Crisis Case Study: Coca Cola Perception is Reality

Coca Cola had an interesting crisis to deal with in 1999. Michael Regester and Judy Larkin presented a case study of the crisis in their book Risk issues and crisis management in public relations. Here follows my short summary and analyses of the case study.

In 1999 more than 200 children felt sick after drinking coke in a Belgian School. Once the company was informed about the issue, it recalled several bottles of cokes from the market upon investigation. The issue reached the media which reported the case on TV among other channels. More and more people kept claiming the same symptoms from the school children.

Nevertheless further investigation from Coca Cola could not find any fault on the products which now were not even from the same plant. As the issue developed into a crisis, the company failed to explain the reasons of the symptoms to its stakeholders. Belgian and French government demanded actions from Coca Cola in order to remove products from the market. The political scenario was not favorable to Coca Cola with re-elections taking place in Belgium after previous dioxin food alike crisis – not well handled by the government.

Interestingly enough there was nothing wrong with coke cans (the initial issue happened on bottles). Finally a Belgian independent professor hypothesized about mass hysteria MSI but he had no evidence at all.

In conclusion it was a case of MSI. However Coca Cola didn’t handle the situation properly by not communicating in a timely manner with the stakeholders. The crisis represented vast damages to Coca Cola’s reputation and total cost of 66 million pounds. The main reason for the mistakes it was the lack of authority of local executives. Coca Cola identified the reason for the fails in communications and consequently empowered the local teams to deal with this sort of situation.

The lessons from this case study show how important it is to communicate with stakeholders. Even if a reason or solution is not clear it is necessary to pay close attention to the high power and high influence stakeholders - in the case study government relations was crucial.

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Source:
Risk issues and crisis management in public relations

Sustainable business

When Anita Roddick created the Body Shop following her activist and ethical principles, it made the company an example of sustainable business. In the video below, a speech she delivered to entrepreneurs in the British Library, she emphasizes and expands in a point mentioned in the last posting: how powerful business is in our society. Anita believes that along with the power, companies should have a sense of responsibility. The Body Shop is a company that, in Anita’s words “prove you can make a profit and can make contribution to the society.

This speech was given a few months after the Body Shop had been acquired by L’oreal. Since the acquisition The Body Shop was highly criticized as we can see in this article from the Independent.

Body Shop's popularity plunges after L'Oreal sale - The Independent - Apr 10, 2006

In the 2003, documentary The Corporation, The Body Shop is mentioned in a scene a member of the public refers to the company as deceiving.

The Body Shop, before and after L’oreal acquisition, is an example on how sustainability and CSR can affect a company’s reputation therefore how crucial it is for communicator to be involved in the CSR function.