Odwalla Inc. (1996) E. coli contamination’s Crisis Management: An Essay

Odwalla Inc. Natural Juices Crisis Management

Nowadays, crisis management has become an integral responsibility or function of every company. This is because the uncertainty has become almost natural in the current business environment. Every organization needs to be equipped with strategies and tools to deal with the crisis should it ensue, and that is exactly what crisis management does. In 1996, Odwalla was compelled by the Food and Drug Administration (FDA) to recall all its unpasteurized juice products over health and safety concerns. Analyzing the company’s reaction to the crisis is a benchmark of how more professional future decisions should be made to address a crunch.

The onset of the year 1996 brought a historic predicament to the company. FDA found Odwalla inc. guilty of distributing fruit juice products that were not compliant with the foods and beverages regulations. In Washington State, one child died while over 60 people got sick after consuming Odwalla’s unpasteurized apple juice. FDA ordered Odwalla inc. to recall all its juice products worth $6.5 million, and, in addition, the company was made to pay a hefty fine of 1.5$ million. Odwalla inc. suffered the loss of a good reputation and significant market share.

A critical analysis of Odwalla’s crisis and consequent reaction helps us to make a key lesson. The health risk of unpasteurized juice was not only an internal threat but also unpremeditated, and it can only be termed as accidental (Cornelissen, 2017). In a highly regulated foods industry, Odwalla inc. was liable for manufacturing and supplying hazardous fruit juices. The direct impact of the substandard juices was on the consumers (primary victims), while stakeholders (secondary victims) only suffered indirect consequences. In reaction, Odwalla company chose the acceptance strategy where it complied with the FDA’s directive to recall its juice products (Cornelissen, 2017). As potential solutions, the company started reestablishing trust with its consumers and improving its products’ quality (Cornelissen, 2017). The strategy was unsuccessful as Odwalla overcame the crisis in a few years.

Odwalla’s reaction to the crisis and the solution strategy embraced apply to the UAE setting. Goby and Nickerson (2015) highlight that money laundering, cyber insecurity, and corruption are UAE’s major threats. In such a setting, accepting and recalling products is a noble reaction and solution strategy that can save Odwalla inc. from possible reputation repercussions. In addition, the company might need to be more vocal, especially on its social accountability, and it could do that by cooperating with the government to devise ways to prevent similar occurrences in the future.

The case of the Odwalla inc. crisis serves as a lesson on how to react professionally to a predicament. The company accepted its fault and immediately began finding and implementing a feasible solution. In about five years, Odwalla had recovered from its lost reputation with annual sales hitting a new mark of 186$ million. The same reaction and solution can work if employed to address a similar case in UAE.

References

Cornelissen, J. (2017). Corporate communication. 5th ed. Thousand Oaks, CA: SAGE Publications, pp.211-227.

Goby, V.P. & Nickerson, C. (2015). The impact of culture on the construal of organization crisis: perceptions of crisis in Dubai. Corporate Communications: An International Journal, 20 (3), 310-325.

Holcomb, A. (2018, May 22). Slime science. Retrieved November 15, 2018, from https://www.slj.com/?detailStory=slime-science

Author’s Note:  TheOdwalla Inc.s case exhibits one of the most significant manner of dealing with widespread crises, with the company’s reaction saving it from bankrupcy. The case exemplifies very few instances that a company has lost face and emerged without much damage to its public profile. Another notable caser involves the Johnson and Johnson contamination case that exemplifies how companies ought to handle a PR nightmare and regain public trust.