On August 2003, Coca Cola India faced a sales drop due to pesticides residues issue brought by a non-government organization called CSE (Center for Science and Environment). This report aims at covering the case study from the Corporate Communication 5th Edition by Paul A. Argenti ‘s book page 284-299 (Case 10-1). These papers will include the case questions with answers, to analyze the key problems that Coke India should focus and how well-prepared was them in dealing with the crisis, as well as the key constituents and communication strategies that Coke India must do to endure the problem along with the conclusion of whether they have avoided the crisis or vice versa. The conclusion of study and references will also be inserted at the end of paper.
I. What are the key problems that Gupta should focus on
in the short term and in the long term?
Firstly, Gupta must understand that Coca Cola has faced several crisis in the past. On February 2003, CSE (Center for Science and Environment), an activist group in India has already brought the issue about Coca-Cola’s Kinley Bottled water which was declared containing pesticides residues, six months before they brought up the same issue about Coca Cola. Since Coca Cola India remained silent about the first issue, the buzz was created and spread, made it even harder to maintain the situation. While in 1997, Coca Cola also had a problem in India. They had to leave India, instead of revealed their formula to government, when Janata Party led India and oblige Coca Cola, and other foreign companies, to dilute their equity stake until 40%, as written under Foreign Exchange Regulation Act (FERA). Any other crisis were happened too on other countries such as in Belgium and Atlanta.
Moreover, The sales drop is an important to be focused on. With the decrease of the sales, it showed that consumers believed the allegation more than their loyalty to Coca Cola, and the investors were afraid to keep their feet on the company.
The competition with Pepsi was crucial too as Pepsi entered the India’s market first in 1988 through join venture as PepsiCo with the Punjab Argo Industrial Corporation, and Voltas India Limited and with Unilever in 2003. At one side, it was welcomed by Indian’s market and marked as liberalization accepted, but on the other side, it had disadvantage for Coca Cola when entering India’s market in 1997. Pepsi already had a strong spot in consumers mind, while Coca Cola was still assumed to bring American way of life. Thus, the crisis which brought Pepsi too but tended more to Coca Cola, make Coca Cola in India has a worse name compared to Pepsi and especially, competitive local brands. Even if Coca Cola India already had local brands which marked the combination of global trends and domestic market, engaging 7,000 local employees and indirectly added another 125,0000 Indians, invested more than US$1 Billion, had a documented quality control and assurance program, and entrust such an important position like Vice President to Indian (Sanjiv Gupta in 1997), Gupta during this crisis must focus to manage their reputation as it will influence the future of Coca Cola company, not only in India, but worldwide and the other brands under Coca Cola company. Besides, Gupta must also focus on the efforts to bring back costumers loyalty and gain trust more to get vision from potential consumers.
II. How well prepared was Coke India to deal with the allegations?
Coke India wasn’t good at dealing with the allegations about pesticides contain in Coca Cola. Firstly, CSE had already brought the issue for Kinley bottled water months before they further involved the Coca Cola itself. Instead of revealing the truth, Coca Cola, and Pepsi, mentioned that CSE’s allegation was baseless and even questioned their testing method. When the first issue came, Coke India should have been noticed and clearly explained to...