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Odwalla Case – Companies in Crisis

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What happened? Odwalla (pronounced “odewalla”) is the health-conscious juice company which began a couple of decades ago when Greg Steltenpohl, Gerry Percy and Bonnie Bassett began squeezing fresh oranges on a $200 hand juicer. The company was growing strongly with annual sales rising 30% per year and approaching $90m. The company had established a strong brand with enormous customer loyalty. On October 30, 1996, everything changed.

Health officials in Washington state informed the company that they had discovered a link between several cases of E.

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coli 0157:H7 and Odwalla fresh apple juice. The link was confirmed on November 5. As the crisis played itself out, one child died and more than 60 people in the Western United States and Canada became sick after drinking the juice. Sales plummetted by 90%, Odwalla’s stock price fell 34%. Customers filed more than 20 personal-injury lawsuits and the company looked as though it could well be destroyed. What did the company do? Odwalla acted immediately.

Although at the point where they were first notified the link was uncertain, Odwalla’s CEO Stephen Williamson ordered a complete recall of all products containing apple or carrot juice.

This recall covered around 4,600 retail outlets in 7 states. Internal task teams were formed and mobilised, and the recall – costing around $6. 5m was completed within 48 hours. What the company didn’t do was to avoid responsibility. On all media interviews, Williamson expressed sympathy and regret for all those affected and immediately promised that the company would pay all medical costs.

This, allied to the prompt and comprehensive recall, went a long way towards satisfying customers that the company was doing all it could. Internal communications were key: Williamson conducted regular company-wide conference calls on a daily basis, giving employees the chance to ask questions and get the latest information. This approach proved so popular that the practice of quarterly calls survived the crisis. External communications were just as vital. Within 24 hours, the company had an explanatory web site (its first) that received 20,000 hits in 48 hours.

The company spoke to the press, appeared on TV and carried out direct advertising with the website address. All possible attempts were made to provide up to the minute, accurate information. The next step was to tackle the problem of contamination. The company’s entire approach had been founded on fresh unpasteurised juice because only juice which had been untampered with could have the best flavour. The company decided quickly that this had been wrong. The company moved quickly to introduce a process called “flash pasteurisation” which would guarantee that E-coli had been destroyed whilst leaving the best flavoured juice possible.

Within months of the outbreak, the company had in place what some experts described as “the most comprehensive quality control and safety system in the fresh juice industry. ” On December 5, the company brought back its apple juice. Williamson’s explanation of how the company found its way is instructive. “We had no crisis-management procedure in place, so I followed our vision statement and our core values of honesty, integrity, and sustainability. Our number-one concern was for the safety and well-being of people who drink our juices. ” (Source: Fast Company) Cost and benefit

Odwalla made a rapid recovery. Much of the good will and trust it had built up over the years remained. Sales picked up again quite quickly. The company did exactly the right things to achieve this. For instance during the lean months, Odwalla refused to lay off any of its delivery people. They were sent out to maintain customer relations – an approach that not only earned the loyalty of the employees, but helped to secure the company’s reputation with its customers. Even the most grievous victim of the crisis gave Odwalla credit. “I don’t blame the company” the father of the girl who died said. They did everything they could”. The company did pay a large cost. Odwalla pleaded guilty to criminal charges of selling tainted apple juice and was fined $1. 5m – the largest ever assessed in a food industry case by the US Food and Drug Administration. So is everyone happy? Not quite – the company still has some critics who say that it was not quite the victim it would have people believe. Jon Entine, for instance, says that ‘investigators now contend that Odwalla had significant flaws in its safety procedures and citrus-processing equipment was so poorly maintained that it as breeding bacteria in “black rotten crud’. Before the outbreak, Odwalla had received letters from customers who become violently ill, but had not addressed the problem. “Resisting industry safety standards, Odwalla steadfastly refused to pasteurize its juices claiming it altered taste and was unnecessary. Yet, the year before the incident, the head of quality assurance, Dave Stevenson, who was aware of the dangers, proposed using chlorine rinse as a backstop against bad fruit. Senior executives who feared chlorine would leave an aftertaste overruled him.

They decided to rely on acid wash although its chemical supplier had informed Odwalla that the wash had killed the E. coli in only 8 percent of tests and should not be used without chlorine. ” Conclusion The overwhelming feeling of people who dealt with the company at the time of the crisis was that here was a community of ordinary people who were devastated at the fact that they had created an episode of poisoning that ended in a loss of life. The company’s values spoke of nourishing people – and when the crisis came it was an adherence to honest, straight talking and accepting responsibility that helped to get the company through.

There are critics who refuse to credit the company with any integrity whatsoever – but even these will concede that as an exercise in crisis management, Odwalla stands as an example of best practice that few can match. The year after the crisis, Odwalla was voted “Best Brand Name in the Bay Area” by San Francisco Magazine. This was the first indication amongst many that Odwalla’s reputation had survived. http://www. kidsource. com/kidsource/content2/ecoli/odwalla. 11. 23. html To Odwalla, the recent incidents of E. coli O157:H7 are a call to action for the entire fresh apple juice industry.

Adherence to industry standards for good manufacturing practices is no longer enough to assure that E. coli O157:H7 is not present in fresh apple juice. “Previously accepted practices for preventing E. coli O157:H7 contamination, such as thoroughly washing apples, cannot assure safety,” said Stephen Williamson, CEO of Odwalla. Further, according to Dr. Michael Doyle, microbiologist from the University of Georgia, “Testing of finished product does not guarantee the absence of harmful pathogens such as E. coli O157:H7. ” Finally, among other methods, the company is considering some form of heat treatment o kill bacteria while maintaining integrity and optimal nutritional content of the fresh apple juice, producing a safe product that is in keeping with the company’s vision of producing nourishing beverages. “Our core values are based around the idea of optimal nutrition,” said Greg Steltenpohl, chairman of Odwalla. “It may be possible to heat treat and still maintain the primary nutritional content of our apple juice. We’re researching that now and when we have all the information we’ll make a decision and share our findings with the industry and the public. Until that time, the company has stopped production of all fresh apple juice and encouraged other producers of fresh apple juice to do the same. http://en. wikipedia. org/wiki/Odwalla Company background Odwalla Inc. (pronounced /o?? dw?? l? /) is an American food product company that sells fruit juice, smoothies and food bars. It was founded in Santa Cruz, California in 1980 and is headquartered in Half Moon Bay, California. The company experienced strong growth after its incorporation in 1985, expanding its distribution network from California to most of North America, and went public in 1993.

However, a period of decline occurred as a result of a fatal outbreak of E. coli O157:H7 bacteria in 1996 caused by contamination of its apple juice. Odwalla recalled its juices and experienced a ninety-percent reduction in sales following the event. The company gradually recovered, and, after a few years, was making a profit again. Odwalla was acquired by The Coca-Cola Company in 2001 for US$181 million and became a wholly owned subsidiary of The Coca-Cola Company. Odwalla’s range of products includes juices, smoothies, soy milk, bottled water, organic beverages, and several types of energy bars, known as “food bars”.

While Odwalla originally sold unpasteurized juices (because the process of pasteurization alters the flavor of juice), following the E. coli outbreak, Odwalla adopted flash pasteurization and other sanitization procedures. Odwalla was founded in Santa Cruz, California, in 1980 by Greg Steltenpohl, Gerry Percy, and Bonnie Bassett. [2][3] Odwalla’s production facility is in Dinuba, California. The trio took the idea of selling fruit juices from a business guidebook, and they began by squeezing orange juice with a secondhand juicer in a shed in

Steltenpohl’s backyard. They sold their product from the back of a Volkswagen van to local restaurants,[3][4] employing slogans such as “soil to soul, people to planet and nourishing the body whole”. [5] The name for their start-up, “Odwalla”, was taken from that of a character who guided “the people of the sun” out of the “gray haze” in the song-poem “Illistrum”, a favorite of the founders, which was composed by Roscoe Mitchell and performed by the Art Ensemble of Chicago jazz group, of which Mitchell was a member. 6]/[7] Steltenpohl, Percy, and Bassett related this to their products, which they believe “help humans break free from the dull mass of over-processed foods so prevalent today”. 1996 E. coli outbreak [edit] Safety issues prior to the E. coli outbreak The Odwalla plant had several food safety issues, many of which arose because Odwalla did not pasteurize its juice. [14] Tests discovered low levels of Listeria monocytogenes, a pathogen that can harm pregnant women, at the Odwalla factory in 1995. 16] In response, the company spent several million dollars to upgrade the plant’s safety features, and bacteria levels were reduced to “relatively low levels”. [14] The next year, Dave Stevenson, Odwalla’s technical services director who oversaw quality assurance, suggested to Odwalla executives that the company should add a chlorine rinse to guard against bacteria on the skin of processed fruit, supplementing its existing phosphoric acid wash process. However, this plan was dropped by Chip Bettle, Odwalla’s senior vice president, who feared that the chemicals would harm the fruit and alter the flavor of the juice. 14][17] In a letter to The New York Times written on January 5, 1998, Odwalla’s director of communications, Christopher C. Gallagher, wrote that “Odwalla continuously upgraded its manufacturing process in the period leading up to the recall. Moreover, our primary indicator of overall quality was daily bacteria-level readings, which were relatively low and decreasing in apple juice” Outbreak and subsequent recall On October 30, 1996, health officials from the state of Washington informed Odwalla that they had found a link between an outbreak of the E. oli O157:H7 bacterium and a batch of Odwalla’s fresh apple juice produced on October 7. This was confirmed on November 5, and may have resulted from using rotten fruit; one account tells of fruit being used that was highly decayed. [14] Another possible source of contamination was fallen apples (“grounders”), that had come into contact with animal feces and not been properly cleaned. [19][20] Confirmation that the bacteria came from outside the factory was provided when an inspection on November 15 found no evidence of E. coli contamination in the facility. 15] The outbreak came as a surprise—the plant had been inspected by the FDA three months earlier, and Odwalla supervisors were not aware that the E. coli bacteria could grow in acidic, chilled apple juice. [14] Based on a recommendation from the FDA, however, on October 30 Odwalla’s Chief Executive Officer Stephen Williamson voluntarily recalled 13 products which contained apple juice from about 4,600 stores. [21] Carrot and vegetable juices were also recalled the following day as a precautionary measure, since they were processed on the same line. [2][15] The recall cost the company $6.  million and took around 48 hours to complete,[22] with almost 200 trucks being dispatched to collect the recalled products. Odwalla opened a website and a call center to handle consumer questions about the recall. [15] As a result of the outbreak, 16-month-old Anna Gimmestad from Denver, Colorado, died from kidney failure,[19] and at least 66 people became sick. [23] Fourteen children were hospitalized with hemolytic uremic syndrome, a severe kidney and blood disorder, and were, according to doctors, “likely to have permanent kidney damage and other lasting problems”. 14] In consequence, Odwalla stock fell by forty percent and sales of its products dropped by ninety percent. [3][24] The company laid off 60 workers, and, at the end of the fiscal year, posted a loss of $11. 3 million. [2][25] The outbreak occurred because Odwalla sold unpasteurized fruit juices,[3][17] though pasteurization had long been standard in the juice industry,[26] claiming that the process of pasteurization alters the flavor and destroys at least 30% of nutrients and enzymes in fruit juice. [17] Instead, Odwalla relied on washing usable fruit with sanitizing chemicals before pressing.

Because of the lack of pasteurization and numerous other flaws in its safety practices (one contractor warned that Odwalla’s citrus processing equipment was poorly maintained and was breeding bacteria in “black rotten crud”),[14] the company was charged with 16 criminal counts of distributing adulterated juice. Odwalla pled guilty,[23][27] and was fined $1. 5 million: the largest penalty in a food poisoning case in the United States. With the judge’s permission, Odwalla donated $250,000 of the $1. 5 million to fund research in preventing food-borne illnesses. 28] In addition, the company spent roughly another $12 million settling about a dozen lawsuits from families whose children were infected. [29] To boost sales following the recall, Odwalla reformulated five products to remove their apple juice content, and released them in November 1996. [2] Flash pasteurization, as well as several other safety precautions,[25] were introduced to the manufacturing process, and the juices reappeared on store shelves on December 5, 1996. [ After the E. coli outbreak, Odwalla improved the safety of several of its production processes. Before the fruit enters the factory, it is washed, sorted and sanitized.

Once it has reached the plant, the apples, carrots, and citrus fruits are separated and washed again. The fruit is pressed to get the juice, flash pasteurized, and bottled. [51][54] A sample undergoes quality testing, and, if it passes, the batch is shipped in refrigerated trucks to various distribution centers in the United States. [36][51] Odwalla juice has a relatively short shelf life compared to other beverages and thus must be refrigerated. However, after the introduction of flash pasteurization in 1996 and a new plastic bottle in 2001, the shelf life has been considerably extended. 2][14][36] Generally, Odwalla products are sold in special Odwalla-brand displays at grocery and convenience stores, instead of being intermixed with other products. http://en. wikipedia. org/wiki/Flash_pasteurization Flash pasteurization, also called “High Temperature Short Time” processing, is a method of heat pasteurization of perishable beverages like fruit and vegetable juices, beer, and some dairy products. Compared to other pasteurization processes, it maintains color and flavor better, but some cheeses were found to have varying responses to the process. 1] It is done prior to filling into containers in order to kill spoilage microorganisms, to make the products safer and extend their shelf life. Flash pasteurization must be used in conjunction with sterile fill technology (similar to aseptic processing) and therefore has the risk of post-pasteurization contamination if hygiene standards are not rigorously enforced [2]. Flash pasteurization is often used for the pasteurization of bulk products such as keg beer, milk, and kosher wines. The liquid moves in a controlled, continuous flow while subjected to temperatures of 71. °C (160 °F) to 74 °C (165 °F), for about 15 to 30 seconds. The process is more prevalent in Europe and Asia than in North America. [citation needed] Flash pasteurization is widely used for fruit juices. Tropicana Products has used flash pasteurization since the 1950s. [3] The juice company Odwalla switched from non-pasteurized to flash-pasteurized juices in 1996 after tainted unpasteurized apple juice containing E. coli O157:H7 sickened many children and killed one. http://www. jonentine. com/ethical_edge/corp_screwups. htm For Odwalla, the test of its character came when company officials learned of the death of Anna Gimmestad.

Within days of drinking apple juice, her kidneys gave out, her brain became clogged with dead blood cells, her heart faltered, and she died. Her juice had been contaminated with E. coli O157:H7 bacteria. Investigators now contend that Odwalla had significant flaws in its safety procedures and citrus-processing equipment was so poorly maintained that it was breeding bacteria in “black rotten crud” and “inoculating every drop of juice. ”   Before the outbreak, Odwalla had received letters from customers who become violently ill, but had not addressed the problem.

Resisting industry safety standards, Odwalla steadfastly refused to pasteurize its juices claiming it altered taste and was unnecessary. Yet, the year before the incident, the head of quality assurance, Dave Stevenson, who was aware of the dangers, proposed using chlorine rinse as a backstop against bad fruit. Senior executives who feared chlorine would leave an aftertaste overruled him. They decided to rely on acid wash although its chemical supplier had informed Odwalla that the wash had killed the E. coli in only 8 percent of tests and should not be used without chlorine.

By summer 1996, former company officials say production demands began to overshadow safety concerns. Safety managers were bullied. Reportedly encouraged by management, production managers brushed aside warnings from an inspector that a particular batch of apples was too rotten to use. Some were decayed, one had a worm, and special precautions against contaminants were not taken. That batch turned out to be deadly. Since the incident, Odwalla has publicly accepted “responsibility” for the poisonings, although it continues to disingenuously portray itself as a victim. “We didn’t test for E. oli because we believed evidence showed it was not found at that acid level,” said founder Steltenpohl. In other words, Odwalla pleaded guilty to the lesser crime of ignorance and to not anticipating the health dangers of unpasteurized juice. Accountability, Not ‘Good Intentions’ Could Odwalla have done anything differently? In terms of its handling of the crisis, the answer is probably ‘no. ‘  It had dealt itself a bad hand but played it pretty well. If it had been more forthright, the public relations hit could have been debilitating. And for all its past problems, Odwalla seems on the way to upgrading its food handling standards.

Whether it can salvage its brand reputation and resume growing is an open question. What can other businesses learn from the blow-up? For all its talk of its socially responsible rhetoric, at the time of the poisoning Odwalla resembled a train loose on a downhill track. With pressure to meet production schedules, managers suspended good judgment and good manufacturing practices. Workers who voiced concerns were intimidated into silence. That’s what happens when a business has an insular culture without a clear system of corporate checks and balances.

At the floor level, Odwalla had never put in place the internal oversight– social reviews, ethical hotlines, ombudsmen and the like–that might keep operational excesses in check. Its board was comprised of business friends of its founder, even though companies with strong, independent boards have proven to have healthier corporate cultures and are more profitable. The drooping bottom line for Odwalla is that after a screw-up, accountability is too late. Nothing is more revealing than management’s willingness to put the broader interests of the company ahead of its own vanity.

And no ethical oversight can compensate for a rupture in personal ethics. Mistakes are built into life; character is defined in the breach. In the end, there is no such thing as ‘business ethics,’ only ethics of individual business men and women. That’s why the Odwalla saga is so troubling. http://lovetomorrowtoday. com/ The (re) Rise of Odwalla Monday, June 28th, 2010 | Author: Rich Odwalla is no BP. Just about everything about the two companies is different. But could the oil giant learn a thing or two from the makers of Mango Tango?

If you’re a consumer of a certain age, you may remember Odwalla’s meteoric rise in the mid-1990s. With annual sales rising 30% per year, the company had quickly established a strong brand with enormous customer loyalty. That all changed in October of 1996, when health officials in Washington state informed the company that they had discovered a link between several cases of E. coli and Odwalla fresh apple juice. By the end of the crisis, one child had died, more than 60 people had become ill, sales plummetted by 90%, and Odwalla’s stock price fell 34%. With pending lawsuits and a tarnished brand, the company seemed doomed.

But, thanks to a considered and rapid response to the crisis, the company survived. Though it’s hard to compare a relatively isolated incident of E. coli with the devastating Deep Horizon oil spill, it’s not hard to draw a parallel between events that threatened to bring down two companies and compare the response to each. The re-emergence of Odwalla, which boasts initiatives like its current “Plant A Tree Program,” is succeeding in ways BP’s can’t possibly. As Mallen Baker explains in his Corporate Social Responsibility case study of Odwalla’s crisis management, “Odwalla acted immediately.

Although at the point where they were first notified the link was uncertain, Odwalla’s CEO Stephen Williamson ordered a complete recall of all products containing apple or carrot juice. ” Williamson has said, ”We had no crisis-management procedure in place, so I followed our vision statement and our core values of honesty, integrity, and sustainability. Our number-one concern was for the safety and well-being of people who drink our juices. ” Within hours of the ‘outbreak,’ the company had an explanatory web site (notably, its first) that received 20,000 hits in 48 hours. Baker writes, The next step was to tackle the problem of contamination.

The company’s entire approach had been founded on fresh unpasteurised juice because only juice which had been untampered with could have the best flavour. The company decided quickly that this had been wrong. The company moved quickly to introduce a process called “flash pasteurisation” which would guarantee that E-coli had been destroyed whilst leaving the best flavoured juice possible. Experts described Odwalla’s response as “the most comprehensive quality control and safety system in the fresh juice industry. ” Despite having to pay the largest fine ever assessed in a food industry case by the US Food and Drug Administration ($1. million), Odwalla recovered quickly. The year after the crisis, Odwalla was voted “Best Brand Name in the Bay Area” by San Francisco Magazine, “the first indication amongst many,” says Baker, “that Odwalla’s reputation had survived. ” Its recent Plant a Tree program reflects the degree to which the brand’s identity- as a thoughtful brand, built on the core principles to which Williamson referred- and its corporate operations are in concert. Visitors to Odwalla’s site are invited to select where the company will plant a tree on their behalf. 00,000 trees will be planted by the program, at Odwalla’s cost – the choice of which states/state parks will be based on vote tally, which visitors can influence by spreading the message via social media. A Facebook Microforest app helps friends join forces to plant a virtual Microforest. Posting your participation in tree-planting on Twitter encourages your followers to do the same. Odwalla’s stated goal is to allow fans and participants to “naturally protect the world from ordinary”. http://www. marlerclark. com/case_news/detail/suits-against-odwalla-mount-in-e-coli-case Suits Against Odwalla Mount in E. coli Case y Sanford Nax And Dennis Pollock, The Fresno Bee January 6 1998 Another lawsuit was filed Monday against Odwalla Inc. , even as a Fresno grand jury continues to investigate circumstances surrounding an October 1996 outbreak of E. coli that led to the death of a Colorado child. Seattle attorney William Marler, who has filed four previous suits against the juice maker in the 1996 incident, filed the latest suit in King County Superior Court in Seattle on behalf of 4 1/2-year-old Katherine Wright, who allegedly drank apple juice contaminated with E. coli 0157:H7. The Wright lawsuit is the latest to stem from the outbreak of E. oli that killed a 16-month-old girl in Colorado and injured at least 60 other people. To date, 17 personal-injury suits have been filed in the incident; seven have been settled, according to Odwalla’s 1997 annual report. Odwalla is based in Half Moon Bay near San Francisco, and its plant is in Dinuba. The Wright girl is the fifth young Odwalla consumer Marler is representing. The lawsuits could go to trial this spring. The complaint alleges the girl drank Odwalla apple juice, provided to her by a day-care provider, periodically from Oct. 21-28, 1996. Girl became sick On the morning of Oct. 7, 1996, the young girl became ill, complained of excruciating stomach pain, cramps, vomiting and diarrhea. She seemed to recover, however, and returned to day care two days later, where she once more was given Odwalla to drink. She became sick again that night and was taken to her pediatrician and then to a hospital the next day, after the day-care provider called with the news that unpasteurized Odwalla juice was linked to E. coli, according to the suit. The suit alleges that Katherine continued to receive ongoing care. It also alleges that Odwalla knew of the dangers associated with unpasteurized apple juice.

Odwalla made its then-unpasteurized products at its 65,000-square-foot production plant in the Central Valley. No evidence After the outbreak, a U. S. Food and Drug Administration investigation found no evidence of E. coli at the plant, but faulted Odwalla for failing to test for the bacteria. Odwalla has since started a “flash-pasteurization” process that kills harmful bacteria. In a court brief filed last year in another case, Marler alleged that Odwalla was told of problems with its unpasteurized juices more than a year before the E. coli outbreak. That brief was filed in opposition to a motion by Starbucks Corp. sking to be dropped as a defendant in a Marler lawsuit. Marler filed the suit on behalf of a child who drank apple juice at a Starbucks outlet. The child spent more than two weeks on kidney dialysis. Marler wrote that Starbucks and Odwalla knew of people who became sick from the juice and of foreign objects—broken glass, an insect and a nail—being found in the products months before the E. coli outbreak. The document contended that a Starbucks worker wrote his company headquarters to say he got “extremely ill within a few hours” after drinking Odwalla juice.

The letter was relayed to Odwalla, one of a number of times the two companies conferred over reports of juice problems, the brief stated. Claims criticized Odwalla spokesman Chris Gallagher called Marler’s claims of Odwalla’s negligence in processing the juice “careless and scientifically unfounded” and said the “implications are absolutely false. ” “We took responsibility, paid related medical bills and have done everything to make sure it hasn’t happened again,” said Gallagher. The publicly traded company lost about $ 12. million in the fiscal year ended Aug. 31, but said in its latest quarterly filing with the Securities and Exchange Commission that sales have returned to almost pre-recall levels. Gallagher said that 75,000 people continue to buy Odwalla products daily. “Rebuilding our business has been expensive, but it is the result of consumers who stuck with us,” the spokesman said. Grand jury probe Still, a Fresno grand jury is probing the circumstances surrounding the contamination and a subsequent recall of Odwalla’s apple juice products.

Odwalla officials said in documents filed with the government that the Fresno grand jury is investigating events that occurred “in 1996 and before, including the E. coli incident. ” The New York Times reported Sunday that interviews with former Odwalla managers and company documents show that before the outbreak, Odwalla relaxed its standards on accepting blemished fruit. In a response Monday, Odwalla Inc. defended its quality-control practices. ‘Unfounded speculation’ Odwalla officials labeled as “unfounded speculation” the Times article’s uggestion that better fruit-handling practices, more rigorous adherence to good manufacturing practices or different quality-control procedures could have avoided the outbreak. “Odwalla concluded after the outbreak, and after extensive consultation with several outside experts, that only pasteurization would provide a fail-safe means of avoiding E. coli,” the company stated. It also disagreed with allegations that safety took a back seat to growth at the company, whose revenues ballooned from $ 9 million in 1991 to $ 59 million in 1996. “In fact, Odwalla continuously upgraded its manufacturing process in the period leading to the E. oli outbreak,” the statement read. Issues being examined by the Fresno grand jury include: * Whether Odwalla had relaxed its standards of accepting blemished fruit in the weeks before the 1996 incident, and whether special precautions were not taken in processing the fruit. * Whether production managers brushed aside warnings from a company inspector that a batch of apples was too rotten to use without taking special precautions. * In the three weeks before the bad juice was made, company documents showed some loads of apples came in with 25 to 30 percent defective fruit.

In its response Monday, Odwalla Inc. defended its quality-control practices. “Odwalla’s primary indicator of overall quality was bacterial level readings, known as total plate counts (TPC’s),” the statement said. “It’s a fact that in the period leading to the E. coli incident, our TPC’s in apple juice were relatively low and decreasing. These test results, however, indicated high-quality juice and contradict the suggestion that lots of substandard fruit were passing through our sorting and culling process. Details that have emerged in recent days sharpen the spotlight on California growers of the apples processed into the contaminated batch and the way those apples were handled at the Odwalla plant. Kenton Kidd, president of the Fresno-based California Apple Commission, said from the outset of federal and state investigations of the outbreak, a suspected culprit was the use of what those in the apple industry refer to as “drops” or “grounders,” apples that have been picked up from the ground. Warning against ‘drops’ After the outbreak, the apple commission issued a warning against use of “drops,” Kidd said.

Kidd said he knows of nobody in his industry who sells dropped apples. He understood investigators found no E. coli at Valley orchards they visited, Kidd said. “From what I understand, there was no problem at the growing level,” he said. Kidd stopped short of pointing the finger at Odwalla in an interview Monday, but remarked: “The contamination from E. coli can come from workers in the plant not washing their hands. There are so many possibilities. ” Odwalla controls damage on the Net By Rose Aguilar Staff Writer, CNET News * Post a comment * Yahoo! Buzz The Web is becoming a tool for crisis management.

Odwalla today launched a site on the Internet to handle questions and concerns about the voluntary recall of some of its popular juices, hoping to broadcast its side of the story to the public. Corporate disasters, such as the E. coli 0157:H7 bacteria found in some kinds of Odwalla juice and previously publicized scares with tainted Tylenol aspirin and contaminated Jack In The Box hamburgers, cause marketing and public relations nightmares. Until now, companies have held press conferences and faxed press releases to the media to broadcast their side of the story. They also take out full-page ads in newspapers.

But increasingly, corporations are turning to the Internet to help manage a crisis. The Net reaches a mass audience quickly and in a cost-effective way. Companies also find that launching a Web site is a good way to stop rumors from spreading, and sometimes that’s a necessity. Even the government is getting into the act. The Federal Emergency Management Agency, has created a Web site to provide tips on how to handle crises such as natural disasters. Of course, there are drawbacks to using the Web. Only about one-third of the U. S. population has a computer and fewer still go online.

But anything companies can do to get the word out is a plus, experts say. “It’s ridiculous when organizations don’t use Web sites in a crisis situation,” said Shel Holtz, principal of Holtz Communications + Technology. “Not doing anything is like saying, ‘We don’t care. ‘” For example, when a Boeing 747 operated by TWA crashed mysteriously this summer, Boeing didn’t offer any details or even acknowledge the disaster on its Web site. With an information void, wild rumors speculating on the cause of the crash began floating around cyberspace, according to Holtz.

Finally, TWA posted a generic letter on its site that said information would be posted as it became available. “Information rushes in to fill a vacuum when a company doesn’t provide it,” Holtz said. “And it will most likely end up on the Web whether it’s true or not. ” Newsgroups are also ideal for spreading rumors, which can make a corporate crisis worse. “Anyone could post false information in a newsgroup and if a consumer did a search they would find negative information as opposed to reliable information from the company,” said Margaret Stude, account executive for the Weber Group, a public relations consultancy. Misinformation can spread like wildfire, and it’s important for a company to release factual information,” she said. Concerned Netizens were involved in a heated discussion about the Odwalla incident on October 31. Some asked what juices were affected and others expressed concerns because they recently drank the juice. The company says it addresses these questions and concerns on its site by providing questions and answers, press releases, and a list of recalled juices.

Odwalla has a high degree of customer loyalty, according to Stude, and “it seems like they are making every effort to maintain that by launching a Web site. ” Holtz agrees and says that the site provides useful information, but Odwalla should provide more than just press releases. “If they really want to be objective, they should be linking to stories about Odwalla in newsgroups and in the press,” he said. Odwalla executives said they “might consider adding that feature to the site in the future. “

Cite this Odwalla Case – Companies in Crisis

Odwalla Case – Companies in Crisis. (2018, Jun 01). Retrieved from https://graduateway.com/odwalla-crisis-essay/

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