January 10th, 2018
Evaluation of the Crisis Management Approach adopted by the Company
The actions followed by Odwalla in controlling the effects of the crisis were what ensured the company’s survival beyond the crisis period. First, the acceptance of liability by the company was well advised. This can be argued since the company’s liability was almost apparent following the discovery of disease causing strains in unopened bottle of its juice products (Martinelli & Briggs, 1998). Though the company had argued that investigators found no traces of the bacteria in the company’s plant, FDA’s response that such did not exclude the bacteria presence at some time in the past further implied the liability of the company. Subsequently, the finding that the company had disregarded some federal guidelines on prudent manufacturing processes (Martinelli & Briggs, 1998) and further revelations of the firm’s disregard of warnings by its employees against using spoiled supplies in production; also establishes a case of negligence and unethical practices which reinforce the entity’s liabilities (Marler 2008).
Odwalla’s crisis management actions however exemplify the best procedure for managing corporate crisis. First on receiving information of its products association with bacteria infection; the company assumed its corporate social responsibility by issuing a nation wide recall of the affected products. This action deemed to have been a corporate responsibility approach since the recall was done even before a direct association of the products to the infections had been established (Martinelli & Briggs, 1998). The recall however was a necessary step that ensured the firm’s survival after the subsequent discovery of the bacteria in one of its products. With the increasing media attention and cases of affected children rising (Martinelli & Briggs, 1998), prospective consumers would have shunned the company’s products resulting in losses to distributors and the company. This would affect the company’s future attempts to re-introduce the products if the industry regulators subsequently banned such products. Such a recall would also allow the company to minimize some of the costs by re-processing the products to provide safer alternatives. The disadvantages of the recall however lay in losses that would arise from reimbursement of customer’s expenditures on purchased products (Martinelli & Briggs, 1998). Such however would be partially off-set by the company’s reprocessing of the recalled products. Overall therefore, the recall was not only beneficial to the company in relation to cost but also in maintaining a favorable corporate image and sustaining the corporate values that the company had previously been identified with (Entine, 1999)
The success of the crisis management was however mainly due to the firm’s setting up efficient communication channels. On increasing publicity of the crisis through the mass media and the Internet, the company hired the services of reputable public affairs consultants (Edelman Worldwide) to assist it handle enquiries from various stakeholders (Martinelli & Briggs, 1998). Two toll free numbers were also set up one dedicated to consumer needs and the other to retailers and suppliers (Martinelli & Briggs, 1998). These provided up to date information on the development of the crisis and the actions that the company was taking (Martinelli & Briggs, 1998). A website that was also developed provided customers with timely recall information (Martinelli & Briggs, 1998, p. 450). These communication channels provided alternative information sources to stake holders hence avoiding the reliance on mass media information that would have provided the necessary ingredients to fuel the crisis (Zerman, 1995). The entity was therefore able to provide adequate information to various stakeholders thus ensuring its survival (Ashcroft, 1997).
Another positive approach by the company was its swift response to the events that arose during the crisis with the involvement of its top leadership improving the process. For instance after the discovery of the disease causing bacteria strain in an unopened bottle of the entity’s apple juice; the firm immediately communicated its re-consideration of using heat sterilization methods that it had previously disregarded (Martinelli & Briggs, 1998, p. 450). The recall decisions halting production of affected products until such a time when it could guarantee their safety were also made in good time (Martinelli & Briggs, 1998, p. 450). Such avoided loss of the company’s resources in producing more juices that would have gone to waste. Top leadership involvement also helped improve the effect of the firm’s public relations approaches. One example was the visit to the hospitalized child’s parents’ home made by the firm’s chairman and co-founder and his subsequent reiteration of the entity’s offer to pay medical costs of affected people in media conferences (Martinelli & Briggs, 1998, p. 450).
That the crisis management process at Odwalla was effective can be derived from its positive results. Its call for competitors to halt sales of their unpasteurized products was for instance partially successful following the action by some retail joints action to reject such supplies from other manufacturers (Martinelli & Briggs, 1998, p. 450). This avoided the loss of many of its customers to the competitors. Further the acceptance of liability by the company through its offer to pay medical costs for affected victims and later embracing “flash pasteurization” to treat its juice products (Martinelli & Briggs, 1998; Entine, 1999) salvaged the company’s consumer loyalty. Overall the crisis management approaches helped the company to go through the crisis with minimal bruises in its reputation. This could be exemplified by a remark by the parent’s of the dead child that they did not lay blame on the company for their child’s death (Entine, 1999). Go to part 4 here.