Case Studies: Reckitt Benckiser’s Chronic Crisis in South Korea & Coke Scare in Belgium
Reckitt Benckiser’s Chronic Crisis in South Korea
In the adoption of ethics in global public relations, the framework of global public relations requires attention to be paid to political economy, culture, media system and the levels of activism. Also, global corporations operating in foreign markets should also be aware of the relationship between their home countries and host countries; it is possible that foreign publics could hold different expectations for organizations from a certain country which could be expressed in the form of consumer nationalism.
Background
As early as 2011, it was reported on South Korean national television that an official inquiry would be made about an outbreak of lung diseases particularly prevalent among children and pregnant women. A possible association was made between the diseases and the use of humidifier disinfectant made by a U.K. company that targeted parents in South Korea where winters were cold and dry.
Dilemma
U.K. company, Reckitt Benckiser, was a market leader in the disinfectant which was used by 8 million people in South Korea. It was found that its product, Oxy, could have caused 80 percent of the related deaths. The company was found to be guilty of false advertising because it was not “safe to humans” as claimed. The company expressed sympathy to those who suffered, but it declined to apologize and challenged the reports regarding the deaths. They would not accept responsibility. They expressed that “This matter is unprecedented due to the complexity and technical nature of the issues, as well as the number of related parties potentially involved. The question of causation is still very much a live issue and is subject to judicial review in the litigation.”
Course of Actions
In May 2016, the company finally made an apology and accepted responsibility. The head of the Korean division of the company bowed several times and said that it was the first time they accepted the fullest responsibility and that they were late. It was estimated that more than 500 people had registered for claims as a result of their or their families’ suffering from lung illnesses caused by the product. A humanitarian fund was set up to help and compensate victims of the case.
Consequences
A boycott in South Korea affected the company’s growth. It was advised that in addition to compensation, they should work with victims to restore trust in the country. The company’s image was seriously damaged. Between the discovery of the association and the apology, a lot of protests were held by victims and had gained the attention from the country—it was a long fight in which chronic active publics wished to bring attention to global publics as well.
Moral of the Story
The story highlighted the important role of chronic active publics in increasing problem recognition of other publics. Some groups further mentioned that because the company sold their products globally, they wished to increase global publics’ problem recognition about the safety of their products. The case highlights the interconnectedness of global problems and how global publics could create networked effects which affected organizations’ relationships with their publics globally.
Discussion Questions
- What are the ethical problems in this case?
- What are the global ethical problems present in this case?
- How was public relations practiced in this case?
- How should public relations be practiced in this case?
Coke Scare in Belgium
This case is written based on Taylor’s (2000) study on the Coca-Cola scare in Europe.
Background
Globalization has increased the interconnectedness among countries—what an organization does in one country could affect other countries. Therefore, public relations must be put in an international and intercultural context to help organizations build and maintain organization-public relationships in an international context. Cultural variations could affect the relationship between an international organization and its foreign publics.
Dilemma
In 1999, Coke was involved in a crisis when school children in Belgium reported to have fallen ill after drinking Coca-Cola. Coke denied responsibilities and expressed doubts toward claims of additional illnesses. As a consequence, Belgium, France and Spain suspended the sale of Coca-Cola. But Denmark, Sweden and Norway did not.
Course of Actions
Taylor (2000) explored how two cultural variables, uncertainty avoidance and power distance, could explain the different reactions made by the governments in different countries. It was cited that in countries with high uncertainty avoidance, workers needed written rules to guide ethical decision making. Thus, in high uncertainty avoidance countries, there should be a formal code of ethics. In low uncertainty avoidance countries, on the other hand, informal codes should be prepared for employees. Power distance could affect whether an organization chooses one-way or two-way communication—it is about the acceptance of inequality. The interaction between uncertainty avoidance and power distance in a country could affect with whom and how an organization communicates to deal with a crisis. It reflects the extent to which its publics could tolerate risk.
Consequences
As a U.S. company, Coke is an ambassador for the country. It did not accept responsibility, but it agreed to suspend the sale of the products. Its reaction received negative responses from the public. It took nine days for its CEO to acknowledge the problems and pledge to win back their customers.
Moral of the Story
One challenge in this crisis was that Europe was a highly complex region with countries’ having different levels of uncertainty avoidance and power distance. The key publics in the crisis were consumers, governments and shareholders. It was reported that Belgian, French and Spanish consumers stopped drinking all Coke-brand products; the government was ignored as a key public. These three countries scored high in uncertainty avoidance and power distance—they tried to avoid risk and did not trust those in power. In Sweden, Denmark and Norway, uncertainty avoidance and power distance was lower—they were more willing to accept Coke’s explanation for the crisis as more risk-tolerant countries. It was concluded that “cultural interpreters” were needed to build and maintain organization-public relationships in foreign host countries.
Discussion Questions
- What are the major takeaways from this case?
- How could Coke have handled it differently?
- Based on what theoretical framework could Coke be guided on its crisis communication?
- What international factors should have been considered in the application of the framework?