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!