Case study: Odwalla, Inc. and the E. Coli Outbreak

Companies need to continually evaluate their business processes to prevent imprudent practices that could result into legal liability and loss of a good reputation. Most recent cases of disrepute in organizations for instance have arisen mainly out of fraudulent or imprudent practices (Heineman 2007). Following such revelations into imprudent practices; modern firms that find themselves in ethical crises have found it difficult to regain the original trust that different stakeholders entrusted in them (Alsop 2002). Thus firms are charged with the responsibility of establishing preventative programs that govern employee behavior such as establishment of formal ethical programs to guide the rightful organization culture. Such programs are however not foul proof and organizations could find themselves into unanticipated crises. In addition to having programs to prevent crises, organizations must therefore also plan for ethical ways of dealing with crises that may arise. Effective approaches to crisis management have thus increasingly become integral aspects of public relations departments in entities. Such importance is reinforced by the fact that public relations actions following a crisis could be a determining factor into the perception of legal liability and successful existence of the company after the crisis.

One organization that has undergone the test of its crisis management capabilities is Odwalla Inc. – a California based juice manufacturing entity that has since been wholly acquired by Coca-Cola. Though the company had achieved a rapid growth and a strong brand loyalty after its establishment in 1985; the 1996 association of its unpasteurized apple juices to E. coli poisoning and the subsequent outcomes became the source of a dismal performance for a number of subsequent years (Entine, 1999). This paper aims to assess how optimal the crisis management process that Odwalla Inc. adopted in the wake of the crisis was. First the paper presents a background to the crisis and evaluates the best course of action for the company based on the information that was available before more disclosures were obtained. Secondly the paper assesses the actions the company took such as recalls and public relations interactions with the media and families of the victims of the poisoning. The paper then analyzes the alternatives that were available to the company for re-introduction of the product and finally, the best response for the firm to deal with increased government surveillance in the juice production industry. go to part 2 here.

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