Defying a Reputational Crisis – Cadbury's

Salmonella Scare: Why are Customers

Willing to Forgive and Forget?
Carroll, C. Corp Reputation Rev (2009) 12: 64. doi:10.1057/crr.2008.34
______________________
In late June 2006, Cadbury Schweppes, the world's largest confectionary
company, had to recall seven of its branded products in the UK and
Ireland due to the possible contamination with Salmonella Montevideo.
Salmonella can cause a severe case of food poisoning, and leads to
extensive diarrhea and vomiting. However, the food company had
known of the possible contamination as early as January 2006, yet did
not inform health authorities. The company was castigated in the media
by the Food Standards Agency (FSA), and lambasted for their
negligence. Only then did the company decide to issue a recall of over a
million affected products. The company decided not to issue a recall in
January as they felt there were only minute traces of salmonella present.
Despite the FSA declaring Cadbury's products posing an ‘unacceptable
risk to the public’, Cadbury's crisis management strategy to the food
poisoning was counter-intuitive to the traditional crisis management
mantra of being open, honest and responsive. The handling of the crisis
was at odds with current crisis management thinking. This crisis case
study raises some very interesting questions and implications in the
management of a food safety crisis and of crises in general. Does
admission of guilt affect a firm's reputational integrity? Did short-term
profit maximization objectives override long-term reputational
objectives of the firm? Did the positive brand equity and favorable
reputation of Cadbury's insulate the firm from the full impact of a crisis?
Would others have survived such a scandal? Did the food contamination
scare and the handing of it jeopardize the future of one of Europe's best-
loved brands? What lessons can be learned for crisis management and
reputation managers? Cadbury's market share quickly returned to pre-
crisis levels, due to a number of reasons, but the long-term
repercussions of the scare still reverberate around the image of
Cadbury's.
Further readings, click here.
(Links to an external site.)
Rubric
Case Study (1)
Case Study (1)
Criteria Ratings
Identification of Main Issues/Problem Strong Average Weak
20.0 pts 15.0 pts 10.0 pts
20.0 pts
Statement of Objectives - SMART Strong Average Weak
20.0 pts 15.0 pts 10.0 pts
20.0 pts
Analysis and Evaluation of Issues and Problems Strong Average Weak
20.0 pts 15.0 pts 10.0 pts
20.0 pts
Recommendations on Effective Solutions/Strategies Strong Average Weak
20.0 pts 15.0 pts 10.0 pts
20.0 pts
Links to Course Readings and Additional Research Strong Average Weak
20.0 pts 15.0 pts 10.0 pts
20.0 pts
Total Points: 100.0

BIG TOBACCO CSR VIOLATES AD BAN

Published by Corporate Accountability International
December 10, 2012
On Wednesday November 28th, members of Health Justice, a
Philippine public health policy group, filed a legal complaint against
Philip Morris Philippines Manufacturing, Inc. (PMPMI) and Fortune
Tobacco Corporation (FTC) for circumvention of a law requiring a
comprehensive ban on tobacco advertising, promotion and
sponsorship.
The tobacco corporation, which has a stranglehold on the Philippines’
tobacco market, falsely represented an advertisement in the February
edition of “Starweek Magazine” as a news article touting Philip Morris
Fortune Tobacco Corporation (PMFTC)’s latest corporate social
responsibility (CSR) schemes. This deception and misrepresentation
is a PR scheme for a corporation that sells a product that kills half its
customers, and, more importantly, is unlawful.
Corporate Accountability International and the Network for the
Accountability of Tobacco Transnational (NATT) sent a letter to the
Philippine Star editorial board in February of 2012 exposing this
violation of Philippine law and journalistic integrity and received no
response.
The advertisement, misrepresented as a legitimate news article,
features PMFTC president Chris Nelson and is part of Big Tobacco’s
efforts to re-brand itself as a “socially responsible” industry,
particularly in the developing world, a target market for expansion
where 80% of tobacco-related deaths already occur. This Big
Tobacco CSR, recognized by the World Health Organization as
nothing more than a form of advertising, is actually a sophisticated
public relations effort aimed at influencing policy makers and the
public and defeating effective tobacco-control measures.
What this brazen PR piece fails to mention is that the tobacco
industry profits from selling a deadly product with tremendous
economic costs, and the dollars that it drains from economies reduce
budgets for essential public services like the ones PMFTC now offers
to support: hunger and poverty eradication, education and disaster
relief.
PMFTC is an affiliate of Philip Morris International (PMI), the world’s
largest, deadliest and most profitable publicly traded transnational
tobacco corporation. PMI currently operates in 180 countries and
holds more than 27% of the international tobacco products market
(excluding China and the U.S.). In 2010, PMI reported revenues,
excluding taxes, of over $27 billion and an operating income of US
$11.2 billion. Another way to look at it: That’s $1,866 in profits for
every person who will die this year from tobacco-related disease.
We applaud Health Justice for taking this legal action, which comes
on the heels of the Fifth Conference of the Parties (COP5) of the
World Health Organization Framework Convention on Tobacco
Control (WHO FCTC). It sends a clear message to PMI and its
subsidiaries that the public health community will continue to hold
tobacco corporations accountable for their unlawful and unethical
practices. We urge the Philippines’ government and legal authorities
to take the appropriate action to take PMFTC to account for this
unlawful act.

Instructions: Use an Open type Case Analysis to be presented in

the classroom. This is a group work presentation. Each group
leaders will examine and evaluate the case study of
presenters. The presenters will be graded according to rubric
provided, 50% from examiners/evaluator and 50% from the professor.

Rubric
Case Study (1)
Case Study (1)
Criteria Ratings Pts
Identification of Main Issues/Problem Strong Averag Weak
20.0 e 10.0 pts
pts 15.0
pts
20.0 pts
Statement of Objectives - SMART Strong Averag Weak
20.0 e 10.0 pts
pts 15.0
pts
20.0 pts
Analysis and Evaluation of Issues and Problems Strong Averag Weak
20.0 e 10.0 pts
pts 15.0
pts
20.0 pts
Recommendations on Effective Strong Averag Weak
Solutions/Strategies 20.0 e 10.0 pts
pts 15.0
pts
20.0 pts
Links to Course Readings and Additional Strong Averag Weak
Research 20.0 e 10.0 pts
pts 15.0
pts
20.0 pts
Total Points: 100.0