Crisis Management Cases Coca-Cola, Belgium Issue: On 14 June 1999, in a move that was to cost more than $200 million in expense and lost profits and cause damage to he brand image of the trade-marked products of The Coca-Cola Company (CCC), the Belgian Health Ministry ordered that Coca-Cola trademarked products be withdrawn from the Belgian market and warned Belgians not to drink any Coca-Cola trade-marked products they had in their homes.
Later, France, Luxembourg and The Netherlands also banned or restricted the sale of Coca-Cola products. Reasons for recall of the products were two unrelated matters. 1. Some consumers complained of an irregular taste and odour in bottled products. 2. More than 100 consumers became ill after reporting an unpleasant odour on the outside of the canned product. Due to this scandal everybody was questioning on the quality of Coca-cola products. Company’s reaction to the crisis:
After a week, The Coca-Cola Company responded with its first statement saying that they regret problems encountered by their consumers in Europe and that the Company’s highest priority is the quality of the product and they reassured their consumers, customers and government officials in Europe that they are taking all necessary steps to ensure that their products meet the highest quality standards. After the complete investigation they identified 2 problems: 1. “Off-Quality” carbon dioxide that affected the taste and odor of some bottle drinks. . An offensive odor on the outside of some canned drinks the odor appeared to intensify when the cans were stored in vending- machines. Coco-Cola Comapany apologised to their consumer for the inconvenience they faced due to this problem. Due to this scandal image of the company for consumers was not positive. Later, in mid-July they put in a lot of focus and money on aggressive advertising to rebuild their lost image in Belgium. This has successfully helped the company to regain its original image in the arket and prevented the loss in market share. Sources: 1. http://www. fh-fulda. de/fileadmin/Fachbereich_SW/Downloads/Profs/Wolf/Studies/belgians/belgians_crisis_management. pdf McDonalds, India Issue: Within hours of the story breaking that McDonalds in the U. S. had been using oil with a beef extract for cooking its fries, it has affected the company in India also. The Indian national media had splashed the story but also pointed out the McDonald’s India fries and vegetarian products no beef or pork flavouring.
But the local activists (Shiv Sena) within a matter of hours made a huge issue out of it. India reacted on the matter, Mumbai’s Thane outlet was vandalized by an angry mob of political fundamentalists. There were many such incidences in India. Due to this scandal quality of the food they provide was on stake Company’s reaction to the crisis: After the breaking news in U. S. , McDonald’s India was prepared for it. McDonald’s in India has 80% vegetarian consumer and their could be huge loss in the market share and revenue.
McDonald’s India was prepared for this situation. On May 5th , they arranged a press conference in which they apologised due to the inconvenience consumers were facing because of the news about McDonald’s assured their consumers that no animal oil is used in India for fries. As a voluntary gesture, McDonald’s took its products to government laboratories- the Sir Ram Institute for Industrial Research, the Brihan Mumbai Municipal Corporation, which tested the roducts for animal fat – the results were negative – there was no trace of animal fat in any of the products.
The cooking medium used is vegetable oil and the results of the tests conducted restored customer confidence in McDonald’s and its products. The findings were displayed in all McDonald’s restaurants – on tray liners, coasters, leaflets and advertisements in the newspapers – informing the public about the products and the results of the testings. McDonalds with ad men from Mudra DDB immediately made posters with the headlines: “100 percent Vegetarian French Fries in McDonald’s India” below this were various bullets of information like: “No flvour with animal products/extracts are used for preparing any vegetarian products in India”.
These posters were plastered over all the McDonald’s outlets. Sources:2. Book: Case from International Marketing by Pathak Comparison in both the companies damage control strategies: 1. Both the above companies at first acknowledged the problem to the consumers. 2. Both the companies immediately started investigating about the matter. 3. As soon as Coca-Cola found the core reason of the problems they were having they started working on it and they apologies to their consumer for the inconvenience, they reassured to them that this problem will never occur and they will maintain best quality standards. . In case of McDonald’s, since they were not at fault, reassured their consumers that “No animal oil is used in preparation of any vegetarian food” and they are providing pure vegetarian food to their consumers as promised. I feel that both the firms have handled the crisis in the right manner. Both have followed the damage control methodology to solve the crisis. Their acknowledgement to their consumer at right point of time has helped them solve the crisis even more effectively.