KMc: Tylenol vs.

Food Lion, Page 1

Public Relations Case Review: Tylenol vs. Food Lion

Kevin McConnaghy mcconnaghykv@appstate.edu COML 512 A1: SEM IN STRATEGIC & CORPORATE desautel@gonzaga.edu Gonzaga University Friday, October 24, 2008

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Introduction The practice of public relations has evolved over the past one hundred years to a point today where it is considered an essential component of an integrated management team. The value of integrated public relations can be measured by many metrics on a day to day basis; however, the value of the integrated practice is most evident in crisis situations. It is in these situations that the fundamentals and art combine to provide leadership for the entire spectrum of stakeholders. The purpose of this paper is to examine how two companies, stressed by dramatic circumstances, choose to deal with their publics. By comparing and contrasting their programmatic responses, this paper will seek to uncover how the fundamental tenets of integrated public relations served as a framework for leadership. Overview A crisis is a violation of your vision (Caywood, 1997, p.189). Caywood goes on to say that in crisis it is helpful to ask: how will the crisis effect the organizations ability to meet the mission in the short and longer term, what is the intensity or how big can it get, which values are affected, and what relationships are threatened (p. 190)? These are the types of questions that help prepare a firm to address the three sequential objectives of public relations crisis management: prevent if possible, modify negative effects, and through its behavior, provide a platform for the firms future (p.191). By probing and establishing clear objectives it becomes possible to develop an actionable crisis management plan based on organizational values and in line with a firms existing / desired reputation. In this context, the cases selected for examination

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provide data that can be evaluated in relation to these benchmarks established as effective public relations management precepts. Analytical Approach Viewed through a series of frames, the Food Lion case presented by Caywood (1997, p. 202) and the Tylenol case as presented by Kaplan (1982) are subjected to a series of probes that serve to narrow the focus of the inquiry. With this narrower focus it is possible to observe and resolve specific differences in the way public relations practices affected outcomes. Analysis This section provides tables that compare / contrast the cases in relation to four frames of reference; they are referred to as the research, strategy, implementation and evaluation frames. The research frame is designed to examine the situation as it is known by the company and evaluate its current strengths, weakness, opportunities and threats. To probe the research frame a series of questions are posed and observations recorded. This approach is then applied in a similar fashion to the other frames. Research Frame Table 1 seeks to expose areas of concern and opportunity. In practice, a public relations professional would use this frame to establish a foundation upon which it could evaluate strategic options.

KMc: Tylenol vs. Food Lion, Page 4 Table 1: Research Frame Food Lion Case Tylenol Case
A Wall Street darling in the 1990s. With operations in 14 southeastern states and $7B in sales; the company has doubled in size in past 4 years. A non-union shop, Food Lion is stressed by organizing activities. When an interview was refused, Dateline decided to conduct an investigative (hidden camera) report. Specifically looking into allegations that old meat is be re-date, workers are being exploited and the facilities are unclean. Company growth plans will be compromised as stock price falls dramatically. If unable to address the situation effectively, over the longer term, Food Lion will suffer from a weakness in its competitive position. The crisis was precipitated by an operations policy that was based on the evaluation of performance metrics that were designed to benchmark individuals effort on the job. As an unintended consequence, the policy / practice alienated employees. Investors view the company in a positive light; consumers do too. Employees and unions are negative toward the company. In terms of financial impact and disturbance in the labor force. Chicago deaths attributed to cyanide laced Tylenol capsules causes nation-wide panic.

Probe
What background information will help frame the situation?

Observation
While J&J had a long history as a public company, Food Lion had less than 10 years operating as a SEC regulated company. Traditions had not taken hold in Food Lion. While J&J was a victim, Food Lion was the victimizer. While J&J looked to the media as a stakeholder, Food Lion made every effort to alienate the media.

What do we know about the current situation?

This was a crime committed by an unknown person. The crime was traced back to Tylenol capsules. The crime place J&J at the center of a consumer confidence crisis. Peoples lives were at stake as a result of the tampering. The product brand and the financial health of the company were also at risk. Consumer goods, especially those that fill up the food chain are easy targets for fraud / tampering. In this case the product packaging made it vulnerable. J&J had a long history of positive experiences with the public and their other stakeholders. In terms of its consumers health and wellbeing.

What is at stake?

J&J viewed the crisis in human terms, while Food lion was most concerned with financial impacts.

What is the source of the crisis?

In both cases, packaging issues were at the heart of the crisis. They differed in relation to errors of commission versus omission.

How does the public view the company? How does the company define the crisis?

By their behaviors, both companies demonstrate to the public who they are and what they believe in. Food Lion took a short term view, while J&J took into consideration both the short and long term perspectives.

As Table 1 seems to show, J&J was able to make a more objective case for the true nature of the crisis; perceived it as process to be managed for the benefit of all stakeholders and recognized their role as well as the role of others. Finally, they recognized the value of media relations in the bigger scheme of things. Strategy Frame Table 2 highlights the strategic thinking of the management and how intention, as expressed by strategy, serves to define the approach taken toward defining objectives.

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Table 2: Strategy Frame

Probe
What are the companys objectives? Prior to implementation, what alternative strategy might be considered?

Food Lion Case

This problem has been festering for a long time before it made headlines to maintain the status quo by attempting to hide problems. Address the problem directly. Make amends. Demonstrate responsive and responsible behavior. Its suspected that much of the decision making was driven by fear of litigation.

Tylenol Case
To protect the lives of its customers.

Observation
J&J took a proactive view of the crisis looking for a solution. Food Lion operated on the defense looking for the problem to disappear. The world view of the two companies drove them to respond with their first ideas. Legal issues are always a concern. They bring resolution by way of a judgment. Even in the legal process, companies often try to influence the judgment in the media. In this context, Food Lions counsel failed its client.

Stonewall and let the problem rest with civil / criminal authorities. Cooperate, but dont become a full partner in finding a solution. Phase one of Johnson & Johnson's public relations campaign was executed immediately following the discovery that the deaths in Chicago were caused by Extra- Strength Tylenol capsules. As the plan was constructed, Johnson & Johnsons top management put customer safety first, before they worried about their companies profit and other financial concerns. Media is provided with timely and current information. The company shares its plans and its actions freely. Johnson outlined his companys responsibilities to: "consumers and medical professionals using its products, employees, the communities where its people work and live, and its stockholders." Johnson believed that if his company stayed true to these responsibilities, his business would flourish in the long run. J&Js view was that if their customers were protected then there company and its brand would be saved. J&J invited government agencies, independent scientists, trade organizations and others into the decision-making matrix. Protect our customers. The public relations decisions made as a result of the Tylenol crisis arrived in two phases. The first phase was the actual handling of the crisis. The comeback of both Johnson & Johnson and Tylenol was the second phase in the public relations plan. The planning for phase two began almost as soon as phase one was being implemented.

How much of the response to the crisis is being driven by legal versus brand considerations?

How will the strategy support relations with the media?

Who are the stakeholders?

Media will push back and dig deeper into the story. For lack of access, the media will control the message. The management viewed the primary stakeholder group as themselves. Followed by investors. Other stakeholder groups; customers, employees and community were given little attention.

Making the media a partner in the process of telling the story works to the advantage of a company. Both companies had the same or a similar set of stakeholders. The difference in the two cases is significant with respect to how the stakeholders interests were considered and in the response to stakeholder concerns. In both cases the issue of success could be express in levels of stakeholder understanding and clarity. Food Lion sought to reduce clarity. Transparency of action was the major difference. Also, the willingness to engage their publics made a significant difference. The central focus of the media campaign was polar-opposite. J&J viewed the crisis as a process, while Food Lion saw it as an event.

How will we know if we are successful what steps will take us there? Who are the decision makers in this situation? What do we need to accomplish?

Food Lion viewed a successful outcome in terms of a low level of public attention. The management team as influenced by their attorneys. Keep our stock price up. By extending the crisis by using stonewalling tactics the crisis lingers and flares up over the course of many years.

Timing?

As shown in Table 2, the ethical challenges presented by each crisis situation have a major role in determining the selection of a strategic reply. J&J combined a non-consequential and consequential view while Food Lion focus was completely utilitarian. By adopting a totally

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self-interested perspective, the management of Food Lion alienated all other stakeholders.

Implementation Frame Tactics follow strategy. They are meant to serve / achieve particular objectives and move the campaign forward according to the direction set. Table 3 illuminates how behaviors and actions serve to demonstrate / reinforce an organizations message. Table 3: Implementation Frame
Probe Food Lion Case
To reach its desired objectives, the company refused access to the media, claimed foul, denied all allegations and placed blame on others the union, ABC Dateline, and employees.

Tylenol Case
As the credo stressed, it was important for Johnson & Johnson to be responsible in working for the public interest. The public and medical community was alerted of the crisis, the Food and Drug Administration was notified, and production of Tylenol was stopped. The first important decision, that put Johnson & Johnsons public relations program in the right direction, was made immediately by the public relations department with complete support from the management. This decision was for the company to cooperate fully with all types of news media. It was crucially important because the press, radio, and television were imperative to warning the public of the ensuing danger. Without the help of the media, Johnson and Johnson's program would have been completely ineffective. The company chooses to speak through its senior management using a wide range of media. The company immediately alerted 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. Johnson & Johnson, along with stopping the production and advertising of Tylenol, recalled all Tylenol capsules from the market. The recall included approximately 31 million bottles of Tylenol, with a retail value of more than 100 million dollars. (Broom, Center, Cutlip, 381) The full resources of the company are committed budget is essentially unlimited. The Washington Post also mentioned that Johnson & Johnson

Observation
J&J used tactics that informed, influence, provided logical underpinnings to their statements and framed the process and the expected outcomes of their actions. Their disclosure was as full as Food Lions was limited.

What behaviors did the company use to support its objectives?

What channels of communication does the company choose?

Company chooses to speak to the public through its legal spokesperson. Consistent with the denial and delay tactics, the company seeks to extend the crisis in hopes that it will become less and less newsworthy over a long period of time. The thinking is that the audiences will lose interest in the story.

While Food Lion sought to persuade using tactics that distanced them from their audience, J&J did the opposite. J&J took action to move the process forward at its own speed, but always taking the opportunity to make its points.

What is managements timeline for dealing with the crisis?

What budget are we willing to expend?

Sufficient funds to defend ourselves in court and to fend off the efforts to organize a union.

The budgets decided upon are a reflection of managements focus as opposed to the need.

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Table 3: Implementation Frame

Probe Food Lion Case
To reach its desired objectives, the company refused access to the media, claimed foul, denied all allegations and placed blame on others the union, ABC Dateline, and employees.

Tylenol Case
As the credo stressed, it was important for Johnson & Johnson to be responsible in working for the public interest. The public and medical community was alerted of the crisis, the Food and Drug Administration was notified, and production of Tylenol was stopped. The first important decision, that put Johnson & Johnsons public relations program in the right direction, was made immediately by the public relations department with complete support from the management. This decision was for the company to cooperate fully with all types of news media. It was crucially important because the press, radio, and television were imperative to warning the public of the ensuing danger. Without the help of the media, Johnson and Johnson's program would have been completely ineffective. almost immediately put up a reward of $100,000 for the killer.

Observation
J&J used tactics that informed, influence, provided logical underpinnings to their statements and framed the process and the expected outcomes of their actions. Their disclosure was as full as Food Lions was limited.

What behaviors did the company use to support its objectives?

In Table 3 it is possible to see how behaviors and actions reinforce corporate messages. The observations make it clear that words not grounded by objective proof in the form of action give rise to suspicion concerning the true intent of management decisions. Evaluation Frame Table 4 appears to show that measurement criteria related to a crisis are only considered at the macro-level in the initial plans. While after action reports may contain significant amounts of data; these are the result of mining artifacts rather than recording responses in relation to established quantitative goals.

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Table 4: Evaluation Frame

Probe Food Lion Case
Food Lion was seen as self-interested stakeholders were given little consideration. What were the effects of the implementation plan?

Tylenol Case
Johnson & Johnson, on the other hand, was praised for their actions by the media for their socially responsible actions. Along with the nationwide alert and the Tylenol recall, Johnson & Johnson established relations with the Chicago Police, the FBI, and the Food and Drug Administration. This way the company could have a part in searching for the person who laced the Tylenol capsules and they could help prevent further tampering. Johnson & Johnson was given much positive coverage for their handling of this crisis. According to the article, "what Johnson & Johnson executives have done is communicate the message that the company is candid, contrite, and compassionate, committed to solving the murders and protecting the public." The brand stabilized and then grew and the company prospered by reinforcing its positive view J&J is a good corporate citizen offering good products. The full range of stakeholders feel the company has made an extraordinary effort to satisfy their concerns the campaign adds to the positive reputation of the firm Brand satisfaction.

Observation
Behaviors established an image in the public mind. Actions that support words are a critical part of leading in a crisis.

What metrics could be used to evaluate the outcome?

Revenues, share price, growth rate, crisis costs,

While a number of metrics could be established in both cases the metrics were establish only as an afterthought. Public impressions of the companies ultimately turned in relation to their concern for their customers. Both cases are now considered classic examples of how / how not to manage a crisis. How do employees of these companies feel about themselves?

What were the consequences?

What are people saying about the campaign? What other indicators will we look at?

From very profitable to essentially breakeven unsatisfied stakeholders formed a new group to challenge management. Another crisis associated with misdated baby formula is created. Stakeholders, other than management, view the campaign negatively.

New stores opened, stock price, employee turnover other operational metrics.

As a broad / general statement, crisis management is evaluated in terms of emotional / attitudinal response by stakeholders in relation to managements demonstration of leadership. That is, their ability to meet / understand the true nature of the event, work to stabilize the situation, and show a path forward. J&J was able to demonstrate awareness and provide the necessary leadership. Most importantly, from a public relations perspective, they were interested and attentive to the information needs of their publics as shown by the post event data. Conclusion Mediated communication in a crisis situation represents the link by which an organization meets the information needs of its stakeholders. Because crisis communication is mediated, a

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company must be conscious of the needs of the media and also be prepared to deliver its message independent of media channels that may shape or reshape messages. In both cases that have been examined, the role of values / ethics in development of strategy and tactics is striking an organization in crisis is challenged to demonstrate its character. Beyond that its a matter of skill / creativity. The observations abstracted from these cases provide a template for lessons learned in relation to best practices. For example, in the area of media relations best practices place emphasis on initiating and maintaining regular contact with stakeholders. In the case of J&J, their long term relationship with regulatory agencies established trust among the stakeholder group including the media. Similarly, best practices dictate that tactics match the strategic intent. Again in the case of J&J, their offer to pay a reward, removal of stock from store shelves, consoling the families, transparency of actions all served to reinforce the companys message in dramatic / believable ways. Finally, once again J&J demonstrated best practices by maintaining pace with the crisis and then moved ahead of it to insure their message was delivered to the affected publics. This was most evident in their use of video news releases that were packaged and distributed to their own proprietary network of media outlets. Finally, J&Js integrated approach strengthened their effort. By drawing together a team of managers and stakeholders they were able to benefit from the thinking of a diverse group. And, by sharing their thinking with the media they expanded the team that was committed to getting the story right. (End)

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References

Error: Reference source not foundKaplan, T. (1982). "The Tylenol Crisis: How effective public relations saved Johnson & Johnson. Retrieved 10/13/2008 4:12 PM; http://www.aerobiologicalengineering.com/wxk116/TylenolMurders/crisis.html