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Communication Memo

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Communication memo
Heart Implants Dilemma
Deborah Rojas:ID#65228 Masters Health Administration
25th April 2014

COMMUNICATION STRATEGY MEMO
GUIDANT CORPORATION (A)

DATE: November: 1, 2005
TO: Ms. Rachael Sullen, Corporate Communication, Vice President
FROM: Deborah Rojas, Management Consultant
SUBJECT: Heart Implants Dilemma

INTRODUCTION
Guidant Corporation (A) heart implants dilemma and the corrective action plan that is needed. Technical Research and analysis show (ICD) and pacemakers which were developed by Guidant Corporation (A) for the purpose of giving long life as stated in your company slogan “It’s a great time to be alive” has evidently been a source of recent deaths to patients. Assessing the situations that have arisen and determining the best course of action that is needed to alleviate the company image. We believe that proactive communication of all relevant information will enable better management of patients that utilize this therapy."
Also, the merger with Johnson & Johnson will be greatly affected if the necessary actions are not taken. This is an internationally based sound organisation and because of this, drastic actions calls for drastic measures. Therefore it is necessary to refocus and realign this organisation whereby cutting losses and starting a new firm, with new vision and mission can be possible.

BACKGROUND
The organisation is globally located and is the second largest producers amongst two other defibrillators companies. Further aspects of the organisation includes:- * In 2004 sales were $3.77 billion, assets of 5.4 billion with 12,000 employees. During 1994-2004 sales increased from 27% - 47%.

Heart Implants Dilemma
November 1, 2005
Page 2 of 5

* The ICD systems are costly with patients having to pay up to $40,000 per system inclusive of doctors and insurance fees. Regular check-ups are made every 3 months, and batteries must be replaced every 5 – 6 years with additional costs to patients.

* In April 2005 Guidant shareholders were at talks about a merger between Johnson & Johnson. A $76 per share deal worth $24.4 billion was approved. Guidant was a major player in this industry and Johnson & Johnson saw the potential of the deal.

* In March 2005, there was one (1) death because of ICD defects, and also in June 2005 there were other deaths related to malfunctioning of your pacemakers.

* In June 2005, a recall of 50,000 ICD was made, with a further 109,000 also being recalled in September 2005. Again in September 2005 Guidant identified problems with two of its pacemaker model which can lead to death.

* In September 2005, a class action lawsuit was filed against Guidant Corporation by Viles & Beckman. Also, Guidant had already been sued before by another company in which millions of dollars were paid.

* In June 2005, Guidant stated that its products were defective and because of this their share prices fell from $74 to $63.

* In September 2005, The New York Times published the Food and Drug Association (FDA) office of Criminal Investigation was investigating Guidant, and two of your employees were contacted by the criminal investigator.

* Surveys were conducted on patients for the use of Guidant products, but emails were sent out from inside the organisation stating that Guidant motive was for financial gain.

Heart Implants Dilemma
November 1, 2005
Page 3 of 5

Guidant Corporation has been in existence for over fourteen years claiming to offer quality of life for its clients. Instead, there are numerous issues that cannot be ignored and decisions have to be made if the organisation is to cut its losses and redirect its focus for a new organisation.

CRITICAL ISSUES

Death of patients
Patients are dying because of these products, this cannot happen, patients are paying lots of money for these products and expect the best that money can buy. Products were being recalled because of malfunctioning/defects, which was increasing in amounts between two of your systems, namely ICD and pacemakers. Deaths were the end result for some clients.

Decline in Sales
Guidant stands to lose millions of dollars because of its lack of decisive actions in order to correct the problems. Therefore Guidant stands to lose its organisation.

Lawsuits
A class action lawsuit was filed against Guidant, because it had prior knowledge of their products defectiveness, but failed/delayed in notifying of same to public/physicians in a timely manner. Presently there are more suits pending. Millions of dollars has already been paid off and more will have to be paid.

Criminal Investigation
Attention has been drawn to the fact of inability of following an agreement of alerting the government of product failures, because of this two of your employees were contacted by investigators. Your company’s name is being published in the media in a negative light.

Company Image
Surveys were used for financial gain/incentive to the company and because of this further negative effects are related to Guidant image and public confidence. Guidant Corporation image has been greatly tarnished, meaning with the total in losses and there seems to be more losses pending, it will be very had to recover and protect this image.

Heart Implants Dilemma
November 1, 2005
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Recommendations 1. Contact families by telephone/email of patients who died and offer to pay for funeral arrangements. These families must be made aware that you care and are truly sorry for your products causing such harm to them. (Action: President September 2005)

2. Contact shareholders by calling a meeting with them, about our decision to cut our losses. This organisation has been severely damaged by these outcomes; decisions should be made into refocusing your mission and vision to them and deciding if forming a new organisation would be the better thing to do. (Action: President November 2005)

3. Forward recalled systems to our research department for total redesign and systems checks with our research department. We will no longer be offering our old products, new products will be developed. (Action: Product Development Manager September 2005)

4. Speak to the public by the media about situation and offer apologies. The public must be made aware of concerns and therefore be encouraged to look to the future. (Action: Corporate Communication Manager September 2005)

5. Refund any monies to the public, which caused issues because of our products. (Action: Accountant Manager September 2005)

6. Contact legal advisor by having a meeting, for clarification on lawsuits. Legal team must be able to make things right, we will pay out the necessary monies. (Action: Legal teams, Accountants November 2005)

7. Implement quality standards by having meetings/memos for all members of staff. They must all be given the mandate to follow our new code of ethics, with policies and procedures and also be given the new rules of the organisation. Action: Managers January 2006)

Heart Implants Dilemma
November 1, 2005
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8. Follow-up checks and balances are made before any product is sold. New products will be scrutinised and totally given the assurance of its viability. (Action: Product Design/Development Manager 2006)

Guidant Corporation has been in existence for over fourteen years (14), in your slogan it stated that this company will provide a great life. Allegedly, lack of commitment and assurance has shown to assist in bringing discrepancies. Company history has been shown to be the second largest defibrillator in this industry. This organisation should consider redesigning and redeveloping products that will bring a greater quality of life for all. This organisation can reign again.

DJR

Guidant Corporation (A)
123 Riversdale Avenue
Indianapolis

November 1, 2005

Dear Clients and Customers
Our organisation is in the business of selling health for a greater life for our clients; our slogan is “It’s a great time to be alive”. The organisation has been experiencing failures from products.
Even though decisions were made to repair patients ICD at no cost to you it definitely cost the organisation tens of millions of dollars. We are committed to doing a better job of communicating with patients and physicians. We continue to implement new standards for product performance communication and to enhance our quality and design systems.
We must refocus our existence and decide to cut our losses; we can rise again if we realign ourselves in the building of new and improved products.
Our history has shown that we provide a beneficial service to our clients, we were developed to provide health from our heart implants systems. Our focus now is to take the necessary actions that will correct the situations. Our company will once again be the second largest defibrillator provider.
We would continue to do all we can to have better performance from our products. We appreciate your service and do look forward to you being here for us when we re-establish ourselves in the not too distant future.

Sincerely,

Dr. Paul Weaver
Chief Executive Officer

Enclosure

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