International Business Blunders
Transcript of International Business Blunders
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Prepared by: Imanova A., Yankovskaya V.,
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Diet Pepsi In 1993, Pepsi-Colafound itself in a crisis
situation when a manin Tacoma,Washington claimedhe had found asyringe inside a can ofDiet Pepsi.
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What happened?Soon after the story hit the news,claims surfaced all over thecountry.
People claimed to find objectsfrom bullets to crack cocainevials. Pepsi-Cola knew that theforeign objects had been insertedby people outside the company
who had tampered with theproduct.
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What did the company do?Pepsi-Cola decided to use a
defensive strategy, claiming its
innocence in the matter. Provingthe companys innocence wouldbe pivotal in protecting furtherdamage to Pepsi-Colas brand
name. Pepsi employed a varietyof strategies to deal with theproblem.
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Pepsi: defensive strategyFIRSTLY:
Pepsi attacked the accuser
claiming that the objects hadbeen inserted after having
been opened and that manypeople do this in order to earnmoney from a settlement. The
company openly declared thatit would pursue legal actionagainst anyone making false
claims
SECOND:Pepsi used a denial strategy saying
that there was no crisis. Pepsi
President Craig Weatherup madeappearances on television and gaveinterviews to radio stations andnewspapers saying that Pepsis
bottling line was secure. Pepsi evenbrought video cameras into their
bottling factories to show thebottling process and the
impossibility of inserting a foreignobject into a can of Pepsi before it is
sealed.
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The end
The Pepsi crisis turned out tobe a hoax. Individuals who
had purposely insertedforeign objects into canswere brought to court.
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Odwalla and the E-coli outbreak:
What happened?Odwalla is the health-conscious
juice company which began acouple of decades ago when Greg
Steltenpohl, Gerry Percy andBonnie Bassett began squeezingfresh oranges on a $200 hand
juicer. The company was growing
strongly with annual sales rising30% per year and approaching$90m. The company hadestablished a strong brand withenormous customer loyalty.
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What happened?On October 30, 1996, everythingchanged. Health officials inWashington state informed thecompany that they had discovered alink between several cases of E. coli
0157:H7 and Odwalla fresh apple juice.
The link was confirmed on November 5.As the crisis played itself out, onechild died and more than 60 people inthe Western United States and Canadabecame sick after drinking the juice.
Sales plummetted by 90%, Odwalla'sstock price fell 34%.Customers filed more than 20 personal-
injury lawsuits and the companylooked as though it could well bedestroyed.
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What did the company do?Odwalla acted immediately.
Odwalla's CEO StephenWilliamson ordered a
complete recall of allproducts containing apple
or carrot juice.
On all media interviews,Williamson expressedsympathy and regret for all
those affected andimmediately promised thatthe company would pay all
medical costs.
The company movedquickly to introduce aprocess called "f lash
pasteurisation" which
would guarantee that E-coli had been destroyedwhilst leaving the bestflavoured juice possible.
Within 24 hours, the companyhad an explanatory web site (its
first) that received 20,000 hits in48 hours. The company spoke tothe press, appeared on TV andcarried out direct advertising
with the website address.
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The resultWithin months of the outbreak, the
company had in place what someexperts described as "the mostcomprehensive quality controland safety system in the freshjuice industry." On December 5,the company brought back itsapple juice.
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The resultWilliamson's explanation of how thecompany found its way is instructive."We had no crisis-management
procedure in place, so I followed ourvision statement and our core valuesof honesty, integrity, andsustainability. Our number-oneconcern was for the safety and well-being of people who drink our juices.
Even the most grievous victim of thecrisis gave Odwalla credit. "I don'tblame the company" the father of thegirl who died said. "They dideverything they could".
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Thank you!