Crisis Management

After research, there has been one big crisis in PepsiCo's history which is often used as an example of a situation that needed a well layed out crisis management plan in order to maintain the companies reputation.In 1993, a man from Tacoma, Washington claimed he found a syringe inside of his can of Diet Pepsi. While people became worried about the production of the company's products, Pepsi knew that their manufacturing would not allow for such tampering. Pepsi realized that people from outside of the company were inserting these foreign objects in order to receive money from the company and alter Pepsi's image.

In order to avoid damage to the company's name, Pepsi employed a defensive strategy, claiming that the organization was innocent in this situation. A tactic that Pepsi used was to attack the accuser. As Pepsi knew that customers were inserting objects after they had been opened in order to receive settlement money from the organization, Pepsi made it clear that legal actions would be taken against those making false claims. Since there was so much information on the news about this situation, Pepsi knew they needed to comment on the situation even though it was not their fault. If Pepsi did not respond to the crisis, it would become worse as information from outside the organization began to spread.

The second strategy which Pepsi employed was to say there was no crisis. In order to show the safety of their factories and that merchandise could not be tampered, they brought video cameras into the manufacturing room. This served as visual representation that due to Pepsi's bottling process it would be impossible for foreign objects to be entered into the cans or bottles before they had been sealed. Pepsi also released a video of a convenience store surveillance system catching a woman tampering a can of Pepsi. These videos served as actions taken to maintain customer confidence in Pepsi's product in the midst of a crisis.

While this crisis is different from most others since there was no subject and Pepsi had done nothing wrong, it was still very important for Pepsi to take actions in minimizing the rumors. While there was no legitimate crisis, the allegations were able to create a negative sentiment about the organization until PepsiCo was able to show the tampering was not their fault. This situation is a specific example that the perception of a crisis must be dealt with just as an actual crisis is.

Pepsi was able to rebound from this situation by using honesty and open communication with both their customers and employees. This crisis was able to be easily averted due to the fact that Pepsi took action extremely quickly after the claims against the company had been made. PepsiCo's preparedness for crisis situations helped them to maintain their positive image even after terrible allegations were made against them.

After looking through their website I was able to find a document about the variety of crisis that PepsiCo is aware they may be affected by. In their 2008 and 2009 annual reports, Pepsi had a section dedicated to "Our Business Risks". This section discussed various things that could potential create conflict for the organization. Potential crisis that were included on the website include:

1. Change in customer preferences
2. Product contamination or tampering
3. Problems with retailers of Pepsi products or bottling companies
4. Problems top management’s ethics or with retaining them
5. Legal changes
6. Economic instability
7. Lack of resources