Exxon Valdez and Tylenol Case Study

DE LA SALLE UNIVERSITY - DASMARIÑAS

Communication Arts Department

Lawrence G. Rawl, chairman and chief executive of the Exxon Corpoation was in his kitchen sipping coffee when the phone rang and received the news regarding the spilling of crude oil into the frigid waters of Prince William Sound, just outside the harbor of Valdez, Alaska. What was about to happen was the worst environmental disaster in the history of the United States.

These were the documented facts that media had portrayed across the United States and to the world: Exxon Valdez, a 978-foot tanker piloted by a captain whom later revealed to be drank, ran aground on a reef 25 miles southwest of the port of Valdez. The results caused a spill of 250,000 barrels, the largest spill ever in North America. The devastating results affects, 1,300 square miles of water, damaging some 600 miles of coastline and murdering as many as 4,000 Alaskan sea otters. The disaster also enshrined the name of Exxon in the all-time Public Relations Hall of Shame. (Seitel, 2000).

According to the book, Exxon’s dilemma broke down into five categories. First was the hesitation of Mr. Rawl if he is going directly and personally to Alaska. In an interview Mr. Rawl has said, “We had concluded that there was simply too much for me to coordinate from New York. It wouldn’t have made any difference if I showed up and made a speech in the town forum. I wasn’t going to spend the summer there; I had other things to do”. Secondly, Exxon failed to establish media control. Exxon, wanted to take charge of the news flow and give the public, through the news media, a credible, concerned, and wholly committed corporate response. One of the few things that I starting to learn about Public Relations, is anticipating the problem before it occurs. This is one of the dilemmas that Exxon Corporation had faced. Mr. Rawl took a full week to make any public comment on the spill. However when he did, he decided to blame others, for example, he blamed the U.S Coast Guard and Alaskan Officials. His impression persisted that in the light of the delay in admitting responsibility, Exxon was not responding vigorously enough. Exxon Corporation did a numerous strategy on how they will profile their company as an image of responsible company. However, they failed again. They made video releases to show how the company is cleaning the spill. It was the worst move of Exxon Corporation, because of the fact that the spill resulted in the death of more than 15,000 sea birds and numerous otters and eagles. The last dilemma is how they deal with the aftermath of the crisis. The company again submerged into controversy when Exxon USA sent a $30,000 contribution to the Alaska Radio Network, which covered the crisis on a daily basis. Unfortunately, the network, sniff a “conflict of interest”, flatly turned down Exxon’s attempt to favor on their behalf. It’s been obvious that this case illustrates that P.R credibility starts w/ management’s integrity and socially responsible actions.

To compare with Johnson’s Tylenol crisis, the public relations decision related to the Tylenol crisis and the product’s strong comeback came in two phases ( Cutlip, Scot, Broom 200). According to the book, Effective Public Relation, phase one is also known as “crisis phase”. It began when the news spread about the cyanide poisoning that first occurred in Chicago. At that time, the extent of the contamination was not immediately known; there was grave concern for the safety of the estimated 100 million Americans who were using Tylenol. First thing they did was to fully cooperate with the news media; comparing it to Rawls action CEO James E. Burke did it without hesitation. The media was key to warning the public of the danger that may occur. For the same reason the decision was made to recall two batches of the product and later to withdraw it nationally.

During the crisis phase of the Tylenol tragedy, every public relation decision was based on sound, socially responsible business principle, which is when public relations are most effective. Immediately, planning began for phase two, the comeback, and this involved a more detailed and extensive public relations effort that closely followed important marketing decisions and reached out so many audiences. The comeback began officially with a 30-city video conference via satellite, an innovative approach, a public relations agency responsible for Tylenol product publicity.

The Tylenol tragedy proved that public relations isa business of basis and that the best public relations decisions are closely linked to sound business practice and a responsible corporate philosophy. President Reagan also remark the works of Mr. Burks, he quoted; “Jim Burks of Johnsons and Johnsons, you have our deepest appreciation for livin up to the highes ideals of corporate responsibility and grace under pressure”. As for Exxon Valdez case, they are still facing the demons of the past, it became a long term effect on their company as far as credibility, responsibility and good communication is concern.

II. Situational Analysis

Environmental Issues, Implication of Exxon Valdez Crisis

At that time the case study was handed to me right after the class ended, I am already familiar about the story behind it. I have watched a couple of documentary in Natgeo (National Geographic Channel) when I was just in high school. However it didn’t synch in to my mind how it became a big impact into our society especially on our environment. That is why days after I’ve watched the documentary; I already forgot what I had learned about the tragedy of Prince William Sound. But when I started my research, began watching videos in “youtube”, my heart were struck in pain and it was a heart felt.

It may sounded cheesy or corny but when I saw those seabirds, (bald eagles, harlequin ducks, marbled murrelets and loons) marine mammals (those cuty large sea otters) and fishes submerged into that sticky crude oil; I felt anger among those people whom are responsible to their death. I read an article about the current implication of the spill that occurred in Prince William Sound, and it is entitled, “Exxon Valdez Spill: Could it happen Again”. According to the article, just hours before the oil spill a group of Valdez residents had gathered to the city council chambers to discuss the impact of oil on their community. A toxicologist and fisherwoman name Ricit Ott said, “It’s not a matter of what if, but when.”

The residents of Valdez were already anticipating of how inevitable an oil spill can be. Almost 20 years had past; the effect of the oil spill still lurks along the Alaskan shores. Even before the spill, scientists knew a drop of oil could kill a bird's egg. But after studying the impact of the Valdez spill, they now believe oil pollution to be at least 100 times more toxic to fish. Sciencedaily.com made an article about why oil still remains from Exxon Valdez disaster clearly prompted that, there are still many places where the oil still exist.

According to a recent study published in the journal Environmental Science and Technology, scientists from the National Oceanic and Atmospheric Administration (NOAA), the U.S. Geological Survey and Alaskan agencies foud that oil levels in the sands around the sound are much the same as they were when tests were done five years ago. The study says oil has seeped down 4 to 10 inches. However, they found out that there are microorganisms that live in water along the beach that eats the oil and can consume it completely. Also environmental factors such as climate can affect the reproducing of the said organism. "There may be enough nutrients, but the temperature may be so low that these micro-organisms cannot grow fast enough to consume the oil that lingers on these particular beaches," scientist said. Indeed the oil spill is a long term effect, and it may take 4-5 more decades before the oil will completely disappear.

Contrary to Exxon's ongoing campaign of public misinformation, not only are victims still suffering, but so is our environment. In February 1999, the government reported that only two of the 24 animal species hurt by the spill have recovered. And as the television reports covering the March 24, 1999 tenth anniversary of the spill showed, Exxon's oil remains on the beaches of Alaska today.

This is the paradox of what had occurred on that tragic morning of 89’, whereas a series of failed communication results to drastic consequences. Furthermore, if there is an environmental implication of the case that was Exxon, legal issues and its implication were also the main subject of that said crisis.

Legal Issues, Lawsuits against Exxon Mobil Corp.

(Includes Economic Damage Lawsuit)

The Exxon Valdez is considered to be a domino effect of an environmental disaster. Thus, after 5 years after the oil spill occurs, a series of lawsuit was filed against the company. A class action jury trial was held in federal court in Anchorage, Alaska in 1994. That jury awarded $5 billion in punitive damages to the plaintiff class. The plaintiff class consisted of 32,000 fishermen, Alaska natives, landowners and others whose livelihoods were gravely affected by the disaster. I did a little background research about what a punitive damage is. According to the website law.com, punitive damage are damages not awarded in order to compensate the plaintiff, but in order to reform or deter the defendant and similar persons from pursuing a course of action such as that which damaged the plaintiff. In my own understanding, punitive damage purpose is to sustain the effect of the disaster that Exxon Valdez has done, these involves restoration of the Alaskan ecology, supports the livelihood of the fishermen and Native Americans. The punitive damages award was on repeated appeal by the Exxon Corporation ever since. However, in June 2001, the Ninth Circuit Court of Appeals ruled that the original $5 billion punitive damages verdict was excessive.

In an article I read (www.marketwatch.com, September,2001), Exxon was implying that they had paid enough money in order restore the damage that was done by the their oil tanker. Exxon Mobil said that they already paid $2.1 billion to clean up the area and $300 million to compensate commercial fishermen, seafood processors and others. All told, the oil giant says it's spent about $3.4 billion as a result of the spill. Moving to recover punitive damages, the Alaskan plaintiffs over the summer filed a cross-petition asking the Supreme Court to restore the $5 billion awarded in the original suit. Ironically, and I was shocked that according to marketwatch.com, “While $5 billion remains a significant pile of money, it amounts to about 1% of Exxon Mobil's market capitalization”. Funny on why Exxon Mobil Corp was insisting to reduce the punitive damage. This one of the factors why Exxon Mobil Corps is a failure in the field of Public Relations, instead of showing the public on how they can be concern on the environmental issues that is affecting their company, they chose to lobby in Supreme Court and whine about how they put a lot of money in order to save their reputation. Again, they show the wolrd on how they are socially irresponsible and failed to comprise on ethical, corporate responsibilities.

Social and Economic Implication of the Exxon Valdez Crisis

As I have said earlier in my brief background and information of the case, Exxon Mobil Corp, acted too little and too late. The famous response of Mr. Rawl (who would forget his pres statement “I don’t have any time for that kind of thing”), which is the biggest mistake that Mr. Rawl had ever done. He created and image as if he was the main villain of a diabolical movie. Again, this is a bad P.R for their company that results to bad imaging to the public or society. Most importantly, the tragedy that happens to Prince William Sound affected not only Alaska but also the balance of ecosystem to the environment. Like I was saying earlier, the tragedy of Exxon Valdez causes a domino effect.

The oil spill destroyed more than economic resources, it also ruined the cultural foundation of Native Life. According to a journal that I have read, the tragedy considered one of the largest conflicts following the spill, because Alaska Native subsistence culture is based on a personal relationship with environment. This also affects the economic stability that occurred in Prince William Sound. A study shows that there was short term economic impact of the Exxon Valdez Oil spill. One of the economic impacts that transcend during those years 0f 1989-1990, was recreational Sport Fishes losses. In addition, tourism also losses it’s potential. Fifty-nine percent of businesses in the most affected areas reported spill-related cancellations and 16% reported business was less than expected due to the spill. Overall, long term effects on Alaska visitor industry are difficult to judge. Many business feel Alaska’s image is “tarnished” as a result of the spill.

Johnson and Johnson’s Tylenol “Before and After” the Crisis

According to Seitel (2000, The Practice of P.R), the single most important cases in the history of the practice of public relations occurred within four years of each other to the same company and product. For close 100, years Johnson and Johnson Company of New Brunswick, NJ, was the epitome of a well-manage, highly profitable, and tight-lipped consumer product manuftacturer.

Social Implication, Issues during the Tylenol Murder Case

When the Tylenol Case first struck on 1982, their top management decided to act. The first they did is to go public and recall the entire Tylenol products that were currently exit in the market. This major breakthrough in Public Relation history because J&J management didn’t hesitate to take responsibility and to claim that that was their company’s fault no matter what.

However, faith seems to embrace J&J predicament, because on February, 1986, a woman was reported dead from cyanide poisoning in Tylenol capsules. J&J permanently removed all of the capsules from the market. Once the product was removed from the market, Johnson and Johnson had to come up with a “campaign” to re-introduce its product and restore confidence back to the customer.

Technological Breakthrough (Tylenol’s Tamper Resistant Packaging)

Tylenol products were re-introduced containing a triple-seal tamper resistant packaging. According to Mitchel(1989) it became the first company to comply with the Food and Drug Administration mandate of tamper-resistant packaging. Furthermore, they promoted caplets, which are more resistant to tampering. In order to motivate consumers to buy the product, they offered a $2.50 off coupon on the purchase of their product.

Political Implication of Johnson and Johnson’s Effective Crisis Management

At the beginning of the crisis Tylenol products was accounted for 37% percent of the over the counter analgesic market (Media Relation Handbook). Six months later, after the re-introduction of the drug and accompanying public information campaign, the company’s share was up to 30%. President Ronald Reagan praised Burke, saying, “In recent days you have lived up to the very highest ideals of corporate responsibilities.

III. Consequence/ Value of the Study

Exxon Mobil Corp made a lot of impact in the society especially in our environment. It has the most numerous mistakes a company that has done. J&J Tylenol on the other hand be and still is being appraised as one of the most socially responsible corporation. The core value of this two case is to admit mistake without hesitation and take full responsibility on all the damage that have been made, whether it’s their fault or not. Sadly, on the part of the Exxon Valdez tragedy, a lot of consequence took place. Our planet now is stained with a deadly chemical that also known as “crude oil”. Though bird, otters, and all those wildlife of Alaska that was been affected cannot speak, the aftermath of the Exxon holocaust is still evident up to this point in time. The outcome of the Tylenol incident however made a breakthrough in the field of Public Relations. A lot of company nowadays is following the path and the campaign strategy that Mr. Burke has showed to the world. Indeed, Mr. Burke is a “Folk Hero” on the eyes of the public. He’s been through zero to hero, and I guess this is what true Public Relation is all about.

The parallelism between Exxon and Tylenol is questionable, because what Exxon did to its crisis was quite paradoxical and inconsistent. Paradoxical in a sense of, they did what they have to do but the situation was handed by some irresponsible CEO that only care about is the company’s own profit. That is why every strategy (publicity) they do was seems contradictory to what they are trying to show to the publics.

IV. Conclusion

My journey to gaining information about these two case studies was quite a ride. When I read J&J’s credo, I was amazed and inspired because they show empathy not only to their customers, but also to society as well. “Practice what you preach” and indeed they do. Their “credo” is very inspiring to those who are taking the path of Public Relation profession. I want to conclude in this paper that no matter how you put yourself into a convenient predicament, it wont work unless you show to the society that you are really sorry for mistakes that had been done.

Lastly, Exxon never took responsibility for what happened. On the other hand, it was proven that Tylenol was not associated with the tampering, yet it still immediately assumed responsibility. This in turn restored the confidence in the consumer about the safety of its product. Exxon completely failed at this task since it took a few days to send individuals to help clean up the oil spill in Alaska. It proved to the people of Alaska and the world that it did not care about the environment or the damage to the tourism and fishery industries in Alaska, which the country greatly depends on.

V. Personal Learning and Insight

Overall, the “gist” of these case studies is about “crisis management”. J&J did it with grace under pressure; unfortunately, Exxon Mobil Corp didn’t establish enough good P.R for its public that is why they suffer the consequence. Indeed, they spend billions of dollars, too bad they still get a black eye for their actions. I also have learned that contingency plan is very critical in handling crisis management. According to Lexicon (Crisis Management), Exxon’s planes were untested; its action-reaction was far too slow. The result was it failed to gain upper hand in the critical moments of their crisis. The company was simply overwhelmed by the rapidity and the magnitude of the events. I suppose, Exxon still finds itself in the midst of the crisis. Tylenol incident on the other hand is considered a textbook of what to do in a critical crisis management. In my own opinion the appearance of Mr. Burke on Donahue’s 60 minutes is quite innovative and very inspiring. They acted quickly and they acted with empathy and showed the public that they really care about the situation.

VI. References

The Practice of Public Relation (Fraser P. Seitel, 7th Edition, 2001)

Effective Public Relation (S.M Cutlip, A.H. Center, G.M Broom)

Crisis Management

Picou, J. Steven, and Duane A. Gill. Survivors of the Exxon Valdez Oil Spill. 17Mar. 2000. 1 Dec. 2006 .

Alaska Oil Spill Commission. Feb. 1990. Spill: The Wreck of the Exxon Valdez.

Exxon Valdez Oil Spill Trustee Council. Nov. 1994. Exxon Valdez Oil Spill Restoration Plan.

Exxon Valdez Trustee Council. Jan. 1999. Update on Injured Resources.

http://www.jomiller.com/exxonvaldez/report.html

http://www.law.com/jsp/article.jsp?id=1189501362640

http://iml.jou.ufl.edu/projects/Fall02/Susi/exxon.ht

Mitchell, Mark L., Economic Association International 1989: The impact of external parties on brand name capital: the 1982 Tylenol poisoning and subsequent classes

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Name

EDNOR ANTHONY SATORRE

I. Background Information

When I started my research regarding the two case studies, one of the issues I notice is the responds of their so-called “top management”. However it has differences on they how respond about the crisis that had occurred on these two gigantic companies. These two cases had made a significant in the world of Public Relation and how it qualifies as a “textbook example” of what to do and what not to do in a crisis. To further elaborate my learning I decided to retell brief information about the said case studies. I want to start with Exxon Valdez case which occurs 7 years after the Tylenol crisis.

In the history of public relations practice, few events have been handled questionably, received as much as global criticism, and had such far-reaching implications as those involving the Exxon Corporation on a Friday morning in 1989.

Exxon-Valdez/ J &J Tylenol Case Study

Subject/ Topic