Odwalla E.

coli
GUNAVATHI MURUGIAH LEA160
SAMUEL FRETCHER ROZWYND LEA160
KRITAVARRMAN LEA160
MUHAMMAD NOR AFIQ BIN CHAIDUN LEA160
THE CATEGORY OF CRISIS
Organizations face a crisis of deception when management purposely tampers data and information.For example,
Management makes fake promises and wrong commitments to the customers .

Financial crisis

A financial crisis occurs when an organization suddenly loses a large amount of money, making it difficult to meet its
financial obligations or service its debts. An example of a financial crisis is when a company suddenly loses three major
clients that account for 45% of its revenue. Some factors that can contribute to a financial crisis include:

.Loss of revenue
.Inflation
.Bankruptcy
.Loss of market
.Sudden change in market trends

Technological crisis

Your organization can face this type of crisis if the technological tools it relies upon for its operations fail without warning.
This could include hardware and software failures or industrial accidents. For example, a business that sells its products or
services via a website or online store can quickly lose tens of thousands of dollars in revenue if its servers crash suddenly.

Personnel crisis

A personnel crisis happens when somebody from your organization becomes involved in illegal or unethical behavior,
impacting your company's public reputation. The issue might be related to the employee's conduct at work or in their
private life. The way the company manages the situation is extremely important, as handling it effectively can help them
maintain a more positive public image.

For example, your company may get bad press because of a workplace conflict or an insensitive comment by a senior
executive.
Odwalla Juice Company was started in 1986 by a
group of health-conscious ( greg steltenpohl ,gerry
percy and bonnie bassett) friends living together in
the San Francisco Bay area.

GERRY PERCY BONNIE BASSETT

GREG STELTENPOHL
The main element of their business
model was the claim that Odwalla's
fruit juice was squeezed fresh and with
minimal tampering. The founders
believed that pasteurization (the
process of heating the juice to a certain
temperature to kill bacteria that can
develop during
growing/picking/processing) affected
the taste of the juice and was
unnecessary.Odwalla was also a
pioneer in the United States'
movement towards organic food
ODWALLA USED AN ACID-BASED
RINSING PROCESS TO KILL
BACTERIA AS AN ALTERNATIVE
TO PASTEURIZATION.THE
COMPANY GAINED A LOYAL
FOLLOWING OF CUSTOMERS
THAT WANTED THE FRESHEST
ORGANIC JUICE POSSIBLE, AND
SALES QUICKLY STARTED
GROWING
BY THE MID- 1990S, ODWALLA WAS
SELLING ALMOST $90 MILLION WORTH OF
JUICE PER YEAR (TOJCC).ODWALLA
DEVELOPED A REPUTATION FOR BEING
SOCIALLY RESPONSIBLE, AND THEY
RECEIVED AWARDS FROM BUSINESS
ETHICS MAGAZINE IN 1995 FOR
OUTSTANDING CORPORATE
ENVIRONMENTALISM AND INC. MAGAZINE
IN 1996 AS EMPLOYER OF THE YEAR .
On October 30, 1996, health officials in the state of Washington notified Odwalla
that they were investigating a possible link between the E. coli outbreak and
Odwalla apple and carrot juice-this was the warning stage. After learning of the
potential link, Odwalla’s executive management team had an emergency meeting
to discuss their response.

Odwalla expanded its voluntary recall on November 1 to include carrot and

vegetable juice products, which brought the total to 13 juices. They also offered
refunds to anyone who bought the juice, as well as offering to pay medical costs
for anyone who fell ill from drinking Odwalla juice.On November 3, the company
executives defended their sanitation process in Seattle newspapers. Odwalla
launched a second website and used two 800-numbers (previously created for
customers and suppliers, respectively), to offer alternative sources for recall
informatio
 CEO STEPHEN WILLIAMSON CONDUCTED “REGULAR COMPANY-WIDE
CONFERENCE CALLS ON A DAILY BASIS, GIVING EMPLOYEES THE CHANCE
TO ASK QUESTIONS AND GET THE LATEST INFORMATION.”THIS PRACTICE
ENDED UP BEING SO WELL-LIKED BY EMPLOYEES THAT IT SURVIVED THE
CRISIS

ODWALLA EXPLAINED THAT “SAMPLES OF APPLE JUICE FROM ODWALLA'S

TUKWILA, WASHINGTON DISTRIBUTION CENTER WERE TESTED AND CONFIRMED
TO BE INFECTED WITH E. COLI.”IN A NOVEMBER 5 PRESS CONFERENCE,
FOUNDER GREG STELTENPOHL SAID THAT ODWALLA WOULD RESEARCH HEAT
PASTEURIZATION AS A COMPANY PROCEDURE. HE ALSO CLAIMED TO HAVE
VISITED WITH SOME OF THE VICTIMS' FAMILIES PERSONALLY
Reportedly, 61 people became sick from the Odwalla contamination, which was
the same E. coli strain that contaminated Jack-in-the-Box hamburgers in 1993
(Lerbinger).Then, Anna Grace Gimmestad, a 16-month-old from Evans, Colorado
became so sick after drinking Odwalla apple juice that within two weeks, “her
kidneys gave out, part of her brain became clogged with dead blood cells, and
her heart faltered,” resulting in her death on November 8

ANNA GRACE

On the day of her death, Odwalla issued a press release offering condolences
to Anna's family. Another same-day press release indicated that “no E. coli
bacteria were found at Odwalla's Dinuba plant.”The focus shifted to suppliers
and sub-par sanitation processes, not just at Odwalla, but with the fresh fruit
industry as a whole. By November 19, media reports claimed that Odwalla was
“calling on its competitors to stop selling unpasteurized apple juice
However, during the discovery process in one of the lawsuits filed by an
injured consumer, it was revealed that Odwalla had more knowledge of a
potential health hazard prior to the outbreak than had been previously
reported. A report surfaced that indicated that the U.S. Army had rejected
Odwalla’s proposal to sell their juic

Army commissaries after an Army inspector found uncommonly high levels

of bacteria in a sample and concluded that the risk of contamination was
extraordinarily high. The Army rejection had taken place four months prior to
the E. coli outbreak. Responding to the Army’s findings, Odwalla’s head of
quality assurance recommended that the company add an additional layer
of contamination protection by employing a chlorine-based washing system
for the fruit. His recommendations were rejected, however, due to
management’s concern that the chlorine wash would affect the taste of the
juice. After the Army disclosures were made public, Odwalla settled several
lawsuits despite its earlier resistance to a non-litigation solution.
FINALLY, THE COMPANY RE-LAUNCHED ITS
APPLE JUICE TWO MONTHS LATER. IN 2001,
COCA-COLA BOUGHT ODWALLA FOR $186
MILLION AND REBRANDED ITSELF. AFTER THE
FALLOUT FROM THE E. COLI CRISIS, ODWALLA
INVESTED HEAVILY IN QUALITY ASSURANCE
TECHNOLOGY AND EVENTUALLY BECAME AN
INNOVATOR OF A “FLASH- PASTEURIZATION”
PROCESS THAT KILLED ALL BACTERIA, BUT
KEPT THE FRESH TASTE AND QUALITY OF THE
JUICE INTACT. JUST TWO YEARS AFTER THE
CRISIS BEGAN, THE READERS OF SAN
FRANCISCO MAGAZINE VOTED ODWALLA
“BEST BRAND.” ALTHOUGH THE COMPANY
LOOKED POISED FOR A COMEBACK, IT HAD
ACCRUED SUBSTANTIAL DEBT AND WAS
FORCED TO BEGIN EXPLORING THE
POSSIBILITY OF MERGER OPPORTUNITIES.
Is it a good or bad crisis management? Give
suggestions on how they should manage the crisis

Their crisis management is good because:-

-Odwalla CEO Stephen Williamson voluntarily recalled 13 products containing apple

juice from about 4,600 stores.Carrot and vegetable juices are also recalled the next
day as a precaution, as they are processed on the same line
.
-Odwalla donated $ 250,000 of $ 1.5 million to fund research in the prevention of
foodborne illness.In addition, the company spent about another $ 12 million to settle
about a dozen lawsuits from families whose children became infected.

-Odwalla opened a website and a call center to handle consumer questions about the
recall.
 Thank you!
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