Business Communication Chapter 10 Crisis Communication Teaching Notes Crisis Communication Crisis Communication All Around

Chapter 10 – Crisis Communication

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Chapter 10

Crisis Communication

Crisis communication is all around us, now more than ever. I updated this chapter

for the Fifth Edition and added an extensive section that addresses how changes in

technology have dramatically changed the landscape of possible crises (as I

mentioned earlier in the Instructor’s Manual, please see my new book on digital

communications, which will be out late in 2009 for more on this topic “Digital

Strategies for Powerful Corporate Communications” (McGraw Hill, 2009)). If you

are interested in crisis communications, I would urge you to read Laurence Barton’s

book, Crisis in Organizations, published in 1992 by Southwestern. It covers every

Since crises are always happening, you can simply take a more recent example and

collect materials about it to make this class more relevant and up to date. For

example, when I updated this chapter for the fifth edition, Wall Street was falling

apart as a result of the credit crunch and the “Big 3” American Automakers were

begging the government for bailout funds to avoid bankruptcy. Regardless of where

you are in the world, you should have no trouble generating new examples from

recent news.

This chapter also reinforces a number of ideas that are covered earlier in the book.

For example, the notion of reputation, introduced in Chapter Two and elaborated on

in Chapter Four, as part of strategy is also an important concept to cover with

students here. As I discuss in the beginning of the chapter, it’s not just the crisis

itself, but also how the organization responds to it and how much credibility it has

Laurence Barton’s book also includes the Dimension Control Matrix, which I have

included with the PowerPoint slides for this chapter. The Matrix allows you to

categorize crises into four different buckets ranging from high dimension/ high

control (i.e. it’s a big crisis, but you can control it) to low dimension/ low control

(not a big deal, but you can’t control it). If you think about these dimensions and ask

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students to use them as a classification system, you will generate some excellent

class discussions.

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What you decide to do with this chapter also depends to a certain extent on the level

of students you are teaching. For example, if you are teaching executives, you

should let them find out what the crisis communication plans are for their

Teaching Note

Coca-Cola India Case

The Coca-Cola India case was new to the fourth edition and offers students a unique

opportunity to look inside a crisis for one of the world’s most important brands as it

occurs inside a developing nation. I have included my PowerPoint presentation for

use in class. The case focuses specifically on issues related to brand, reputation, and

Corporate Social Responsibility (CSR), and the intersection of all three.

Introduction

History reveals that companies with the strongest brands, most proactive policies of

social responsibility, and deepest relationships with their consumers are the most

attractive targets for NGO attacks. The very assets that define these leading

companies provide the fodder NGOs are looking for to further their agendas. Global

Being an attractive target, however, need not imply vulnerability. Organizations and

their leadership teams need to start thinking systematically, proactively, and

strategically about their reputational risk from crises concerning CSR (corporate

social responsibility) and take actions to mitigate these risks before they become

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Purpose of the Case Study

1. To give students the opportunity to apply a strategic framework to corporate

communications, in a foreign context, with a global brand

2. To identify how, why, and where an organization is vulnerable to a crisis

3. To help students understand that:

• Successful and responsible companies are the most attractive targets for

NGOs

• Prior credibility helps you weather a crisis

• Public perception not reality or “truth” matters most

• Anticipation and preparation for crises before they occur are critical

• Prior experience informs current crisis strategy

Key Business Issue

On August 5, 2003, The Center for Science and Environment (CSE), an NGO in India,

attacked the safety of Coca-Cola India’s products in a press release titled “Twelve

Major Drink Brands Sold in and Around Delhi Contain a Deadly Cocktail of Pesticide

Residues.” Though Coke was well within the Indian government’s legal limits for

pesticide residue in beverages, the country’s standards were weak and full of

loopholes, making them effectively meaningless.

Coke India CEO Sanjiv Gupta and his team had to decide how to rebuild public trust

and had to weigh a larger policy decision at the same time: should Coke take on a

leadership role and help create higher standards for food and beverage safety?

Problems

1. The CSE attacked Coke for this same issue surrounding bottled water in

February of the same year; they should have seen it coming and been prepared.

2. NGOs have automatic credibility while corporations, particularly large

multinationals (MNCs) automatically lose credibility when under attack. How

should this inform Coke’s approach to the attack?

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3. Coca-Cola is a socially responsible company that takes care of the communities

in which it operates, yet India is a developing nation with a different set of

standards. Should Coke be held to the same standards internationally as they are

at home? Is this economically sustainable? Does a company’s responsibility stop

at following the law?

4. Coca–Cola is the world’s most valuable brand and that value is largely driven by

the image of the company and its products. How does a company that derives a

disproportionate amount of its value from its image manage reputational risk?

How does the importance of Coke’s brand inform the best strategy?

5. Consumers outside the US, particularly in developing nations, have a love-hate

relationship with MNCs. Can Coke do anything about this? Do they address the

issue already?

6. Coke seems to have a history of dealing ineffectively with crises. Have they

learned from their mistakes or are they likely to repeat their unwillingness to

deal head-on with problems?

9. The role of Coca-Cola Corporate Communications from Atlanta is not mentioned

in the case. Is it a problem that they were not actively involved?

Communication Strategy

A strategic communications model that incorporates an understanding of Coke

India’s objectives, constituencies, and channels should be used to analyze this case.

This framework allows students to appreciate that objectives drive both the right

strategy and the best execution of that strategy. In addition, the communication

strategy should incorporate a framework for managing reputational risk,

underscoring the link between reputational capital and corporate performance.

In this case, Coca-Cola’s clear, primary objective is to regain the trust of consumers,

the media, and the government but it has many secondary objectives as well. These

include:

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• Reassuring the global community, specifically global consumers of Coca-Cola

products as well as investors in the Coca-Cola Company

After articulating the Company’s objectives, students should explore the execution

of a communication plan. Who are the most important constituencies? How do they

rank and how should you prioritize them? What are the best channels to use for

each? What is the timeline of the communication messages needed (i.e. which are

short-term and which should be ongoing)? What are the opportunities for

increasing reputational capital? What safety nets should be put in place to manage

reputational risk?

Solutions

1. Communicate openly with key constituents, including the public, the media,

employees, franchisees, the trade/channel, state and national government, and

2. Attempt to collaborate with the CSE, acknowledging that your goals may be

3. Choose to differentiate as a more socially responsible company. Though a united

4. Enhance your relationship with the government. Whether or not a relationship

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5. Recognize the upsize for reputational risk on a corporate level if the situation

Application of the Page Principles

The Page Principles can be effectively applied to the Coca-Cola India case as a means

of evaluating the company’s corporate communication.

Tell the truth. This case study allows students to push on the definition of truth for

corporations. Did Coke “tell the truth” by sticking to the facts, or does truth imply a

greater responsibility? Is truth sticking to the letter of the law or accountability to a

higher standard? The Coca-Cola case also blurs the distinction between truth and

facts. The CSE, the government, and Coke all had different facts regarding the nature

and degree of pesticides in soft drink products; what does a company do when the

truth is not black and white and consumers form their own truths on the basis of

perception?

Prove it with action. At the time of the case, Coke falls short of meeting this

principle, which contributes to the continued erosion of consumer confidence in the

company and its products. Collaborating with Pepsi to address the issue was a good

first step, but Coke falls short of actions that demonstrate a commitment to problem

resolution and product safety including collaboration with the CSE or independent,

Listen to the customer. Coke is forced to listen to the customer because they have

spoken with their wallets. With sales down over 30% in less than two weeks, the

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Manage for tomorrow. Coke missed this opportunity in the past by ignoring the

Kinley bottled water crisis but can redeem itself by taking a long-term perspective

Conduct public relations as if the whole company depends upon it. In Coke’s case,

with over half of its market value attributed to the brand, the whole company really

A company’s true character is expressed by its people. Sanjiv Gupta was an

Remain calm, patient, and good-humored. This case gives students the

Teaching the case

Distribute the case prior to the session to allow students an opportunity to read the

case thoroughly, meet in study groups to prepare their remarks, and tie case issues

to readings for that particular day.

Students should spend the first third of the class focusing on key problems as

described earlier in this teaching note. Once all of the problems have been

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Questions for discussion

A focus on these key questions will help students to thoroughly prepare the case:

1. What are the key problems that Gupta should focus on in the short term and in

the long term?

2. How would you evaluate the crisis?

3. How well-prepared was Coke India to deal with the CSE’s allegations?

4. What is your recommendation for Coke’s communication strategy? Who are the

key constituents?

5. Could Coke India have avoided this crisis?

6. What should Gupta do now?

Key Takeaways

1. Don’t underestimate the power of NGOs or antagonists in general

2. Realize that socially responsible companies are likely targets for NGOs but also

attractive collaborators

3. Recognize the value of strategic communications