Sanjiv Gupta Case
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COCA COLA CASE STUDY1.
What are the key problems that Gupta should focus on in the short term and in the long term?
In the short term , Sanjiv Gupta , CEO Coke India , has to focus on improving the tarnished image of Coke owing to CSE s recent findings . He needs to win back customer confidence in Coke s products and should work on controlling the declining sales of the company
In the long term , Gupta needs to ensure the basic safety standards are always being met by the company so the event does not occur again . He also needs to further penetrate into the market and should work ways and strategies of increasing customer base.
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-Colas 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.
Step 1: Get control of the situation.
Gupta needed to define the real problem, use reliable information, and a measurable communication objective for handling it.
Step 2: Gather as much information as possible:
Gupta quickly reacted to the situation without taking a fair and objective look at the facts in the statements being made. Guptas reaction was emotional and attacked the credibility of the Center for Science and Environment ( hereafter CSE).
Step 3: Set up a centralized crisis management center:
As Gupta was gathering the right information from the right people he should have made arrangement for creating a crisis center for the constituents, that is, media, employees, customers, and government. Creating a crisis center would have made Coke India look more sympathetic and human. Instead, Gupta went on the attack and published a letter that was callous and focused only on the potential impairment of business; not the safety of lives.
Step 4:Comminicate early and often:
Gupta should have made a plea in person especially since the crisis involved the threat to lives. He could have avoided any panic by hiring a public relations firm to assist him during this process. He should have expressed concern for the public safety rather than focus on profits and conspiracy theories.
Step 5:Understand the medias mission in a crisis:
Gupta should have created an alliance with certain members of the media. A public relations firm would have been an asset.
How would you evaluate the crisis?
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 Indias products, Coke was well within the Indian governments legal limits for pesticide residue in beverages. The fact is that the countrys 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 NGOs 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.
In my viewpoint , the crisis struck owing to common negligence which companies tend to display while conducting business in developing countries . Issues have surfaced many times in developing economies of the world where the multinationals are found not adhering to the basic business ethics and norms . They tend to neglect or overlook the standard operating procedures in such countries because rules , regulations and quality standards are not properly exercised on them.
The crisis was started when CSEs issued a press release stating “12 Major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues. The report has been spread out and has bring up in parliament even there is no evidence to prove that the finding is genuine or not. Even Pepsi and Coke did conduct the analysis but they are too late as the news has been spread out across Delhi. This is a big damage to a multinational company like Coke & Pepsi. They should published the result not only in India but across the world as to prove to the consumer that the Coke drinks was not contain CANCER agent in