CADBURY CRISIS MANAGEMENT

(WORM CONTROVERSY)

By- Pranshu Sahay

TABLE OF CONTENTS

1. INTRODUCTION & THEORIES APPLIED

2. PRE-CONDITIONS OF CADBURY CRISIS

3 EVENT TRIGGERED

4 THE CADBURY CRISIS

5 POST CRISIS MANAGEMENT : LESSONS

LEARNT AND PREVENTION FOR FUTURE

6 SUMMARY

7 REFERENCES
8 APPENDICES

1. INTRODUCTION & THEORIES APPLIED

 In October 2003, worms were found in the chocolate bars of the flagship brand
Cadbury Dairy Milk (CDM). These worms were found mostly in the stock of
chocolates sold in Maharashtra and Kerala, India. The organisation saw its worth
offer liquefy from 73 per cent in October 2003 to 69.4 per cent in January 2004.
CDM turnover/sales declined from 68 per cent in October to 64 per cent in
January 2004. This resulted in a massive loss of shares and goodwill for the
organisation, especially in India (Zachariah, R., 2013).

The suitable theories for the Crisis mentioned above are Barry Turner's
"Sloppy Management" as Crisis happened because of Cadbury's poor
management, poor quality control of wrappings (Turner, B.,1978). Another theory
that will be used is Crichton et al.- "Command Skills" as Cadbury was in an
unfamiliar environment which resulted in chaotic events due to communication
problems and time pressure of serving chocolate bars to maintain the supply of
demand (Crichton M.T, Lauche K. and Flin R., 2005).

Source: Francis, A., 2010. Case Study: Cadbury Crisis Management (Worm

Controversy) - MBA Knowledge Base. [online] MBA Knowledge Base

2. PRE-CONDITIONS OF CADBURY CRISIS

Chocolate is a nourishment item that requires explicit consideration in assembling
and capacity. It was pre-assumed after the episode that works got into at the
capacity level. Packaging of Cadbury was not satisfactory or impermeable. Under
unhygienic conditions, all the manufacturing and bundling of the item was finished.
Along these lines, the customers lost trust and enthusiasm for purchasing Cadbury
chocolates which brought about a 30% drop in deals in only 15 days. A significant
explanation for this crisis is the mismanagement by the assigned employess of at the
Cadbury who were responsible for keeping a steady check over the quality control of
the item. On the off chance that these precautions have been dealt with previously,
at that point, Cadbury could have handily kept away from such a massive loss of a
portion of market and loss of reputation.

The organisation should have a proper management team because a company like
Cadbury plays a very vital role in a country like India as its products are widely used
all over the country especially during the festivals, having knowledge about the
market they are operating in and still failing to fulfil all the necessary basic
requirements resulted in such a blunder. An association functioning at such a large
scale ought to have suitable board of individuals and administrators to carry out their
responsibility properly to avoid such disastrous result that is excessively out of such
a juvenile dynamic (Vaid, M., 2006).

3.EVENT TRIGGERED
On October 2003, only a month prior to Diwali, the Food and Drug Administration
Commissioner got grievances about the invasion in two bars of Cadbury Dairy Milk,
Cadbury India's leader image with over 70% share of the market. He requested an
enquiry and went legitimately to the media with an announcement. Over the
accompanying 3-week time frame, resultant unfavourable media inclusion contacted
near 1000 clasps in print and 120 on TV news channels. In India, where Cadbury is
synonymous with chocolate, the organisation's notoriety and believability were under
extraordinary examination. Deal volumes descended radically in the initial ten weeks,
during the festival time; retailer loading and show dropped, worker spirit – particularly
that of the business group – was shaken. The test was to re-establish trust in the key
partners (shoppers, exchange and workers, especially the business group) and work
back with believability for the corporate brand through similar channels. (Francis, A.,
2010).

Source: SIMCON Blog. 2016. Cadbury : Case Study Analysis.

Due to the "Sloppy Management" of the Cadbury, the organisation had to go

through all of this nightmare. The major reason behind the occurrence of the Crisis
was the mismanagement in quality control of the packaging, as Cadbury was not
using the appropriate quality of wrappings which could keep the chocolate bars safe
and sealed from the outside environment, in order to cut price in the packaging
(Turner, B.,1978). Cadbury used an only single thin layer of packaging which could
be easily invaded in by the worms. Hence, this poor decision making by the
management of the Cadbury resulted in triggering the problem of worms in the
chocolate bars which later turned out into a huge crisis for the company and affected
the market share and reputation of the company severely (Jacques T.,2007).
4.THE CADBURY CRISIS
Clients in Mumbai griped about discovering worms in Cadbury Dairy Milk chocolates.
Speedy to react, the Maharashtra Food and Drug Administration held onto the
chocolate stocks made at Cadbury's “Pune” plant. In protection, Cadbury gave an
explanation that the pervasion was unrealistic at the assembling stage and poor
stockpiling at the retailers was the most probable reason for the revealed instance of
worms.

Source: SIMCON Blog. 2016. Cadbury : Case Study Analysis.

In any case, the FDA didn't purchase that. FDA commissioner, Uttam Khobragade
told CNBC-TV18, "It was assumed that worms got into it at the manufacturing level
and bundling was not appropriate or impenetrable, either ways it's an assembling
imperfection with unhygienic conditions or ill-advised bundling." Aside from the FDA
Minister, FDA Commissioner and the CNBC (media) as considered before being the
partners in question, the purchasers (moms, youngsters, kids, media people and
colleagues) market share smashed by 30%. Notwithstanding these partners,
government officials rushed to abuse Cadbury's emergency for the political increase.
Nearby individuals from ideological groups on October 16, dropped on Cadbury's
home office against Cadbury motto on the dividers. Government officials rushed to
exploit Cadbury's defencelessness for the political increase (Vaid, M., 2006).

It was trailed by claims and counter-charges among Cadbury and FDA that the
warmth of negative exposure dissolved Cadbury's deals by 30 per cent when it is
supposed to have a happy spike of 15 per cent. Just because Cadbury's promoting
went off the air for a month and a half after Diwali, following the debate, shoppers
appeared to disregard their chocolate longings. Even though Cadbury gave around
700,000 shopkeepers coolers and metallic distributors to store the chocolate
appropriately, it couldn't guarantee if all retailers took care of the items fittingly. The
organisation expected to react quickly to the emergency, even though the issue was
because of packaging at the retail level, which was out of Cadbury's immediate
control. Nonetheless, Cadbury's test was the absence of involvement with managing
a widespread conclusion. Unexpectedly, new cases were accounted for to the FDA
from the city of Nagpur in Maharashtra. The following day the FDA Minister said
cleanliness should just be seen during assembling. Thus Cadbury must
acknowledge obligation regarding the packaging of its items at the retail level also
(Annor, J., 2016).
Source: SIMCON Blog. 2016. Cadbury : Case Study Analysis.

On October 16, nearby individuals from an ideological group plunged on the central
organisation station. Cadbury had been a part of India for an exceptionally prolonged
period, so the counter Cadbury notion shocked the organisation and left unsettled.
The harm to impression was made that each bar of Cadbury's chocolate was
plagued to harm. Cadbury's the same old thing, and notoriety was in question, as
was the representative assurance (SIMCON Blog. 2016).

5. POST CRISIS MANAGEMENT : LESSONS LEARNT

AND PREVENTION FOR FUTURE

Source: Telang, A. and Deshpande, A., 2016. Keep Calm And Carry On: A Crisis
Communication Study Of Cadbury.

Cadbury took very effective move to overcome the crisis, crisis communication was
effectively used that was given by Crichton et al- “Command Skills” (Crichton M.T,
Lauche K. and Flin R., 2005). It can be seen clearly from the table mentioned above
the content analysis of the statements from Cadbury. It comprises of all the
statements, theme and the category under which the Cadbury responded to in
different situations. To overcome the crisis Cadbury created a very advanced
strategy to revive back itself into the market.

Recuperation Strategy used by Cadbury:

Project Vishwas:
Cadbury was losing on its deals, and notoriety was being hampered. Along these
lines, recouping from this kind of circumstance was a test for Cadbury. In October,
just Cadbury propelled Public Relations (PR) crusade 'Vishwas' which was a training
activity covering 190,000 retailers in critical states. Undertaking Vishwas, a three-
pronged program that tended to the exchange, customers, media and
representatives. The undertaking fused the accompanying measures:

For Trade
A retail observing and instruction program was propelled in which quality checks at
more than 50,000 retail outlets and taught 190,000 wholesalers and retailers was
finished concerning capacity necessities. A press promotion concerning 'Realities
about Cadbury' was likewise distributed by Cadbury broadly in 55 exchange
productions which were about channel individuals taking therapeutic measures in the
organization. Banners and handouts on the issue were additionally circulated to
retailers, urging them to impart them to customers.
Cadbury additionally connected the exchange with reaction cell through a cost-free
number and an email id to let them contact the organization straightforwardly.

For Media
The perspective of an organization was disclosed to media; media was likewise
given updates about activities started by the organization and urged to impart them
to buyers. The organization initiated a media work area and determinedly addressed
each common question, agreeable or not. The organization's overseeing chief
encouraged media to guarantee shoppers that Cadbury chocolates were safe to eat,
yet that buyers practice the standard consideration in buying a bar of chocolate that
they practice in buying a nourishment thing.
Moreover, it likewise vowed to actualize bundling changes inside two months to
guarantee against poor stockpiling. Cadbury's MD and key spokespersons had
coordinated meetings with 31 media editors as a significant aspect of an 'Effort'
program started in November 2003.

For Employees
Workers were likewise advised about activities taken by the gatherings with
managing directors and emails were received regularly from the MD.

Change in Packaging:
January 2004, the organization propelled another twofold bundling that had the
option to wrap even the littlest 13 gm chocolate in an aluminium foil, heat-fixed for
complete assurance from all sides and further encased in a poly stream pack. The
over-built pack, the first of its sort in Quite a while, cost a great deal to an
organization, however, satisfied the organization's guarantee to customers and
media. By contributing up to Rs 15 crore (Rs 150 million) on imported apparatus,
Cadbury patched up the bundling of Dairy Milk. The metallic poly-stream was costlier
by 10-15 per cent, yet Cadbury didn't climb the pack cost. The new bundling was
propelled in a media meeting. In a gathering, correlation units were circulated. These
units helped look at old packs and new packs. A video with bundling and industrial
facility shots for TV inclusion was additionally propelled (SIMCON Blog. 2016).

Promotion Campaign:
Soon after changing bundling, Cadbury roped in Amitabh Bachchan an iconic movie
star as brand ambassador. From the month January to March 2004, Cadbury
promoted a robust Ad crusade which helped them to get back the buyer certainty.
During this period Advertising costs went up by 15%, yet it indeed encouraged
Cadbury to get back its notoriety (Vaid, 2006). Therefore, it can be said that the
organisation improved its management and got over its theory of “Sloppy
Management” (Turner, B.,1978, Jacques T.,2007).

6. SUMMARY
After that Incident Cadbury now takes incredible consideration of the numerous
number of items they have. Cadbury is right now driving the market in the chocolate
fragment. Piece of the overall industry of the Cadbury Dairy Milk is around 35% in
India. Cadbury has not confronted any contention identified with items after that
episode. Cadbury took the corrective action necessary to control the damage from
the Crisis incurred. Cadbury dealt with the problem honestly and gained back the
trust of the public through the right promotional strategies and good media relations.
Launching of project "Vishwas" was extremely beneficial for the organisation and
sales stabilised after eight weeks. Hence, today Cadbury is considered as the
synonym for chocolate in India.

7. REFERENCES
Annor, J., 2016. Cadbury India Worm Infestation Crisis. [online] JOis BLOG.
Available at: <https://strategicprspring.wordpress.com/2016/01/31/cadbury-india-
worm-infestation-crisis/> [Accessed 26 April 2020].

Coutu, D.L. (2002). How Resilience Works. Harvard Business Review, May, 46-55.

Crichton M.T, Lauche K. and Flin R. (2005) ‘Incident Command Skills in the
Management of an Oil Industry Drilling Incident: a Case Study’ Journal of
Contingencies and Crisis Management, 13, 3, 116-128.

Francis, A., 2010. Case Study: Cadbury Crisis Management (Worm Controversy) -

MBA Knowledge Base. [online] MBA Knowledge Base. Available at:
<https://www.mbaknol.com/management-case-studies/case-study-cadbury-crisis-
management-worm-controversy/> [Accessed 26 April 2020].

Jacques T. (2007) ‘Issue Management and Crisis Management: an integrated non-

linear, relational construct’ Public Relations Review.

Jacques T. (2010) ‘Embedding issue management as a strategic element of crisis

prevention’ Disaster Prevention and Management.

SIMCON Blog. 2016. Cadbury : Case Study Analysis. [online] Available at:

<https://simconblog.wordpress.com/2016/06/19/cadbury-case-study-analysis/>
[Accessed 26 April 2020].

Telang, A. and Deshpande, A., 2016. Keep Calm And Carry On: A Crisis
Communication Study Of Cadbury. [online] Available at:
<https://www.researchgate.net/publication/303122804_Keep_calm_and_carry_on_A
_crisis_communication_study_of_Cadbury_and_McDonalds> [Accessed 26 April
2020].

Vaid, M. (2006),”How Cadbury's won the battle of worms”, Rediff India Abroad,
December 27, 2006, available at: www.rediff.com/money/2006/dec/24cad.htm
(Accessed August 31, 2015).

Zachariah, R. (2004),”Cadbury recovers from worm shock”, Business Standard,

available at: www.business-standard.com/article/companies/cadbury-recovers-from-
worm-shock-104070301003_1.html (Accessed 26 April, 2020).

Zachariah, R., 2013. Cadbury Recovers From Worm Shock. [online] Business-

standard.com. Available at: <https://www.business
standard.com/article/companies/cadbury-recovers-from-worm-shock-
104070301003_1.html> [Accessed 26 April 2020].

8. APPENDICES
 Source: Francis, A., 2010. Case Study: Cadbury Crisis Management (Worm
Controversy) - MBA Knowledge Base. [online] MBA Knowledge Base

Source: SIMCON Blog. 2016. Cadbury : Case Study Analysis.

Source: SIMCON Blog. 2016. Cadbury : Case Study Analysis.

Source: SIMCON Blog. 2016. Cadbury : Case Study Analysis.

Source: Telang, A. and Deshpande, A., 2016. Keep Calm And Carry On: A Crisis
Communication Study Of Cadbury.