Pepcid AC acid stabilizers. The company accrues more than half of its total proceeds from its foreign market bases. It manages this by exploiting its sales networks that comprise of about 190 operating ventures in 51 nations across the globe and its promotion ventures that operate in 176 states (Ronald, 2005:121). The 1982 Tylenol tragedy In the period of October 1982, Tylenol, the company’s then most popular pain medication variant in America, faced a major crisis in sales and human health. About seven individuals in the city of Chicago succumbed to death after ingesting boosted Tylenol pills. According to official investigation news, unknown individuals had injected about 65 milligrams of fatally dangerous cyanide into the available Tylenol pills. This amount of cyanide was lethal, being about 10,000 times more than the minimum amount required to kill a human being successfully. This illegal and covert tampering of the drug happened after the drugs had already reached various outlets in the city, ready for sale. It was suspected that the tablets were covertly taken from the stores, and returned after being injected with the lethal poison. At the time, the drug commanded a 37% stake of the entire pain-medication market base, raking in annual proceeds amounting to close to $1.1 million dollars. In the period that immediately followed the deaths, the drug’s market stake plummeted drastically to only about 7%. Johnson & Johnson’s reaction Immediately after the deaths of the people in Chicago implicated the drug as the culprit, nationwide awareness campaigns that warned the citizens against ingesting the drug started in earnest. As a result, the conglomerate faced a massive problem on how best to tackle the crisis whilst preserving its image towards the public and protecting its market base. The conglomerate’s response was swift and drastic (Michael, 2008:154). Acting in line with the company’s overall strategy regarding the supremacy of the customer, the McNeil Company, which was a branch of the conglomerate, embarked on a swift collection of the drug in the whole nation. This recall resulted to the collection of more than 30 million and cost the company a massive loss that amounted to about $100 million (Paul, 2002:142). Furthermore, the company directed the stopping of all promotion operations regarding the drug. Even though the Johnson venture was not responsible for the heinous and fatal act, they took the blame and acted accordingly. It did this through safeguarding the general public safety in removing the entire product from the country’s medication outlets (Robert, 2009:164). In addition, when a woman died from the effects of the drug in February 1986, the company decided to eliminate the pills from the market on a permanent basis. Product re-introduction After the company succeeded in its process of removing the pills from the market, it had to formulate an appropriate method with which it would re-launch the Tylenol drug and win back the damaged trust of the market. The company successfully accomplished the re-launch by applying numerous measures affecting the whole appearance and presentation of the drug (Suresh, 2009:127). The venture presented the drugs to the public in a completely novel manner. The company repackaged the Tylenol pills in a corrupt-resistant packaging wrapper that comprised three layers of resistant seals. Through this action, the business pioneered the compliance with the Foodstuff and Medicine supervision directive regarding the requirement of alter-resistant wrapping and packaging system. Moreover, the venture embarked on a fervent advertisement that favored the use of caplets all across the drug industry, since they proved more tamper-proof than the previous method. The venture, in pursuit of increased sales levels of the brand, advertised a $2.50 discount coupon as an offer for every purchase of Tylenol. The consumers got the coupons readily from newspapers, or by inquiring about them through a company number at no cost whatsoever. In order to recapture the stock loss that had arisen from the occurrence, the venture invented a novel pricing framework that enabled all buyers of the product to gain a maximum discount that amounted to 25% of the total product price worth. In addition, the company took on a massive publicizing strategy that resulted to about 2250 sales men making detailed promotion presentations regarding the usefulness of the revamped Tylenol drug to medical fraternities. This move had the purpose of winning back lost confidence levels and influencing a sales explosion. Tylenol’s crisis tackling model Tylenol managed to react positively and in a fast manner from the potential tragedy due to the directives of the parent company that are highlighted in its operations credo. The credo, which came into force during the mid-19th century, was the work of Robert W. Johnson. In the mission directive, he publicly emphasized that the venture’s major responsibilities regarded the safety of its consumers, and towards the medical fraternity that utilized its products. In addition, he outlined that the company should also consider the safety of its workers, the local society, and its stakeholders. This meant that the continued success of the company highly depended on the sustained safety of the populace. This acted as the company’s most successful public communication tool, and was the major drive that propelled Tylenol’s successful restoration (Scott, 2011:113). Researches had concluded that the sales of the Tylenol drug, which represented 17% of the venture’s net revenue in the year 1981, would never reclaim its market base. However, after just two months, the pills were back in the market. In addition, they were fast regaining the lost ground and confidence. The drug, backed by a massive media awareness-promotion onslaught, had managed to control 30% of its previously lost market share by the end of the first year after its re-launch. However, the whole process was extremely expensive for the venture. The conglomerate lost in excess of $100 million due to the Tylenol disaster. Furthermore, an extra recall in the late 1980s and an additional rebranding cost much more (Sarah, 2010:178). Conclusion The Tylenol disaster is a perfect example of how excellent crisis supervision strategies can save a company from imminent fall. 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