Running head: Pepsi Crisis Management Plan

CRISIS MANAGEMENT PLAN

CREATED BY: KAHLA STANDWICH OLIVIA KLEIN ALLISON HUDSON JADE LUSH JOSE DIAZ SHELBY MCDONALD

Pepsi Crisis Management Plan TABLE OF CONTENTS Part 1:

Introduction..3 Mission and Purpose3 Vulnerability Analysis of Possible Crises4 Crisis Management Teams..5 Key Publics/Stakeholders and Themes...6 Crisis Preparation and Prevention...7 Media Audit.8 General Social Media Strategy9 Third Party Potential Supporters/Credible Experts10 Immediate Response Checklist..11 Communication Channels Worksheet12 Key Messages Worksheet..13 Press Release Template.14 Organizational Backgrounder....15 Media Log Sheet16 Crisis Management Contacts.17 Plan for Testing/Evaluating the Crisis Plan..18 Part 2: Crisis Response Strategy...19 Initial Press Release..20 Key Messages and Talking Points.21 Social Media Strategy22 Appendices.23

Pepsi Crisis Management Plan PART 1: INTRODUCTION

The PepsiCo Crisis Communication Plan follows an in depth guide on the appropriate steps necessary to combat any unforeseen crisis. We intend to be ready for all possible crisis both highly probable and unlikely probable to maintain the expected standards on which PepsiCo was built upon. The guidelines within our plan will ensure that all protocols are followed and that all communication to our publics is efficient and effective so that we may assure our consumers that our reputation and relationship with them remain strong. MISSION & PURPOSE The PepsiCo Crisis Management Teams mission is to form a trained team designed to be called upon in the wake of an unforeseen event which affects the company as a whole. We strive to be consistent and honest with feedback to our publics in the wake of any crisis to reassure them that their trusted brand is doing their utmost best to prevent any damage to our company and our loyal communities that we serve. We seek to make our investors, employees, and stakeholders satisfied by providing growth and enrichment to our customers and their communities. We intend to maintain the strong reputation of our company while providing back to our communities with opportunities to grow and by providing quality products nationwide. We strive for honesty, fairness, and integrity in everything that we do. Our values are to make our customers satisfied by keeping our company focused on leaving a positive influence on society. The PepsiCo is committed to delivering trust and empowerment to people while remaining environmentally responsible. Our goals are to remain communicated with the public in any crisis. We plan on acknowledging any problem right when it occurs. Our communication will remain open and honest with our customers, employees, and stakeholders. It is our goal to answer any questions or comments in a timely manner and to the best of our abilities. Our Crisis Management Teams plan is to be prepared for any type of crisis that may occur. We will do our best to be prepared for any unexpected issue that may occur so our customers will feel safe and valued.

Pepsi Crisis Management Plan VULNERABILITY ANALYSIS OF POSSIBLE CRISES

Equation (Crisis Threat = Likelihood x Organizational Impact x Stakeholder Impact) Likely Crises: Product contamination: 7x9x9 = 567 - Product users could get severely sick (Technical-error product harm and Human-Error Product Harm) - Contamination causes someone to lose their life (Technical-Error Product Harm and HumanError Product Harm) - Poor sanitation in area of production of products (Human-error product harm and Technicalerror product harm) - Poisoning of product due to sanitation problems (Human-error product harm and Technicalerror product harm) Health Hazards (7x7x8) = 392 - Studies about health products (Challenges) - Too many calories, preservatives, process food (Human-error product accidents) - Researches and test on products being published (Challenges) - Food critic gives poor review on products (Challenges) Employee Discrepancy (6x9x6) = 324 - Unhappy employees result of an organization strike (Challenges) - Physical contact between employees which leads to injury (Workplace Violence) - Employee using (alcohol, substances, drugs) at or during work (Human-error accidents) - Employee commits crime to organization (Human-error accident) - Employee sexaul assult (Human-error accidnet and Workplace Violence) Unlikely Crises: Rumors (5x7x8) = 280 - Someone shares false information about products (Rumor) - Competing companies place false knowledge about Pepsi products and organization (Rumor) Natural Disasters: (5x7x5) = 175 - Severe Storms, Tornados, Earthquakes, Flood, Volcano Eruption (Natural Disasters) Terrorist Attack (2x7x6)= 84 - Outside forces causes harm to organization (Malevolence)

Pepsi Crisis Management Plan CRISIS MANAGEMENT TEAM

President - Kahla Standwich The President will be responsible for addressing the publics about whatever crisis is present. She is the face of PepsiCo, therefore, the public should be spoken to by her. She should have an active part in the crisis and understand every step the company is making toward solving the crisis. Chief Human Resources Officer - Jade Lush In the event of an employee crisis, the chief HR officer is going to be responsible for communicating with the employees about the issue/crises. She will also be in charge of keeping the employees up to date on the ongoing issue/crisis. They will be in contact with the employees about their payment and other qualms about their work. Legal Advisor - Allison Hudson The legal advisor will be contacted in the event of any legal matter. She will be responsible for the assessing the crisis and deciding the likelihood that there needs to be any legal proceedings. She will also be responsible for going to court in representation of PepsiCo. Public Relations Advisor - Olivia Klein Olivia will be responsible for fixing all of the issues/crises that arise. She will handle the media and write up the press releases and speeches given by the President. She will be giving accurate information as quickly as possible to the various news media. She will be responsible for restoring and maintaining the reputation of PepsiCo. Health and Safety Advisor - Shelby McDonald Our health advisor will be dealing with the issues and crises that come about that cause harm to consumers health and/or safety. She will have the right to recall products and find the source of the problem. Distributing Advisor - Joey Diaz Joey organizes the companys distribution unit. In the event of a crisis occurring, he has the power to stop, maintain, and override the distribution of our products.

Pepsi Crisis Management Plan KEY PUBLICS/STAKEHOLDERS AND THEMES Employees (Internal) Theme: Job Security An employees immediate thought during a crisis is job security. PepsiCo aims to promote employee growth through programs they have developed therefore acknowledging the employees desire for growth and better salaries. Employees will be informed consistently as the crisis is ongoing and reassure them that the crisis is being taken care of as well as their best interest as employees. Board of Directors/Executives (Internal) Theme: Loss of Revenue The board of directors primary interest is making profit and their main investors are stockholders. It is crucial to let the board of directors know each step being taken throughout the crisis. It is also important for the investors and stockholders to be informed of each step being taken to reassure them that their money is not being wasted. By keeping them consistently informed PepsiCo is assuring the stockholders that their investment with the company is highly valued in the company and that they should stay with the company even throughout a crisis. Suppliers (External) Theme: Financial The services provided by the suppliers are essential for a company like PepsiCo to function properly. Since money is the blood that makes the company flow it is very important to consistently inform suppliers just like investors on the steps being taken to fix the crisis. Again reassurance is key to maintain an already successful partnership remain that way.

Customers (External) Theme: Safety and Reassurance PepsiCo states in their mission statement that it meets the needs of its customers by offering of quality and satisfying products. The safety of PepsiCo consumers is critical to the company and of utmost importance. Press and news releases are a great vehicle to use during a crisis to keep the consumers/customers well informed of any potential hazards with PepsiCo products. Communities (External) Theme: Reputation During a crisis it is beneficial for the company to reinforce their communities concerns by answering questions and addressing them through consistent updates through various channels such as social media and newsletters so that they know the brand they trust is taking care of the crisis and giving feedback to their communities since reputation really is the deciding factor on how a company is seen and portrayed.

Pepsi Crisis Management Plan CRISIS PREPARATION AND PREVENTION

Preparation: PepsiCo is a company that is widely popular and therefore has vulnerabilities. Addressing such vulnerabilities and assigning roles to members of the crisis management team is an essential first step. This should be in accordance with each potential crisis that could arise. Everyone on the team will work to create a crisis management plan for PepsiCo. This plan will include protocol for how a crisis will be handled, messages that may need conveyed to stakeholders and the media, and well as a plan for restoring the company's reputation. All team members should be knowledgeable of the information included in the crisis management plan. Prevention: In an attempt to stop any future crises from arising, PepsiCo will monitor various social media sites (Facebook, Twitter, Instagram, etc.), news outlets and blogs to see what is being said about the company and its products. Paying close attention to what is being said by stakeholders is also an essential part of prevention. PepsiCo will also pay attention to the employees and their morale, in order to ensure no product tampering occurs and that no problems occur with the production or distribution of any PepsiCo products. The latest health studies specific to PepsiCo products, as well as their competitors products will also be monitored. A threat assessment will be created for each of these potential crises in order to determine the level of impact it will have on stakeholders.

Pepsi Crisis Management Plan MEDIA AUDIT In the event of a crisis PepsiCo would be covered by the following outlets: Traditional Media - Worldwide news channels/stations -CNN, ABC, NBC, FOX -National newspapers -The National, New York Times, The Wall Street Journal, Time Warner -Television shows -USA Today, Nightly News, The Talk -Magazine -Time Magazine, People, Prospect -Radio

New Media -Cellular News Apps -CNN, Huffington Post, Yahoo News -Online News -Yahoo, CNN, The Daily News -Blogs - Postings on Twitter -Postings on Facebook

Pepsi Crisis Management Plan GENERAL SOCIAL MEDIA STRATEGY Before Turning to Traditional or Social Media Establish who is going to be the spokesperson and identify who will be the lead communicator before and after the crisis Make sure that everyone knows the clear message that is going to be sent out to the public Make sure that all information is correct and concise Make sure that the lead communicators response is done quickly Create a schedule of when updates will be held about the crisis at hand
Using Social Media Use social media in a timely manner when responding to a crisis Let public know who they can contact with any questions Leave little room for rumors or other problems to occur Apologize for the situation depending on what the issue is Keep the language easy to understand Be honest Update social media regularly incorporate PepsiCos beliefs Stay on a schedule of updating posts Questions that may be Asked by the Media How the crisis happened Why the crisis happened Are your products healthy Are the products contaminated What is going to be done to fix this crisis

Pepsi Crisis Management Plan THIRD PARTY POTENTIAL SUPPORTERS/CREDIBLE EXPERTS Strategy Experts, Investing Experts, Media Experts, Health Experts, and Human Resources Experts. Ken Danieli Experienced branding & strategy consultant. PepsiCo, Microsoft, Motorola, Vans. Kellogg MBA. http://www.linkedin.com/in/kendanieli Jamie Caulfield Investing expert Senior Vice President, Investor Relations 914-253-3035 jamie.caulfield@pepsico.com Jeff Dahncke Media expert Senior Director, Media Bureau. 914-235-3941 jeff.dahncke@pepsico.com Andrea Beaman Health expert CBS news health, Living Well Network @andreabeaman http://www.linkedin.com/in/andreabeaman Meghan M. Biro Human Resources expert CEO + Founder TalentCulture Consulting Group + TalentCulture World of Work #TChat Forbes Contributor http://www.linkedin.com/in/meghanmbiro

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Pepsi Crisis Management Plan IMMEDIATE RESPONSE CHECKLIST

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What Happened? What are we doing to fix it? Have the correct authorities been notified? Are they present? Who did it happen to? Are consumers okay? Are employees okay? If not, are they getting treatment? Why did it happen? How did it happen? Where did it happen? Is the area secure? When did it happen? Has the President been notified? Is the crisis management plan in effect? Has the media been alerted? What to do next? Hold a crisis management meeting Assess damages Solve problem Restore reputation

Pepsi Crisis Management Plan COMMUNICATION CHANNELS WORKSHEET

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Name

Phone Number

Alternative Phone Number

Email Address

Best Way to Contact

Crisis Leader Cooperation Manager CEO of PepsiCo V.P of PepsiCo Board of Directors Media Reps. Stakeholder Reps. Lawyers Insurance Company

Pepsi Crisis Management Plan KEY MESSAGES WORKSHEET

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Key Point 1: PepsiCo is not fully responsible for childhood obesity. Our product has been around since 1898 and considering childhood obesity is fairly new in the 21st century, our product cannot be correlated with the rising health concerns. o Subpoint 1.1: Fast food and other poor dietary choices are also at fault for childhood obesity. o Subpoint 1.2: Physical Education being taken out of classrooms. Key Point 2: Our company has a large selection of other variety of drinks and products that can satisfy anyones certain needs at any ages. Although Pepsi is a leading product of our company, it is not the only choice of beverage. o Subpoint 2.1: One of the largest distributors of bottled water. o Subpoint 2.2: Pepsi has many alternative choices of the beverage with less calories. Key Point 3: Our customers satisfaction is the main concern of ours, and us here at PepsiCo are working hard to meet their needs. We hope to keep our loyal customers happy as well as reach out to new ones in providing a positive experience for everyone. o Subpoint 3.1: Provide quick answers for customers questions and concerns. o Subpoint 3.2: Keep searching for alternatives to make our products as healthy as possible. Key Point 4: As a company we would like to apologize for misleading information about our product and the rising childhood obesity concerns. We are aware of the misleading information, and are doing everything in our power to fix the problem as soon as possible. o Subpoint 4.1: We understand caffeinated cola is not the healthiest choice; we have healthy alternative choices. Key Point 5: PepsiCo is in the process of hosting and sponsoring events to promote physical activity in order to combat childhood obesity. We are hoping that these events will help the children as much as possible. o Subpoint 5.1: Health promotion will be in as many schools and parks as possible.

Pepsi Crisis Management Plan PRESS RELEASE TEMPLATE PRESS RELEASE TEMPLATE Contact Name: Contact Phone Number: Contact Email Address: Location, Date 00/00/0000 Title Introduction to the problem in one sentence FOR IMMEDIATE RELEASE

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Location of problem Quotes and information Who was being affected Why is this important Apology statement and resolution

Date

What happened

Resolution to the problem and the main points

Restatement of apology and resolution of goals: Main message #1 and Supporting Points Main message #2 and Supporting Points Main message #3 and Supporting Points

For More Information, contact: 700 Anderson Hill Road Purchase, NY 10577 Phone Number: (800)-433-2652 Website: http://www.pepsico.com

Pepsi Crisis Management Plan ORGANIZATIONAL BACKGROUNDER

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Refresh the World. Distributing their product to over 200 countries across the world, PepsiCo is an American multinational food and beverage corporation with interests in the manufacturing, marketing, and distribution of grain-based snack foods, beverages, and many other products. Pepsi-Cola was created in the late 1890s by Caleb Bradham, a New Burn, N.C. pharmacist. Frito Lay, Inc. was formed by the 1961 merger of the Frito Company, founded by Elmer Doolin in 1932, and the H.W. Lay Company, founded by Herman W. Lay, also in 1932. Herman Lay. Former chairman and CEO of Frito-Lay, was chairman of the board of directors of the new company; Donald M. Kendall, former CEO and president of Pepsi-Cola, was president and CEO. In 1997, Pepsi-Co began to expand its operation to include products other than soft drinks and snack foods. Pepsi-Co purchased the orange juice company, Tropicana Products and later merged with Quaker Oats products in 2001, adding it with the Gatorade sports drink line and other Quaker Oats products such as Chewy Granola Bars, and Aunt Jemima. In August 2009, Pepsi-Co made a 7 billion dollar offer to acquire the two largest bottlers of its product in North America: Pepsi Bottling Group and PepsiAmericas. In 2010 the offer was completed, resulting in the formation of a new wholly owned subsidiary of PepsiCo, Pepsi Beverages Company. Since 2006, Indra Krishnamurthy Nooyi has been the CEO of PepsiCo and continues to be today. As of January 22, 2012 PepsiCos product line has generated retail sales of more than 1 billion dollars each, resulting in an annual net revenue of 43.3 billion dollars. Based on that net revenue, PepsiCo is the second largest food and beverage business in the world. Within in North America, PepsiCo is ranked (by net revenue), as the largest food and beverage business.

Pepsi Crisis Management Plan MEDIA LOG SHEET

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Callers Name: Date of Call: Organization that Called:_____ Phone number: Inquiry: Address: Time of Call:

Deadline:

Who answered call:

____________________________________________________

Replied By: _______________ Date/Time: ________________ Reply Response:

Pepsi Crisis Management Plan CRISIS MANAGEMENT CONTACTS

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Contact Name

Home Phone

Cell Phone

Work Phone

Kahla Standwich President Jade Lush Chief Human Resource Officer Allison Hudson Legal Advisor Olivia Klein Public Relations Advisor Joey Diaz Distributing Advisor Shelby McDonald Healthy and Safety Advisor

815-777-4567 708-444-7890

815-777-4587 708-456-7898

898-008-4567 309-898-7898

309-567-7969 815-849-8888

309-567-9087 815-789-0000

815-976-5566 708-345-9898

456-999-0000 567-989-0008

456-567-8979 567-555-0980

815-786-9080 708-555-1234

Pepsi Crisis Management Plan PLAN FOR TESTING/EVALUATING THE CRISIS PLAN

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The PepsiCo Crisis Management Team is confident that after various crisis plans proposal that we have selected the most appropriate and effective steps to prepare for any unforeseen crises. To successfully test and evaluate our selected crisis plan we will first go about the different scenarios that could become a crisis with our employees, executives, and board of directors at mandatory meetings. We will then have semi-annual crisis drills where we practice what we would act and cooperate as a unit per crisis drill that the PepsiCo Crisis Management Team will test. To record the data we will evaluate the response time by the board of directors and how adequately they inform the both internal and external stakeholders. We will gather more data through the comments and feedback from the stakeholders and evaluate how effectively our actions were interpreted. This will provide us with experience and help us prepare for any unforeseen crises that would impact our organization as a whole. After the data and feedback is received, The PepsiCo Crisis Management Team will examine the damage that the chosen crisis drill had on our company. Possible damages that affect our organizations and stakeholders are potential financial losses, employee and consumer safety, reputation and image, and job security for our employees. We will also focus on our social media outlets and their ability to reach our consumers and ask for their feedback to measure their effectiveness to deliver assurance that the crisis at hand is being taken care of. Once all data is gathered and evaluated, The PepsiCo Crisis Management Team will deliver the analyzed data and present it to the board. Our goal is to have the actual crisis damage be less than the anticipated damage that we have prepared and trained for.

Pepsi Crisis Management Plan PART 2: CRISIS RESPONSE STRATEGY Our crisis response strategy incorporates justification, excusing, and reminding. Excusing attempts to minimize the organizations responsibility for the crisis. For this specific crisis, the consumption of cola cannot be the sole reason for the increase in obesity.

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Justification is the process of minimizing the organizations responsibility for the crisis. There are also many other variables involved in children becoming obese. Informing the stakeholders with more knowledge about the situation and how we can avoid future accusations about our company. Another strategy of response for this specific crisis is reminding the stakeholders about all of the products and programs PepsiCo has to offer that promote a healthy lifestyle. Reminding the stakeholders about these items will provide a positive view of PepsiCo as a whole.

Pepsi Crisis Management Plan INITIAL PRESS RELEASE PRESS RELEASE Contact Name: Trica Lynch Contact Phone Number: (800)-433-2652 Contact Email Address:pepsicomediarelations@pepsico.com Purchase, 6/09/2014 PepsiCos Future Involvement in Healthier Lifestyles FOR IMMEDIATE RELEASE

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It has come to PepsiCos attention that childhood obesity has currently become linked with the consumption of caffeine in PepsiCos products. Although there are claims that say this is supported by research, do not be convinced. We make sure that all of our products are safe to consume, and have as little risk as possible. We are currently coming up with ways to make all of our products as healthy as they possibly can be. Indra Nooyi, Chairman, and CEO of PepsiCo: At PepsiCo, we truly care about each and every one of our customers health. It has come to my attention that my nanny has made claims that I do not allow my children to drink any type of soda. I have two young children that are ages 4 and 5. I believe that any children that are that age drink a small amount of soda. I do not think that soda is something that would be good for a young child to drink in the morning or before bed. Having said that, I do allow my children to drink Pepsi soft drinks one time during the day. Although I believe that Pepsi products are healthy enough for anyone to consume, we are doing our best to sponsor more outdoor activities that involve physical activities. PepsiCo plans on sponsoring more events, involving physical activity, affiliated with the NFL, MLB and International Cricket Counsel During said events, Pepsi products will be offered for refreshments PepsiCo will continue selling all of our products without hesitation With providing out products to over 200 companies we are very confident with our products We encourage all of our loyal customers to continue buying all PepsiCo products We would be grateful for any customers to contact us with any questions or concerns

For More Information, contact: 700 Anderson Hill Road Purchase, NY 10577 Phone Number: (800)-433-2652 Website: http://www.pepsico.com

Pepsi Crisis Management Plan KEY MESSAGES AND TALKING POINTS

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Key Point 1: PepsiCo is not fully responsible for childhood obesity. Our product has been around since 1898 and considering childhood obesity is fairly new in the 21st century, our product cannot be correlated with the rising health concerns. Key Point 2: Our company has a large selection of other variety of drinks and products that can satisfy anyones certain needs at any ages. Although Pepsi is a leading product of our company, it is not the only choice of beverage. Key Point 3: Our customers satisfaction is the main concern of ours, and us here at PepsiCo are working hard to meet their needs. We hope to keep our loyal customers happy as well as reach out to new ones in providing a positive experience for everyone. Key Point 4: As a company we would like to apologize for misleading information about our product and the rising childhood obesity concerns. We are aware of the misleading information, and are doing everything in our power to fix the problem as soon as possible. Key Point 5: PepsiCo is in the process of hosting and sponsoring events to promote physical activity in order to combat childhood obesity. We are hoping that these events will help the children as much as possible.

Pepsi Crisis Management Plan SOCIAL MEDIA STRATEGY

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The way PepsiCo will handle this crisis through social media is by posting an initial statement regarding the issues on the main website and by sending emails to all of the stakeholders. Along with publicly announcing

Publishing an initial statement on the PepsiCo website apologizing to all stakeholders Email all stakeholders initial response to the criticism Utilize Twitter and Facebook for promoting healthy alternatives Respond to all questions regarding the situation as quickly as possible using social media

Pepsi Crisis Management Plan APPENDIX Website: http://www.sirpepsi.com/pepsi11.htm http://www.pepsico.com/Purpose/Our-Mission-and-Values

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Coombs, W. T. (2012). Ongoing crisis communication: Planning, managing and responding. (3 ed.) Thousand Oaks, California: Sage Publications.