james burke a career in american business
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THE BAD NEWS
Sep, 29, 1982, 4 deaths reported in suburbs Chicago , cause unknown.
Sep, 30, 1982, 1 more death.
Sep, 30, cause confirmed: Cyanide() poisoning Extra-Strength Tylenol Capsules.
The product by J&J
CEO: James Burke
OutlineThe Company: J&J
The CEO: Early Life, Career in J&J
The Product: Tylenol
Action and Question
J&J, early history
Founded 1886, New Brunswick, New Jersey
Founder: 3 brothers, James, Edward Mead, Robert Wood Johnson
Products: Antiseptic surgical dressing, Band-Aids
Major health product company
1926, most modern textile mill
1933, Robert II, called for a federal law increasing wages as well as reducing working week
1940, Credo, public and social responsibility (to customer, employees, community and stockholder), product quality
decentralized(resp&credit) , trust
Tied to every perspectives of regular concerns of business
Affiliate company
Balance btw (manufacturing, marketing), (financial, operating), (consumer, product) no single product > 5% of total revenue
Profit through just and ethical behavior
J&J, 1976 ~ 1981
1977: disposal diapers, sales > 100M
1977: baby shampoo, best-selling
1978: acquired kidney dialysis, $35M, heart valve lab, $26M
1979: acquire Technicare, CAT machine and ultrasound scanner, $125M
1981: 74/500 largest U.S. Industrials
4 Segments: Consumer, Professional, Pharmaceutical, Industrial
$5,400M Sales, $468M earning ~ from overseas
Blue-chip growth stock on Wall Street
CEO's Vision:
Commitment to science and technology
Broadening its base in the health-care field
Tylenol's victory at consumer product over fight with Datril.
OutlineThe Company: J&J
The CEO: Early Life, Career in J&J
The Product: Tylenol
Action and Question
James Burke's Early Life
FamilyFatherMotherCollege of Holy GrassMAEconomics'421925, FebBorn Rutland VermontCatholichigh school
HBSMBA
turn-onmoralbizcorrupt
work'49WW-IINavyOkinawaMBA ProgramRevisionability and understanding(ethic, public relationship & Responsibility)P&Gsalesbrand management1953J&JProduct DirectorBand-AidsAdvertisingCompany3 VenturesDouble salarySth wrongNo doubtChallenge'473.5YrFamily company ??
James Burke's Career in J&J
Director of Band-Aids, bored, Quit, political battle
Director of New product
Micatin, Liquiprin
Nose Drop, cough medicine, chest rub
The General's congratulation, mistake paid
Acting director of advertising, merchandising of the operating company
Financial's trouble, mentor
VP of product management for the operating company
1962, President of Baby and Proprietary Product company
The General's challenge
1964, executive VP for consumer products
1965, President of Domestic operating company
Dumped Baby Liquid Creama lot $ loss
1975, The Credo Challenge
1976, chairman and CEO
Credo Challenge
We believe our first responsibility is to the doctors, nurses
and patients, to mothers and fathers and all others who use our
products and services.
We are responsible to our employees, the men and women who work
with us throughout the world.
We are responsible to the communities in which we live and work
and to the world community as well.
Our final responsibility is to our stockholders.
In meeting their needs everything we do must be of high quality.We must constantly strive to reduce our costsin order to maintain reasonable prices.Customers' orders must be serviced promptly and accurately.Our suppliers and distributors must have an opportunityto make a fair profit.
Users (1)
..... everything we do must be of high quality.
.... strive to reduce our costs in order to maintain reasonable prices.
Customers' orders must be serviced promptly and accurately.
Our suppliers and distributors must have an opportunity to make a fair profit.
Employee (2)
.... be considered as an individual.
...respect their dignity and recognize their merit.
...sense of security in their jobs.
... fair and adequate Compensation, working conditions clean, orderly and safe.
Feel free to make suggestions and complaints.
Equal opportunity for employment, development and advancement for those qualified.
.... provide competent management, and their actions must be just and ethical.
Communities (3)
... good citizens - support good works and charities and bear our fair share of taxes.
... encourage civic improvements and better health and education.
We must maintain in good order the property we are privileged to use, protecting the environment and natural resources
Stockholders (4)
Business must make a sound profit.
We must experiment with new ideas.
Research must be carried on, innovative programs developed and mistakes paid for.
New equipment must be purchased, new facilities provided and new products launched.
Reserves must be created to provide for adverse times.
When we operate according to these principles, the stockholders should realize a fair return.
OutlineThe Company: J&J
The CEO: Early Life, Career in J&J
The Product: Tylenol
Action and Question
Tylenol
Developed by McNeil
'60~'70: a prescription drug, a generic compound, advertised through medical trade journal, doctors, pharmacists as a gentler-to-stomach alternative to aspirin.
1970, Superb opportunity: lower price retail market.
Early '70, study questioned aspirin.
'72~'74: sales of acetaminophen in retail mkt, 5% -> 13%, J&J accounted for 90%.
Hospitals trust Tylenol, most used, trusted by doctors.
1981: named as 1/15 top marketing success product
Brand Market Share
Advertising Expenditures, 1976~1981($000)
Threaten from Datril/Bristol-Myers>> price 1/3 cut>> 11.5% $1 less ($20M, 1% share)1976, J&J advertising 1976, Extra-Strength Tylenol, the most potent 1976, Tylenol 18.2% share1979, Tylenol 25% share, ES 70%'76~81: won 4 lawsuitsTylenol Sales1981: > $400M1983: e $500M
OutlineThe Company: J&J
The CEO: Early Life, Career in J&J
The Product: Tylenol
Action and Question
ACTION
CEO: took charge of management at corporate level.
FACT:
Cyanide was the cause.
In random capsules in the bottles of Extra-Strength Tylenol
Batch number MC2880 at a McNeil plant, total 93,000 bottles containing 4.7M capsules
A small amounts of Cyanide were used in QA testing, requested by FDA. Clarification with media.
Sales and Earning ($M)salesearning
19762522.5205.4
19772914.1247.3
19783497.3299.1
19794211.6352.1
19804837.4400.7
19815339467.6
Market Share, 1975In $680M retail market B
Anacin0.153
Bayer0.123
Bufferin0.123
Tylenol0.106
Excerdrin0.085
Other0.41
Market Share, 1981In $1.2B Retail Market F
Anacin0.14
Bayer0.11
Bufferin0.1
Tylenol0.35
Excerdrin0.09
Other0.21
AHPSterling'sBristol-MyersJ&J
BrandAnacinBayerBufferinExcedrinTylenol
1976$29,889$15,581$14,233$15,841$4,204
1977$33,981$17,995$12,922$16,252$12,721
1978$34,290$22,510$14,183$16,196$16,988
1979$39,671$25,072$14,818$15,959$23,670
1980$43,513$23,519$14,430$17,297$26,495
1981$44,641$24,650$20,321$19,603$36,766
total$225,985$129,327$90,907$101,148$120,844
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