Case Study In Crisis Management: Perrier Recall Term Paper

Length: 6 pages Sources: 3 Subject: Business - Management Type: Term Paper Paper: #81538418 Related Topics: Ajax, Mineral, Crisis Management, Case Study
Excerpt from Term Paper :

AJAX Mineral

Since the Pacific Rim companies started to mine and supply the same minerals, Ajax Minerals started to become concerned about the future of the company. Even though the workers did not think that there were any emerging issues, the management could view that they had to take immediate steps. The first major resistance that Ajax Minerals had to face with respect to the changes in their policies and strategies was that the workers were not ready to accept any changes. The main reason behind this was that the labor union always believed that the management wanted to harm them. The relations between the labor union and the management were such that the workers were always suspicious that any changes in the company would mean that there would be cut offs in their salary. The second resistance that the management had to face was that they were of the view that if the management brings out a reference to the problems on the horizon, then the labor union will consider that reference a ploy against them (, 2014).

The management made sure that they tackle the situation in a way that changes are run in an effective manner and that the workers are also taken into confidence. The management called out a meeting with the workers and claimed that solutions will only be sought after considering the point-of-view of every employee. In order to gain the confidence of the employees, the company decided to adopt an open-book approach, which meant that the workers were given access to the entire data pertaining to the accounts of the company. Later on, this exercise became the norm of Ajax Minerals, since the supervisors, employees and managers started to share the data amongst themselves in order to bring about improvised strategies (Blawett, 2011).


In the year 1990, a trace of benzene was found in one of the bottles that were manufactured by Perrier. It will not be wrong to say that it was the turning point in the history of the company. The annual sales of the company came down crashing after that incident and the profit declined exponentially. This is when Nestle, the world's largest food manufacturing company, decided to take over the company. Nestle aimed at improving the financial conditions of the company, however they had to face a great deal of resistance by the workers. Since Perrier's financial situation was quite miserable and it had to be taken over by another company, the workers were quite skeptical about their own future at the company. They were afraid that they might have to lose their job because of this entire situation. The other resistance faced by the company was the poor relations between the management and the workers. The labor union, CGT, was active throughout to ensure that the workers do not have to face any kind of injustice at the hands of the new management. This is what was considered the biggest source of resistance by Nestle. The incident in which the bottles of one of the competitors of Perrier were found in Perrier's cafeteria is what led to management going ballistic on the workers. It is important to note here that the company did not do much in order to solve these issues with the workers. Even though the performance of the organization was depressingly low, the management did not make an attempt to involve the workers towards devising strategies that would help the company improve its performance. There was always a blame game happening within the company. The workers held the management responsible for the decline in the performance and the issues that they had to face at work and on the other hand, the management believed that it was the labor union that was hindering the improvement in the financial performance of the company (Barton, 1991).

Comparison and Contrast

The two companies and their performance can be compared and contrast because both the companies fall in the same industry and...


On the other hand, Perrier was a successfully running company until traces of benzene were found in their mineral water in the 1990, after which their sales declined significantly. The latter company was then taken over by Nestle so that the performance of the company could be improved. It should be noted here that both the companies were aware of the fact that it was time for them to bring about some changes in their strategies so that their performances could be improved. However, both the companies had to face some kind of resistance to these changes. The thing that is common to both companies with respect to the resistance that they had to face was that it came from the employees and the labor unions. In case of Ajax Minerals, the workers did not have confidence in the management since they believed that any change in the strategy was either result in a decrease in their salary or would be a ploy against them. On the other hand, when Perrier was taken over by Nestle, naturally the workers became very insecure and did not want anything in the company or the management to change because they were afraid that they might have to lose their job.

Even though the source and kind of resistance was the same for both the companies, the way that both the organizations tackled the situation was quite different. Ajax Minerals believed that it was time for them to win the confidence of the workers. Therefore, they started to arrange interactive sessions with the employees and gave them access to the confidential data of the company. This resulted in the workers starting to believe in the management and they also started to contribute towards the changes in the strategy of the company so as to improve the performance. On the other hand, in case of Perrier it was seen that the company was not really bothered to involve the employees. The main reason behind this is that Nestle is the largest food manufacturing company in the world, and since two other mineral water producers owned by Nestle were performing really well in the same region, they did not think that it was that necessary to involve the employees so as to improve the situation and the working relationship.

Needless to say, Ajax Minerals dealt with the situation in a more effective way. The reason behind this is that through their strategy of involving the employees, they were successful in getting past the resistance that they had to face within their own organization.

Adjustments -- Ajax Minerals

Even though the strategy devised by Ajax Minerals was quite an effective one, especially when it comes to the fact that it was successful in getting over the resistance that it had to face, there are some adjustments that could be made to their strategy so that it could have been more effective. The first adjustment is that of educating the workers. It should be noted here that it is quite natural for the workers to react in a negative way if the management decides to bring about some changes in their strategies. The reason is not that the workers do not wish to see an improvement in the performance of the company, but the reason is that they have their own insecurities. Especially in the face of the economic recession that is more or less prevailing the economies of the entire world, the workers are always thinking about lay-offs and reductions in their salaries every time the management announces to change the policies or the strategies. In this case, if the workers are educated with respect to the problems that are being faced by the companies and if they are made to understand why the change in the strategies are important, then confidence will be instilled in the workers. It is true that the management went on to arrange interactive sessions with the employees, but in these sessions the workers were not being educated about the problems that are being faced by the government.

One of the other adjustments that could have made the change in the strategy more effective is that the management should have negotiated with the employees. This implies that the workers should have been given some kind of incentives or bonuses if they had reached a certain target with respect to the performance of the company in the industry. When workers are offered bonuses, they automatically tend to perform in a better way.

Adjustments -- Perrier

It will not be wrong to say that the change in the strategy of Perrier was not effective to begin with. It required adjustments from the very start. As it has already been explained above that…

Sources Used in Documents:


Barton, L. (1991). A case study in crisis management: the Perrier recall. Industrial Management & Data Systems, 91(7), 6 -- 8.

Blawett, K. (2011). Leave Ajax minerals in the ground. The Daily New. Retrieved from,. (2014). Ajax Minerals LTD.: Private Company Information - Businessweek. Retrieved 4 August 2014, from

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