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Coca-Cola India

Essay by   •  April 23, 2011  •  Case Study  •  1,685 Words (7 Pages)  •  2,243 Views

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The crisis that happened at Coca Cola was a very crucial incident. It affected issues such as brand and reputation, and the company has to take action so as not to ruin its image. Coca Cola is a company with a very strong brand name all over the world. An attack like this of the NGO can lead any company to problems. Although the Center for Science and Environment attacked the safety of Coca Cola India's products, Coke was well within the Indian government's legal limits for pesticide residue in beverages. The fact is that the country's standards are weak, so the problem of Sanjiv Gupta and his team is how to rebuild trust. Furtherore, Gupta tries to find ways on how he could contribute on the creation of higher standards for food and beverage safety.

First of all, Gupta should focus on specific problems such as:

* After the NGO's attack, sales dropped by 30-40% in only two weeks.

* The company is a valuable brand, while that value is created by the image of the company and its product. The CEO should keen on the ways that Coca Cola, which has value from its image, can manage reputational risk.

* The company should become stronger on issues of such crises, and avoid facing them ineffectively in the future.

* Clubs, restaurants, etc have stopped selling Coke products. The company should solve this problem because image gets damaged.

According to the reactions of the customers, we could easily evaluate the crisis in India as a major crisis. After the announcement that CSE made, Coca Cola attacked the credibility of the CSE and their lab results, by citing regular testing at independent laboratories proving the safety of their products. The reactions of the consumers that are making this crisis as a major are the following:

* Sales had dropped by 30-40 percent in only two weeks on the heels of a 75% five year growth trajectory and 25-30 percent year-to-year growth.

* Many clubs, retailers, restaurants, and college campuses across the India had stopped selling Coca Cola.

* Finally, the Indian government banned Coke products in Parliament and state governments launched independent investigations, sending soft drink samples to labs for testing.

As we mentioned before, Coca-Cola's value is created by the image of the company and its products. So, it would be expected that the consumers would continue to buy the products of Coca cola. But, after the announcement of CSE the majority of consumers believed the findings were correct and agreed with the parliament's move to ban the sale of soft drinks. So, that makes the crisis a major one, and Coca cola should regain the faith of their costumers.

Coca Cola was prepared enough to deal with the CSE's allegations. As we found out, the company did not deny doing the tests in independent labors. What the company did wrong was the fact that they did not do any attempt to collaborate with CSE, at least to take time to understand their real intentions.

The communication strategy that was applied was the following: the Company's operations demanded a matrixed team organization. The communication functions included: Media Relations, Nutrition Communications, Financial Communications, and Marketing Communications. But the problem was that the geographic diversity of the company's businesses required regionally-based communication leaders. As a result, five regional communications directors serviced North America, Latin America, Asia, Europe, and Africa with their own teams of communications professionals. All these were reported to the Chairman & CEO in India.

The most important issue in order to confront a crisis correctly is how the communication will be during the crisis. Small regional problems can turn into big issues if they don't manage them correctly. The recommendations that we have to mention concerning the communication strategy that Coca cola are the following:

 Should communicate with key constituents:

* public,

* the media,

* employees,

* franchisees,

* state and national government,

* and suppliers.

More analytically, Coca cola should focus on public to the consumers. One major key in order to succeed the communication during the crisis is "to listen to the customer". Coke is forced to listen to the customer because they have spoken with their wallets. That was a mistake. The company should inform them correctly about the facts and not because the sales were decreasing dramatically. One of the most important things that the company should remind continuously to their costumers is the Loyalty that they should have in the biggest brand name, that of Coca Cola's.

Concerning the media, Coca cola should immediately present the facts through the TV or through newspapers. In fact, in India they take out full-page newspaper advertisements and they "put" in their Web site the test results. This movement was correctly. But concerning the crisis in Belgium, the CEO of Coke should appear immediately in the news in order to explain the facts.

The employees are a big part of the company and they should stay together in order to solve the crisis. For example in the second problem that Coke confronted was because of their employees.

Coca cola should enhance the relationship with the government. Strong government relations are important in India and give them an opportunity to communicate all the benefits and investments they provide to the economy.

 Another recommendation concerning the communication in crisis period is that the company should:

* Assign different teams to each crisis. No matter if there exist geographical problems; the company should be jointly in order to solve every problem.

* Set up a centralized crisis management center

* And make plans to avoid another crisis immediately. Something, which Coca Cola didn't do in the past.

Coca cola the previous years has faced three more crises concerning its products and its policies.

The first crisis took place in the spring of 1999. Linda Ingram with 3 more Coca cola employees filed bias charges against Coca-Cola

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