Case Analysis of Coca Cola India Crisis Essay
Carder Higinbotham Case analysis of the Coca-Cola India Crisis 1. What are the key problems that Gupta should focus on in the short term and in the long term? In looking at the situation, hindsight is always 20/20. Gupta would have benefited from the eight steps of crisis management. Step 1: Get control of the situation. Gupta needed to define the real problem, use reliable information, and a measurable communication objective for handling it. Step 2: Gather as much information as possible:
Gupta quickly reacted to the situation without taking a fair and objective look at the facts in the statements being made. Gupta’s reaction was emotional and attacked the credibility of the Center for Science and Environment ( hereafter CSE). Step 3: Set up a centralized crisis management center: As Gupta was gathering the right information from the right people he should have made arrangement for creating a crisis center for the constituents, that is, media, employees, customers, and government. Creating a crisis center would have made Coke India look more sympathetic and human.
Instead, Gupta went on the attack and published a letter that was callous and focused only on the potential impairment of business; not the safety of lives. Step 4:Comminicate early and often: Gupta should have made a plea in person especially since the crisis involved the threat to lives. He could have avoided any panic by hiring a public relations firm to assist him during this process. He should have expressed concern for the public safety rather than focus on profits and conspiracy theories. Step 5:Understand the media’s mission in a crisis:
Gupta should have created an alliance with certain member’s of the media. A public relations firm would have been an asset. Step 6: Communicate directly with affected constituents: Gupta needed to communicate directly to his employees the position of Coke during this crisis. The employees were the mouthpiece to the community and the media. Everyone one needed a consistent story. Half-truths and rumors would only inflame the situation. Gupta also needed to consider which constituents were the top priority. Communicating with these constituents would filter the information that would be published.
In this case, I believe he should have been communicating not only with the media but also with the government as well as any customers affected by the crisis. Step 7: Remember that business must continue: At this point Gupta needed to take a step back and look at which areas of the company will be most affected by the crisis. Are there certain divisions that are short handed because the impromptu crisis management team had taken them away from their usual duties? Did they need to start thinking about a promotional campaign to rebound from the situation?
Did they have an exit and re-entrance strategy? Step 8: Make plans to avoid another crisis immediately: Gupta should have been somewhat prepared for this crisis because Coke has had similar incidents in the past such as the Belgium incident. They should have followed the lead of Coke Belgium by not only implementing an aggressive public relations campaign, but also put a crisis management plan and team in place while the motivation was still high to learn from mistakes. Long Term:Gupta needs to integrate the eight steps of crisis management into a crisis policy.
This policy should include a campaign to assure customers of continuous safety monitoring, as well partnering with the CSE, government and other evaluators, and regulatory organizations. Together they could create and implement a consumer safety policy. They should also have set up a public relations campaign that highlights combined efforts to exceed safety and environmental standards of excellence within the industry. Short Term: Immediately there should have been a press conference with Gupta stating that they are doing everything imaginable to isolate contaminated bottles for consumer safety until further testing could be done.
This would show that Coke puts public safety before profits. Pepsi and Coke did a good job of showing a united front, however, there should have been more emphasis on the effort to provide safety as well as investigating the contamination claims. 2. How would you evaluate the crisis? As the number one brand in the world, Coke has defined excellence in quality and marketing. Vilifying Coke is like vilifying Disney World or Hershey’s Chocolate. With all the resources that Coke has, there was no concentrated effort by Corporate Coke (America) to rally behind India.
In my opinion, it seemed that if Coke had presented a global united front, emphasizing public safety, then some of the repercussions (Michigan State’s Coke boycott) could have been avoided. The initial plan to “deny, deny, deny” and “attack, attack, attack” showed an uncaring and unsympathetic face to the world. The public perception was that the soft drink industry was more interested in profits and maintaining their brand positioning rather than aggressively investigating the claim and recalling the product. The outright assault on the validity of the CSE’s findings was a mistake.
It would have been better to cooperate with the CSE in order to get third party testing done. The CSE, was a respected organization. It generates awareness of consumer health and well-being. Coke immediately criticized the validity of the CSE testing results. . Their initial efforts of the myth versus fact website was effective. However, in my opinion, when Coke and Pepsi united for the press conference, it seemed that it was big corporation versus public safety advocacy groups. Though showing solidarity was effective, the companies should have put more emphasis on the public safety.
Crisis is not new for Coke. The Belgium debacle should have given them an outline of how to deal with the crisis. Coke Belgium issued an immediate recall and a public statement that emphasized that safety came first. Hiring an independent toxicologist to test and report on findings would have been more effective. 3. How well prepared was Coke India to deal with the CSE’s allegations? Gupta should have been prepared by the Kinley water crisis. The Center for Science and Environment had evaluated the product. They reported evidence of pesticides in Kinley Water which was a Coke brand.
The Center for Science and Environment further stated :“if what we found in bottled water was correct, then what about soft drinks? ” This is a direct statement indicating the soft drinks were next on the list. The Company turned a blind eye to this impending disaster. Coke essentially ignored the Kinley water controversy and luckily it faded away before any real impact was made. Furthermore, there had been no regulation of the soft drink industry at the time when the reports were published. With no regulation in the soft drink industry there was fertile ground for controversy.
What is surprising is that the company had excellent record of corporate social responsibility policies. Coke had dedicated itself to environmental responsibilities in India, which included ground water surveys before selecting the sites. Maybe they were too over confident in the environmental assessment of the sites. Coke’s initial and quick response was to deny any and all allegations of tainting and fire back accusations of faulty science. Coke’s assurance that the product was safe was secondary to their claim of misleading and unaccredited data. 4. What is your recommendation for Coke’s communication strategy.
Who are the key constituents? Communicate early and often! Coke now has to restore confidence in its key constituents: customers, employees, investors, government and non-government organizations. The first recommendation would be to create an internal chain of communication. Communication about their crisis management plan needed to be sent out to all employees to reassure them that they are taking the necessary steps to correct the issue. The employees likely would talk to their families, neighbors and perhaps the press. There needs to be a consistent message from Coke within the community.
It would be advisable to have team meetings and crisis updates to make sure that everyone has a consistent message. There should also be an internal website with a directory of the crisis management team. The website would allow employees to share what they are experiencing or hearing from the community. The next recommendation would be to set up a press conference and partner with the media to assure them that Coke is doing everything possible in regard to testing for safety and removing any contaminants from the water supply before manufacturing. They need to be more forthcoming and transparent with information.
There should be a toll free hotline and a website for communications to update the public and questions and answers. There should be a link on this website to an emergency medicine website, hotline with tips and helpful health information for the community. There should be an interface with the government. Coke needs to create standard of excellence program that exceeds the PML , EPA and EED standards. Since Coke already has a good social responsibility policy, they should increase their environmental protection programs to concentrate on the Indian community.
It should coincide with their marketing of “Think local, act local”. Their marketing should emphasize Coke employees working in the local community to improve environmental conditions and quality of life in the local community. There should be an attempt to put together a think tank of scientists, Coca Cola members, Center for Science and Environment members, and government. This think tank would monitor and work to improve the pesticide levels in the environment. Finally Coke needs to put together a website for investors to keep an accurate account of sales stock prices.
This would provide updated information about Coke India and their quality control. This website should include photos and videos of Coke helping to restore value in the community by their environment efforts, and progress of the think tank with regard to the pesticide levels. 5. Could Coke India have avoided the crisis? Coke also had the Belgium example to follow. Belgium’s plan of action was swift and decisive. If Coke had responded quickly and adequately to the Kinley water crisis, this could have been avoided. Steps should have been taken to immediately to correct the Kinley water situation and subsequently he soft drinks. This would have been a perfect time to partner with the CSE to review the safety findings. An alliance with the CSE would have gone far for Coke’s public image. The steps that I proposed in question 1 should be taken. 6. What should Gupta do now? This is an opportunity for Gupta to publicly increase and exceed standards. This is a chance to generate awareness about the company’s focus on environmental issues. Coke should create a campaign to work with other environmental organizations and create a cleaner India and a greener Coke.
Gupta should focus most of his efforts in committing to public safety and improving the local community in India. Once faith is restored in the brand, the momentum will increase sales and thus investor confidence. Coke should not only implement a crisis management plan but also set up a strategic alliance with the CSE and other NGO’s to initiate a caring Coke campaign. Gupta should put together a transparency policy with the public. Coke should continue its efforts to build social programs with emphasis on education, environmental and water safety and public health initiatives.