Let us go back to the Tylenol case. Only 7 people died and it seems that Johnson & Johnson, the manufacturer, had nothing to do with it. What did the firm do? It was honest, direct, apologetic, and definitely not in denial. The result: Johnson & Johnson is still around and so is Tylenol. We Americans love people who are ready to admit their mistakes. We truly forgive and forget.
Why will there be no Merck or no Merck as we know it left in a few years time? By not following the example of Johnson & Johnson, Merck is essentially destroying shareholder value each day. At some point, shareholders will simply abandon the stock. According to David Schwab and Ed Silverman of the Star Ledger, "...a growing number of its 60,000 employees, including about 8,000 in New Jersey, are worried enough to rethink their future." And finally the customers of Merck - How many people will be willing to risk their lives for too long by consuming Merck products? In summary, customers, employees, and shareholders of Merck are ready to abandon the company but the company management, instead of admitting its mistakes and offering its sincere apologies, is getting ready for a big fight with both Vioxx victims and Merck shareholders.
What does Merck management hope to gain? At iProceed, we could not come up with a single value-creating rationale for Merck's behavior. It seems that the company executives are simply determined to prove that they were/are right and everybody else is wrong and to do that they are willing to destroy what used to be a great company.
Here are a few recommendations on shareholder value creation:
Why will there be no Merck or no Merck as we know it left in a few years time? By not following the example of Johnson & Johnson, Merck is essentially destroying shareholder value each day. At some point, shareholders will simply abandon the stock. According to David Schwab and Ed Silverman of the Star Ledger, "...a growing number of its 60,000 employees, including about 8,000 in New Jersey, are worried enough to rethink their future." And finally the customers of Merck - How many people will be willing to risk their lives for too long by consuming Merck products? In summary, customers, employees, and shareholders of Merck are ready to abandon the company but the company management, instead of admitting its mistakes and offering its sincere apologies, is getting ready for a big fight with both Vioxx victims and Merck shareholders.
What does Merck management hope to gain? At iProceed, we could not come up with a single value-creating rationale for Merck's behavior. It seems that the company executives are simply determined to prove that they were/are right and everybody else is wrong and to do that they are willing to destroy what used to be a great company.
Here are a few recommendations on shareholder value creation:
- Distractions are bad, particularly those from lawsuits that can last for decades.
- It is better to admit your mistakes, apologize, compensate the victims, and move on. Not much will be lost except for short-term pain.
- Always do the right thing. Criminal activities can go unpunished because of many reasons but that should be no reason to become a criminal.
- Don't make business personal. The world will not come to an end if you simply admit that you made a wrong decision.
- Respect human life. Nothing bothers people more than a human life lost due to greed.
Recommended article: Merck's' flawed Vioxx recall strategy