2. How does Coca Cola handle crises? Discuss whether this global leader has succeeded in handling crises from headquarters in Atlanta with reference to both the Belgium school children case and to Dasani in the UK. You must access relevant media comment from the time in making your assessment.
A crisis is “a major occurrence with a potentially negative outcome affecting an organization, company, or industry, as well as its publics, products, services, or good-name”; it is also “a sudden and unexpected event that threatens to disrupt an organization’s operations and poses both a financial and a reputational threat”. All organizations need to be prepared for any kind of unexpected crises, as true crises define the companies’ future actions and have long-lasting implications for organizational climate and profitability. The bigger the organization is the higher the chances are for a crisis to happen at one point in its evolution. Crises cannot be predicted, but they should be expected, as managers should anticipate them and prepare for them. In this essay, we will examine two of the best known crises, suffered by the Coca-Cola Company, the one in 1999 in Belgium and the one in 2004 in the UK, focusing on their crisis management. Crisis management can be defined as “a set of factors designed to combat crises and to lessen the actual damages inflicted”. In Belgium, the crisis started when more than 200 consumers of whom most of them were children, became ill after noticing an irregular taste and odour in bottled products and on the outside of the canned soft drinks. The Belgian authorities stated at that time that the drinks had triggered a blood disorder that caused the destruction of red blood cells among people who had drunk Coca-Cola. Those affected suffered from nausea, shivering, headaches and diarrhoea, some of them seriously enough to be admitted to hospital. Trying to manage the crisis from their headquarters in Atlanta, Coca Cola’s message remained for four days that it was merely a bad odour that was causing the nausea and there was no risk to public health. They agreed that the contaminated batch to be recalled, but they still did not have a clear explanation. Worried about the increasing number of cases, the Belgian Health Ministry ordered on 14 June 1999 that all Coca-Cola trademarked products to be withdrawn from the Belgian market and warned Belgians not to drink any Coca-Cola products they had in their homes. Marylise Lebranchu, Secretary of State at the Finance Ministry, said that the government had acted because it was not satisfied with Coca-Cola's explanations. A week after the reported illnesses and after the Health Ministry withdrew the products, Coca-Cola Enterprises Belgium issued an official statement in a news conference. The director-general, Philippe Lenfant, told that a bottling plant in Antwerp had used the wrong carbon dioxide to put the fizz in soft drinks bottles.Moreover, the head of sales for Coca-Cola even visited those in hospital to check after their welfare. However, the next day other cases appeared and they were referring to schoolchildren and cans produced in Dunkirk. In addition, the manufacturers of the gas from the Antwerp plant denied Coca Cola’s claims and said that the gas was perfectly normal and that they could prove it. Later, France, Luxembourg and The Netherlands also banned or restricted the sale of Coca-Cola products. It was estimated that a total of 15 million bottles and cans of products were recalled.This cost Coca-Cola Co. more than $200 million in expense and its bottler in Belgium, Coca-Cola Enterprises estimated its losses at $103 million. It was only after the Belgian and French governments recalled the products that Coca Cola finally mobilized and Doug Ivester, Chairman and CEO came to Europe and apologized: “We let down the people of Belgium, and we’re sorry for that, but now we’re committed to do what it takes to earn their complete...
Please join StudyMode to read the full document