Free Coke India Faces Crisis Essay Example

Having read the chapter on crisis communication I have learned about various types of crises well-known companies had to face. Some cases were analyzed in detail, providing a number of successful, as well as inefficient ways of crisis management. Having learned about common practices of handling such unexpected and harmful situations I’d like to try my hand at going into details of crisis communication. The case under study is the crisis of Coke India in 2003. The goal of this paper is an analysis of this crisis and my evaluation and ideas of the mentioned above incident.
First of all, let’s take a closer look at what happened in 2003. The Center for Science and Environment (CSE), an activist group in India, made an investigation revealing that twelve leading beverage brands contained dangerous pesticides in their products that were cancerogenic and could also affect nervous and reproductive system, immune system and cause birth defects (p. 284). Coke India was also among the companies accused of poisoning their customers. It resulted in banning Coke and Pepsi products in Parliament. The scandal resulted in sales dropping by 30-40 percent in just two weeks. The reputation of the company that was established with two years of expensive and cost-consuming marketing campaign was at stake. The president and CEO of Coca-Cola India Sanjiv Gupta had to take immediate actions to save the company.
Let’s now define what key problems Gupta should focus on in the short term and in the long term. To begin with, the CSE’s allegation caused panic among the Coke India’s customers. People refused to buy the products of this brand considering them dangerous and health-threatening. It led to significant reducing of the sales rate and the company lost money. Moreover, the reputation was also harmed. Thus, the situation required immediate reaction. In other case, many serious long-term problems could occur. Further financial loses and the problems of credibility are some of them worth mentioning. What is more, the crisis could have been widely reported outside of India, affecting other constituencies all over the world. In this case the reputation of the Coca-Cola brand could be at stake.
Having analyzed short-term and long-term problems that Coke India faced, I may say that the crisis was rather serious. In case of unreasoned reactive response or response delay it could make considerable harm to the company. Coke India turned out to be a victim of the misleading allegation, but the company managed to handle the crisis. Let’s examine in detail how well prepared they were for this incident.
Firstly, the company reacted immediately. Only the day after the CSE’s announcement they together with Pepsi organized a joint press conference where they doubted the results of the CSE’s tests. Moreover, they accused the NGO of false statements and threatened them with legal actions against them. Then Sanjiv Gupta addressed the Indian public and stated that the company took the case quite seriously, that’s why he provided some facts and data concerning these health and environment issues (p. 297). By doing so, the president showed care and concern for their customers. He didn’t just refute the CSE’s allegation, but gave the Indian people an opportunity to make sure that there was no need to worry. The company also had a good reputation in India, as well as well-established relations with the media. It contributed to effective reaction to the incident. What is more, the company chose the policy on care of the community by improving the quality of life of people and by taking care of the environment (p. 292). It could have a positive effect on the crisis management as well, as it proved once more the president’s concern for their customers and the nature. What concerns centralization in handling the crisis, it left much to be desired, as the company had many constituencies all over the world. That is the reason why it was so difficult to have one universal crisis plan suitable for any crises possible. Fortunately, the case didn’t go outside of India due to effective crisis strategy. Otherwise, it could harm the brand’s name in other countries and even on other continents.
If I were the crisis manager at Coca-Cola company, I would recommend to have regional communication directors in each region with the alike position in each country. But as we can see from the table 10.8 given in this chapter, it was later accepted by the company (p. 296). In my opinion, this strategy results in more successful crisis management, as there are many internal and external constituents of the company and crisis cases have to be treated according to the peculiarities of the region.
As far as I am concerned, Coke India could have avoided the crisis by establishing relations with CSE earlier. As we can see, the company takes the policy on care of the environment. The NGO does the same thing. Instead of turning out to be on the opposite sides of this incident, Coke India could gain support of the CSE before the crisis happened. Moreover, the company had to promote their achievements in helping with improvement of quality of life of the Indian people and concern for the environmental issues more effectively. In this case there was a possibility that their customers wouldn’t believe the CSE’s report so easily.