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.

CSR - Corporate and Social Responsability

When we started the CRS discussion in class, one of my professors said that my concepts made it sounds like an enormous thing. I cannot deny how fascinating the subject is in my view. How can you describe CSR in a world that companies’ profits are higher than countries GDP and companies’ culture can overcome countries way of life, but the power of corporations is underestimated.  What is the mission of CSR? Can business make the world a better place? Furthermore, is business willing to make the world a better place?

Before diving in CSR, here are two key concepts to develop the discussion:

[     Philanthropy definition: generous help or benevolence toward one’s fellow men (Webster’s dictionary). Corporate philanthropy use to be likely a mere choosing of charity or organization followed by donations. Philanthropy is related to strong moral or ethical values therefore backed by belief systems.

[     Corporate social responsibility encompasses not only what companies do with their profits, but also how they make them. It goes beyond philanthropy and compliance and addresses how companies manage their economic, social, and environmental impacts, as well as their relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community, and the public policy realm. (Harvard Kennedy School)

 CSR goes way beyond what Corporate Philanthropy used to be. We can use the metaphor of license to operate. Scrutiny, visibility and trust make this license essential.

Now that the concepts of CSR are covered – and I agree it is not so enormous – we will discuss sustainable business on next posting.

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Here it is an interesting link on CSR and also the source of my definition above:

Corporate and Social Responsibility – Harvard Kennedy School

The Virtual Revolution

BBC series The Virtual Revolution is an interesting source of information on all the happenings behind the computer screen. When navigating and finding information “for free” most people don’t realize there is a price on “free”.

Keeping tuned with what people do on-line is the best way to communicate with stakeholders. Recently I posted a low rate on a product I bought from Philips Avent on Amazon. The product, plastic containers to storage food, has no indication of being BPA free. Within days there was an answer to my posting with a link to the company web-site where it is mentioned the product is BPA free. Interesting enough, every time I returned to Amazon to check on the product it was out of stock. My hypothesis is that the answer for my post comes from someone within Philips and furthermore it boosted the on-line sales.

In short, this is an intelligent way to communicate directly with the end consumers. To share more on tracking on line activities here it is a video from the BBC series I mention above, The Virtual Revolution.

NGO and Activism

NGO’s and activism are fascinating and growing areas of public relations. Check the slides below to find out some of my thoughts and some interesting points raised in class.

NGO and Activism

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And the spiner prize goes to...



Spin-doctor and Propaganda are terms often associated with Public Relations. And this is certainly an achievement we can give credits to Edward Bernays who worked so hard to have his place in history and be seen as the father of PR. However I ultimately agree with Larry Tye who gives Bernays another title: the Father of Spin.

Some spin techniques can certainly have a positive impact on society by supporting behavior changes or raising awareness of key issues eventually causing change. It is important to remember though that the ethical duty of practioners goes beyond what Bernays observed in our industry.

Alastair Campbell is one of the most iconic communicators in the UK. If in one hand he is seen as a spin-doctor, on the other he has supported Prime Minister Tony Blair through huge crisis and in one point we have to agree, he has done his job - and well done.

Campbell’s career illustrates the fine line to define each professional role in a spin situation. It is our duty to portrait the facts in a favorable manner for our clients and that does not necessary means lie or omission but protect information is crucial to preserve image and reputation. Now let’s think about the media. Despite the efforts to transmit public information in a unbiased manner, journalists are often under the pressure to produce stories that sell.

Recently, I was talking to two financial managers and they were complaining that every time they had been interviewed, for either personal or professional reasons, the article published did not reflect their views. Yes, I am taking in consideration that those were finance professional and they are not used to deal with the media. But how much we, PR professionals have to emphasize, repeat and create context to make sure journalists don’t misinterpret stories – or write them in a manner that sells better…?

It is hard to define Alastair Campbell is a spinner or a great communicator. It certainly depends more on who is judging than his actions. Personally, I can only respect someone who has dealt with the war on Iraq, the death of David Kelly, the extraordinary row with the BBC, and the Hutton enquiry. Therefore he does not get the spinner prize!

On the next posting I will share some thoughts on NGO and Activism.

Sources:

The Father of Spin: Edward L. Bernay's and the birth of PR

Alastair Campbell web site

Social Media and Media Relations

Here are some insights on what is happening to Media Relations in the era of Social Media.

(Nevermind the books trying to jump out of the shelf in the last bit!)