CRITICAL SITUATION IN AN ORGANIZATION AND MANAGERIAL SOLUTION

1. CRITICAL
SITUATION IN
AN
ORGANIZATION
AND ITS
MANAGERIAL
SOLUTION
S.KISHORE
89
1 MBA
B SEC

2. • Introduction
• Growth
• Crisis
• How it prevailed over the crisis
• Solution the management gave
Titles

3. • Pepsi is a carbonated soft drink manufactured
by PepsiCo.
• Originally created and developed in 1893
by Caleb Bradham and introduced as Brad's
Drink in New Bern, North Carolina, United
States.
• It was renamed as Pepsi-Cola on August 28,
1898 after the Greek word for "digestion" and
"cola" after the kola nut and then renamed as
Pepsi in 1961
• Bradham intended to create a fountain drink
that would be appealing and also aid in
Introduction

4. • Pepsi-Cola gained popularity following the
introduction in 1934 of a 12-ounce bottle.
• Previously, Pepsi and Coca-Cola sold their
drinks in 6.5-ounce servings for about $0.05 a
bottle. With a radio advertising campaign
featuring the popular jingle "Nickel, Nickel”, it
became more popular.
• Coming at a time of economic crisis, the
campaign succeeded in boosting Pepsi's
status. From 1936 to 1938, Pepsi-Cola's profits
doubled.
Growth in Popularity

5. • The stylized Pepsi-Cola wordmark used from
1940 to 1950. It was reintroduced in 2014.
• Pepsi's success under Guth came while the
Loft Candy business was faltering. Since he
had initially used Loft's finances and facilities to
establish the new Pepsi success, the near-
bankrupt Loft Company sued Guth for
possession of the Pepsi-Cola company.
• A long legal battle, Guth v. Loft, then ensued,
with the case reaching the Delaware Supreme
Court and ultimately ending in a loss for Guth.
Growth in Popularity

6. • The Pepsi Corporation faced a crisis in 1993
which started with claims of syringes being
found in cans of diet Pepsi.
• Pepsi urged stores not to remove the product
from shelves while it had the cans and the
situation investigated.
• This led to an arrest, which Pepsi made public
and then followed with their first video news
release, showing the production process to
demonstrate that such tampering was
impossible within their factories.
Crisis

7. • A second video news release displayed the man
arrested.
• A third video showed surveillance from
a convenience store where a woman was caught
inserting a syringe into a can.
• The company simultaneously publicly worked
with the FDA during the crisis. This made public
communications effective throughout the crisis.
• After the crisis had been resolved, the corporation
ran a series of special campaigns designed to
thank the public for standing by the corporation,
along with coupons for further compensation.
Crisis

8. • Kessler called a press conference to insist that the notion of
a nationwide tampering with Pepsi product was unfounded,
and to suggest that "the complains of the past week follow
the classic pattern of copycat hoaxes." By the end of the
week, there had been more than 50 tampering claims and
more than a dozen arrests for filing false claims.
• On Thurday, Pepsi's ad agency, BBDO Worldwide, had put
together a print ad that was the company's only paid place-
ment in response to the crisis. The headline read: "Pepsi is
pleased to announce.... nothing." The text explained that:
"As America now knows, those stories about Diet Pepsi
were a hoax. Hundreds of investigators have found no
evidence to support a single claim." It concluded by
thanking "the millions of you who have stood with us." It ran
in USA Today, The New York Times and about a dozen
other major newspapers on the following Monday, by which
time the crisis was effectively over.
Management solution