BHAVANA R B REGISTER NUMBER: RA1952001020013

1. CRITICAL SITUATION IN AN ORGANIATION
AND MANAGERIAL SOLUTION.
NAME: BHAVANA R B
REGISTER NUMBER: RA1952001020013
SUBJECT: MANAGERIAL SKILLS
COURSE AND SECTION: MBA, A

2. CONTENTS OF THE PRESENTATION
o INTRODUCTION
o THE CADBURY CRISIS
o THE SOLUTION
o BIBLIOGRAPHY

3. WORLD’S SECOND LARGEST
CONFECTIONERY BRAND

4. INTRODUCTION
oIn 1824, John Cadbury, a 22 years young Quaker opened a small grocers shop in
Birmingham, England at bull street making drinking chocolates, coffee, tea.
oIn 1847, John Cadbury moves his business to a larger factory, as his company
becomes the Cadbury brothers – his brother Benjamin joining him and the company
they formed was called “Cadbury brothers of Birmingham”.
oSince 2010, Cadbury is owned by Mondelez International.
oCadbury India began its operations in India in 1948 by importing chocolates.
oTheir operates in categories were chocolate, confectionaries, beverages, biscuits,
candy, etc.

5. BRAND PORTFOLIO
o CHOCOLATE – Cadbury Diary milk, Diary milk silk, Cadbury diary milk shots,
Bournville, Temptation, 5 Star, Perk, Eclairs, Gems.
o SNACK – Cadbury bites
o MALTED FOODS – Bournvita, cocoa powder, drinking chocolate.
o BISCUITS – Oreo.
o BEVERAGES - Tang
Cadbury India, growing in double digits the past two years, has forecast a healthy 2007 riding on the back
of factors such as sharper focus on core brands, product rationalisation and working closely with trade
channels. It is the market leader in the chocolate confectionery business with a market share of over 70%.

7. WHAT ACTUALLY HAPPENED?
o In October 2003, Cadbury found itself in the eye of a storm.
o During Diwali, customers in Mumbai, complained about finding worms in the Cadbury’s Dairy
milk chocolates.
o Acting on the complaint from the customers and consumers, the state FDA(food and drugs
administration) began sizing the stocks of Cadbury chocolates.
o When produced before the state food laboratory at the public health institute, the chief chemist and
public analyst said that “the chocolates were insect infected and unfit for consumption”.
o This seizure has been widely reported by the local medias.

8. THE TRAFFIC
o In India Cadbury is synonymous with Chocolate.
o The company's reputation and credibility was under intense scrutiny.
o Sales volume came down drastically during that festival season by 30%, which was supposed to go
up 15%.
o The infestation incident became the subject of sms jokes, warnings, cartoons and TV tickers.

9. MARKED EFFECT OF CRISIS ON
CADBURY
o The heat of negative publicity melted Cadbury's Dairy Milk sale.
o For the first time, Cadbury did not advertise for a month and a half.
o Consumers seems to ignore their chocolate carvings.

10. CADBURY’S RESPONSE AND FDA
CONCLUSION
o Cadbury stated that “chocolates requires specific care and attention in manufacturing and storage”.
o At all Cadbury plants, every manufacturing process is closely monitored by experienced personnel
and a quality assurance team tests finished goods before their dispatch for sale, pushing the blame
on poor retailers of their storage practices.
o This raised a question about their packing.
o Packaging wasn’t either proper or airtight.
o FDA concluded that, it’s a manufacturing defect with unhygienic conditions or improper
packaging, leading to massive public negativity.

11. THE
SOLUTION

12. LEGAL BATTLE
o The interaction between the FDA and cadbury during the incident was strained at best.
o In October 2003, the FDA was riding the way of public sentiment following the PEPSICO and
COCO-COlA incident.
o The local FDA commissioner used the Cadbury infestation as another opportunity to be seen as a
saviour of massess.
o The FDA Minister annouonced the Hygiene conditions in the factory are more than satisfactory, it
is imposible for infestation to occur during the manufacturing process.

13. o FIRST MEDIA BRIEFING
Infestation is a storage linked problem. It is safe to consume Cadbury Chocolates. Consumer must exercise
the same care in purchasing a chocolate as they would when buying a food item. -BHARAT PURI,
MANAGING DIRECTOR.
o SECOND MEDIA BRIEFING
Cadbury announced significant steps to restorer consumer conference called Project VISHWAS. It included
monitoring an education programme undertaking on a war footing to address storage problems. Significant
packaging changes to reduce dependency on storage conditions as much as possible.
o Cadbury brought an Brand Ambassador to reinforce credibility that the company had demonstrated through
its action.
o Amitabh Bachan, a legendary Indian Film star was chosen as he embodied the values of Cadbury as a brand
and connect with all of India.

15. RESULTS
o The media relationship effort clearly helped in making media accept that the infestation was
genuinely caused by storage linked problems.
o The Media helped Cadbury get a total of 378 clips in over 11 languages covering the new
packaging and its benefits in January 2004.
o The sales volume which declined drastically, climbed back almost to the pre incident levels by
week.
o With in Eight weeks of introduction of new packaging and communications there was a clear
reflection of restoration of consumer and hence trade confidence in the corporate brand.

16. CONCLUSION
While the new product introduction and advertising had their roles to play in changing consumer
perceptions, the media’s positive coverage and the trade’s positive predisposition played a huge part
in helping Cadbury regain its reputation in the market.

17. BIBLIOGRAPHY
1. Mbaknol.com
2. Prcai.org
3. Researchgate.net (pdf)
4. Image courtesy - google

18. THANK YOU