Strategic Decision Making - Example

Strategic Decision Making Name: Student ID: College: Tutor: Date of Submission: Introduction Jonathan (2010) defines a crisis as whichever state of affairs that is frightening or that possibly will threaten to cause injury to people or tear down property, critically interfere with business activities, harm reputation or have a negative influence on a company’s share value. A crisis entails a momentous distraction that arouses widespread media reporting whereby the consequential public scrutiny will have an effect on an organization’s everyday businesses. Besides, it may well engender political, ethical, legal, and financial as well as government impact on the organization. Also crises can emanate from natural disasters, human error, malicious intent, and negligence, among other causes. In light of this, no company can wish away any impending occurrence of a crisis; the sole weapon is to effectively set up a plan should it happen and suitably follow a line of investigation as soon as it is hit with a crisis. For the most part a crisis occurs mainly out of the blue. A crisis can take an organization by surprise; occur when an organization has deficient information; occur rapidly; or arise from an unexpected deep inspection and is typically arrived at owing to there not being a control and reaction coordination. However, with an effectual crisis management arrangement, a company can turn over a crisis into an upbeat and valuable marketing stratagem. Each one crisis occurrence is distinctive and, for that reason, calls for a custom-made rejoinder. This paper presents an analysis of a crisis that PepsiCo faced in 1993 in the United States market and that might have greatly hampered the future of the globally leading beverage company along with its product Diet-Pepsi. Pepsi Cola’s Syringe Crisis On the 10th of June 1993, the media reported shocking news about a man in Tacoma, Washington who claimed that in the previous night he had consumed half a can of Diet Pepsi, on waking up, he found out that the can had a hypodermic syringe and plunger akin to the one used by diabetics inside the can. The company, through the CEO Craig Weatherup, regarded this as a usual product tampering. For end user product companies, claims of their produce having been interfered with on average do not develop into a crisis that pressurizes their integrity, reputation as well as continued existence. However, like a bush fire, the syringe story broke out all over the United States, and by the 13th of June, there were mounting parallel claims from men and women from all corners of the country such as finding screws, needles, bullets, and narcotics, among other paraphernalia in Pepsi cans. PepsiCo's apparent usual news of messing about with their products issue had developed into a full-scale crisis. This culminated to a call for all Pepsi products to be recalled, a move that would have had a momentous financial impact on the beverage company. Response Strategy The administration of Pepsi-Cola was aware that strange items were being inserted by individuals out of the company’s production line thus interfering with the beverage product. This marked a major crisis for Pepsi-cola. Under the leadership of the company’s CEO, PepsiCo clogged up the surprise to mitigate it on hearing the news. To fulfill this, he early on fit into place PepsiCo’s crisis management team to handle the growing crisis. The team was given power to craft immediate assessments and circumvent usual company set of rules. The crisis team took on the crisis by several strategies. First, the team denied that there was no crisis. The CEO, Craig Weatherup, straight away appeared on national broadcast television and newspaper interviews to affirm the company’s position that its production lines were safe and sound. The CEO made appearances on Nightline, CNN as well as three morning network programs. Craig Weatherup acted as the spokesperson meaning that the company took up the matter as critically and it also laid bare concern as regards the crisis. Alongside him, the U.S. Food and Drug Administration Commissioner, David Kessler, helped to convince the public and went further to rule out recalling the beverage product. Pepsi boosted their integrity and helpfulness of their crisis communications by very much engaging the Food and Drug Administration Agency and bringing to the open their working association. Also, the company showed aggression to the accusers stating that the bits and pieces found in the beverage cans had been placed there after opening them and that a lot of natives did so in order to take home cash from formal resolutions. PepsiCo explicitly stated that it would “pursue legal action against anyone making false claims as regards the reliability of the company’s products”. Too PepsiCo brought to play a defensive strategy, claiming its innocence in the matter. The administration was certain that placing of foreign items into the beverage cans on speedy, strictly controlled bottling production lines was practically not possible; hence they opted to shield their beverage product. The company officials accepted as true that they did not have trouble with their production progression. Despite the fact that assertions of product interference may well look like out of the usual average public expectation, beverage companies are used to to sporadic reports of product interference. In fact, the company’s President and CEO Craig Weatherup, said that, "I do not think that there is an end user products company in this country that does not have one [product tampering claim] every matter of months". PepsiCo’s spokesperson, Andrew Giangola too stated that, "To have unusual confrontation crossways the country in diverse states was a sky-high ridiculousness," The pressing subject matter, at that moment, was to prove to the public that PepsiCo’s beverage product was not dangerous, and that whichever foreign items found in the beverage cans had been put in after the cans had been opened (Dennis, 2006). PepsiCo’s administration defended their company and carried out a far-reaching analysis. They paid attention to consumers’ shelter, establishing the basis of the crisis and solving it. They communicated in point of fact with internal and external addressees and took accountability for the crisis. They freed anxiety from their customers as regards the beverage products safety by way of marketing strategies including video information releases, charts, as well as audio that corresponded with their inquiries. For instance, PepsiCo introduced video cameras into their bottling production factories to be evidence for the bottling production progression and the impracticality of putting a foreign object into a can of Pepsi ahead of it being sealed. Providing the evidence on the subject of the company’s blamelessness would be fundamental in preventing extra smash up to PepsiCo’s beverage product. Another case in point is when the company’s officials called reporters to confirm that it was practically not possible to insert a syringe into the beverage cans. Additionally, by sheer luck, at the same time as USA Today reported an unpleasant incident of lady who found a syringe in a Pepsi beverage can in Colorado, a grocery store video supervision camera recorded the lady craftily dipping a syringe into the can. Pepsi gained access to the surveillance tape and shortly circulated it. PepsiCo’s line of attack was to restore public confidence that the occurrence was not a production crisis and was not taking place within the company’s production plant (Center, 2003). PepsiCo's response strategy took in four foremost main beliefs, first the administration considered public wellbeing, they then investigated and solved the crisis, being in touch with internal along with external customers from time to time, and assuming liability for fixing the predicament. The internal customers comprised the entire PepsiCo's workforce. PepsiCo’s employees needed to be given an assurance that regarding the beverage product their employer was putting to the market. Lack of sufficient employee confidence would make it tricky for them to endorse the company's product. The external customers took in every person or organization that purchases or else consumes the soda along with the journalists. The external customers needed to be targeted so as to carry on the PepsiCo’s business. Journalists are crucial in upholding an activist point of view using the media. The magnitude of this crisis could have pushed folks to buy different brands of soda other than Pepsi due to the horror of coming across a syringe in their Pepsi beverage can and the press would endorse Pepsi in a negatively. In this case the most important publics targeted were PepsiCo’s consumers, the journalists and the workforce. At last, the PepsiCo crisis was uncovered to be a deception. People who had, with intent, put foreign objects into the beverage cans were subjected to a legal process. Subsequent to this, the crisis was worked out. Reputational Threat Reputation entails a united depiction of a company’s earlier period’s performance that illustrates its capacity to convey appreciated end results to various stakeholders. Reputation too outlines the highest achievement of an organization in the public’s mentality. In the contemporary aggressive market, reputation is able to make a company be prominent from the multitude and offers a ready for action edging; it is today’s biggest asset. Efficient crisis management can build up reputation by communicating as well as building good quality dealings with each and every one organizational stakeholder (Dennis, 2006). Reputation management is a proactive approach that is employed all through the year especially by the top management. Presidents and CEOs do not time and again want to mull over impending crisis situations. PepsiCo’s Presidents and CEO, Craig Weatherup recognized the importance of the beverage company’s reputation, that’s why he came out strongly to defend their product. A lot of top executives tend to overlook a crisis as something distant, so it can be easily forgotten about as the major concern of most businesses is profit along with output. Each one executive is anxious on the subject of the reputation of the company. PepsiCo’s top officials fought hard for the company’s reputation too; they communicated swiftly and proactively in the course of the syringe crisis. As a result, owing to an excellent crisis management system, the humiliation was confirmed to be a hoax; PepsiCo was able to recapture the public’s confidence. Communication Performance PepsiCo's communications for the duration of the syringe crisis brings to the open an effective crisis communications system. The company’s crisis management team made decisions swiftly and went around usual corporate procedures. Its message was straightforward, truthful and was delivered without fail. PepsiCo was exceptionally noticeable in nearly all forms of the media with the President and CEO, Craig Weatherup, appearing severally on the main information broadcasters (Dennis, 2006). The company as well offered journalists a 'front door' admission to the company. PepsiCo improved key channels to the public using its 24 hour toll-free telephone line. PepsiCo’s engagement with supportive third-party’s enhanced its trustworthiness with the media as well as public. The company too carried out an exquisite analysis so as to corroborate the reliability of their production bottling plants. As soon as it became clear that it was untenable for someone to put in foreign items into the beverage cans ahead of them being sealed, the crisis had ended. All this reveals that the crisis management team did their job successfully as the company was able to get hold of much respect from clients plus employees. High-quality crisis management used by PepsiCo enabled the company to get back on track as early as possible devoid of losing a large number of clients or sales owing to the syringe crisis (Center, 2003). Conclusion and Recommendations Every organization is in danger of a crises occurring. Efficient communication is integral in trying to have power over whichever crisis that occurs. The victim company bears the task of providing information with reference to what is taking place, the probable effects the crisis will have to the general public, plus the company’s strategy to deal with the incident. A crisis brings shakiness, where the action assumed by the leadership as well as their decision making will determine the ending of the incident. PepsiCo was triumphant in dealing with the syringe crisis, by making its production progression discernible to the public and revealing that it was impracticable to insert a syringe into a beverage can (Dennis, 2006). The company’s crisis management teams set up a victorious strategy by means of an effective communication connecting the organization to the public. This impression ought to be adopted by other organizations to steer them all the way through a crisis. There is solemn call to aggressively take on crisis deterrence by first understanding when, why, and where conflict will blow up. This approach will successfully protect the arrangement of a business. It will enable managers and leaders to reconstruct the courage of their employees and customers so that the business is able to be re-established swiftly and perhaps even end in an organization that would be well built than it was prior to the crisis (Center, 2003). References Jonathan, B.L. 2010. The 10 Steps of Crisis Communications - Part 1. Retrieved November 14, 2013, < http://managementhelp.org/blogs/crisis-management> Center, A.H., and Patrick, J. 2003. Public Relations Practices: Managerial Case Studies and Problems, 6th edn. Prentice-Hall, Inc. Pearson Education Company. Dennis, W. 2006. Public Relations: Strategies and Tactics. Boston, MA. 8th edn. 262-263. Read More