Monday, May 24, 2010

Drug recalls not hurting J&J - yet

Institutional investors who own the stock said that J&J still appears to be getting the benefit of the doubt because the company earned plaudits for how it handled the Tylenol cyanide scare in Chicago in 1982.


Why does J&J stocks rise even though there's a flagrant recall of the drug Tylenol lately?



Well, very simple, the reason is as stated above, that is the company is well known for how it handled a similar incident in 1982. People have died from that incident and yet J&J has successfully claimed back the confidence of the citizens.


In business, it is crucial & imperative to build a rapport with your consumers and gain their trust. It is therefore a risky move to betray their trust to gain the trust of someone else.


What do I mean here? Well, many companies fall into the pithole of short term benefits. They try to cover up the incident until it actually exposes itself but that's actually too late. You don't need someone else to tell you about your own problems.



The worst part is that you yourself already know the problem beforehand and yet you decided to conceal it. You hide it from the rest in an effort to earn more profits in the mean time but little do you know, the public actually hates the way you handled the incident and thus they will stop buying from you altogether. The loss is then devastating and perpetual.


The mark will not leave the consumers for they feel betrayed.


Conversely, if you are constantly on the look out for their well-being, they will slowly trust you more and more, little by little. It does not matter how long it will take for trust is arcane. They might take years but more important, they will come to trust you eventually. That's the whole point.


Once you earned their trust, you will have to sustain it. An anomaly will be more than enough to obliterate the rapport between you and your consumer. Similarly, if you can sustain the relationship throughout by being honest, then you are definitely safe for the consumers will still stand by you regardless of what happens.



The moral of the story is, if you cover their back, they will cover yours when you need them.


It's a symbiosis.



Credits -cnn, -biochem, -businessweek

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