Crisis Management Can Be The Important Key To Your Companys Survival
A crisis can be a powerful impetus to your companys short and long term survival.
Contrast these two separate incidents involving world renowned products.
In the fall of 1982 , seven people died after taking Johnson and Johnsons Extra-Strength Tylenol capsules that been laced with cyanide.
Guided by the companys credo that the focus of its company was its customers the CEO set on a course of alerting the public to the dangers and recalled 31 million bottles of the product , at a cost of then $ 100 million .
The company told customers that it would stop production until it could provide tamper resistant caplets and launched an investigation to find the culprit . The company also offered to exchange the millions of bottles of Tylenol capsules that had already been sold for Tylenols tablets.
Costly, but it saved and ultimately prospered the firm.
Though initially the market share fell from 34 % to eight, by the end of the year it had rebounded to 24 % percentage.
Years later the company had more than regained market share.
The crisis had given the company in essence to show that it had a serious commitment to product safety and quality to its products.
This model of action should have given other businesses a template example for maintaining credibility and customer trust through disasters.
However Source Perrier did not follow this template model in their experience in the marketplace.
In 1989 Perrier was the leading imported water purveyor in North America with about 6 % of the market share in the United States.
The naturally sparkling water comes from a mineral spring in the south of France.
In 1990 Benzene, a poisonous organic liquid, that was known to cause cancer in rats, was found in the product Perrier Water sold in the United States sales market. The concentration of this harmful solvent was found to be 4 times the legal allowed limit for Benzene in drinking water.
At first Source Perrier said it was an isolated incident and reassured people that the underground spring that was the source of the product was surely virgin, pure and unpolluted.
An employee had cleaned some bottling equipment with a fluid containing benzene.
The company reassured the public that The problem had been immediately dealt with .
The company recalled 70 million bottles of the product from the North American market.
A few days later, it said the contamination was caused when employees failed to replace charcoal filters that screen out benzene, a chemical impurity in the natural gas in the water.
The company changed its story yet again, saying that the chemical Benzene is naturally present in Carbon Dioxide .
The company insisted that the Benzene which was normally present in the Carbon Dioxide which the company added to create the fizz should have been normally filtered out in the bottling process.
As a result of the admission that the carbon Dioxide had been artificially induced to the Perrier Water product - the U.S. Food and Drug Administration made Perrier drop the words naturally sparkling from labels , since of course it had now been admitted by Source Perrier that the water product was artificially carbonated.
By 1995 sales in the United States of Perrier Water had fallen in half.
Even though in the coming decade the market for bottled water exploded Perrier had not even regained a portion of its previous market share.
The two diametrically opposed examples of how a company handles a crisis illustrated that crisis management is often the key to a companys very survival.
Handled well it can prosper the company.
Handled poorly it can very well destroy the firm itself. |
