Introduction According to the case study, Odwalla Juice Company was founded in 1980 when three musicians in an effort to raise money to fund music school programs, had the idea of selling freshly squeezed juice to small businesses within their immediate community. The trio invested $200 in juicing equipment and started a “fresh juice revolution”, which was intended to meet the growing demand for organic foods & beverages by consumers across the country. The company started relatively small with the founders personally squeezing, packaging and transporting these juices to local restaurants that existed in their community. However the company experienced rapid growth in the early 90’s and by 1995 it has increased its product line and expanded operations well beyond the local market. Odwalla was able to captivate consumers through the creativity of the company’s founders who were also very passionate about social responsibility and the need to ensure the health and wellbeing of the community. This philosophy was also reflected in the company’s core values and company vision which read “Odwalla, a breath of fresh intoxicating rhythm, living flavor, soil to soul, people to planet, nourishing the body whole.” The company’s core values also touted a philosophy or honesty, integrity, personal responsibility and environmental awareness, just to name a few. In an attempt to effectively meet the needs of its customer base, the company leadership employed a business model that was focused on selling strictly organic products which contained very little or no preservatives. They also bypassed the pasteurization process and instead used an acid rinsing method in order to kill bacteria. This was mainly done in order to preserve taste and maintain the integrity of their products in the eyes of their customers as being non-processed & 100% organic. However, in 1996 an outbreak of E.Coli bacteria that was found to be linked to the company’s unpasteurized apple juice products caused a series of illnesses across the West Coast of the US and even resulted in the death of an 18 month old baby. The company was suddenly thrown into survival mode since these events resulted not only in a 90% drop in sales in one month as well as a 34% drop in the company’s stock price, but also numerous legal troubles, government investigations and fines and severe damage to the brand. The leadership the company was faced with the challenge of modifying a strategy that had worked wonderfully in the past, rebuilding the company brand and guiding Odwalla through a long recovery process.
Stakeholders
Employees
Odwalla’s employees can be considered a major or primary stakeholder since as described in Waddock, they are persons without whom the business cannot operate (page10). In this case the company leadership realized the need to have a shared vision which they were able to in turn use to motivate the employees to strive for excellence. The company leaders were always open to suggestions and ideas from employees about improving their products and services. The employees of the company were also allowed to participate in the formulation of the company vision which gave them a sense of purpose and contribution. Also the way the company vision was practiced by management made the vision attractive and credible to the company employees, which according to expert Burt Nanus, is necessary for in order for the vision to be embraced (http://www.au.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt4ch18.html). The employees of the company can also be considered primary stakeholders since they are there to ensure that all parts of the business processes, come together to provide the best possible product and service to the customer.
Customers
Odwalla’s customers are also a key stakeholder since they are the ones who through their patronizing of the company ensure its profitability. In this case Odwalla’s customer base consists of persons who are health and environmentally conscious and prefer organic foods and beverages. They are a key stakeholder since Odwalla’s products are specifically produced to meet the needs of this target group since being health conscious themselves meant that the customers would also likely share the company’s vision. During the crisis over food safety, customers literally stopped purchasing the company’s products which caused a drop in sales of 90% after just one month. The struggle for survival that resulted from the loss of its customer base reinforces the fact that when primary stakeholders cut ties with an organization, profitability is reduced and the company cannot function effectively. The reaction of the customers during the food safety crisis also shows how the civil society sphere impacts a company. Once safety was perceived to be compromised then the community initially turned away from Odwalla products.
Government regulators The E.Coli outbreak resulted in higher safety standards being set for food companies operating within the industry as well as more stringent tests and benchmarks being implemented by the FDA. The FDA mandated that quality control techniques be updated and the investigations into Odwalla’s safety practices resulted in a $1.5million dollar fine. The political sphere became more active as it relates to food safety and instituted strict guidelines that govern operations in food businesses within the industry which impacted companies like Odwalla since business processes had to be modified (which leads to additional costs) in order to meet the guidelines of this stakeholder.
Investors
Odwalla’s investors can also be considered primary stakeholders in this case, since their investments in company stock allows the company to raise capital in order to meet its needs for growth and profitability. The case makes mention of the investment banker who made a significant investment in the company and who also took on a leadership role as chief financial officer and used his expertise to reduce production and distribution costs while increasing profit margins. Once a company continues to do well then the shareholders will continue to invest and the company can continue raising capital for growth and expansion.
Key Target Groups
Apart from its targeted customer base, the case also shows us that Odwalla also focused on partnering with environmental groups by sponsoring various bio-safe agriculture forums, and outdoor events that were focused on preserving the environment and cultural diversity. For example the creation of seasonal brands where the proceeds would go to environmental causes is one way in which the company was able to reinforce its vision and core values through corporate citizenship. The company would also focus its efforts at corporate citizenship into areas that were most related such as providing a scholarship fund for women interested in health and nutrition or sustainable agriculture (Frieburger page 5) Furthermore the company only establishes contracts with organic producers in an effort to maintain their product integrity and stay true to their values and vision.

The role of leadership
From analyzing the case we can conclude that the main role of the leadership of the company is to establish the corporate culture, core values and instill the businesses vision within the various stakeholders. Another role that can be identified is the preparation of the strategic plan or direction for the company, the establishing of goals, and procedures to be followed in order to meet those goals. The Odwalla case shows that the company leaders were very passionate about achieving their vision and maintaining their core values, even during times of crisis. The company’s vision was reflected in the business processes, corporate responsibility and during the food safety crisis that threatened the very survival of the company. True strength of character and leadership is shown in times of crisis which more often than not requires the direct involvement of the CEO. An article by Eric Douglas entitled crisis leadership, describes Odwalla’s CEO as a realist survivor, one who takes responsibility, makes sure everyone is aware of what’s going on, delegates decisions, and enables people throughout the organization to communicate – both to employees and to the media. The realist-survivor trusts that if many people assume responsibility, then many people can be mobilized to act quickly (http://www.leadingresources.com/learning/tools/crisismanagement/crisisleadership/)
Douglas also points out two important rules of crisis management in his article:
“Protect other people first – customers, employees and citizens. Not your shareholders or yourself. Protect the public and your customers, and the shareholders will follow. Why? Because the long-term reputation and goodwill of your organization are more important than any short-term risk to shareholder value or your own job security.”
Also, “Be prepared to reframe and expand your level of responsibility. In other words, accept responsibility even if you’re not at fault. This may feel counterintuitive, especially when someone else is clearly culpable. But reframing and expanding your level of responsibility will help lead you out of the crisis.” When a container of Odwalla apple juice contaminated by the bacteria e coli resulted in the death of a child in 1996, CEO Greg Stepensall stepped in right away and assumed personal responsibility. He recalled every Odwalla product and paid settlements to the families affected by the tainted products. He held regular press conferences to ensure the public knew what was going on and how the company was responding. For more than a year, Odwalla retooled its production lines, adding flash pasteurization to ensure no future incidents could occur and although product sales fell 90% initially the company survived with its reputation intact. The company also took a leading role in the food industry as it relates to food safety. Odwalla’s response to the crisis proved successful because they stuck to their core values of integrity, honesty, accepting responsibility and effective communication. Therefore they were able to retain the trust of their consumers.
Strategic Issues/ Decisions The crisis created an opportunity for perspective, learning and improving the business. This allowed the leadership of the company to re-evaluate their strategic direction and identify areas where improvements could be made. The need for an effective advertising program was identified in order to strengthen the company brand and image and defend against competition. Also in order to reduce dependency on juice based products the decision was also made to expand their product line and bring new items to market such as meal replacement bars and shakes. There was also a consideration toward global distribution and the company invested heavily in quality assurance technology and eventually became an innovator of a “flash- pasteurization” process that killed all bacteria, but kept the fresh taste and quality of the juice intact. Although this is necessary to reduce the likelihood of customer illness by making the product safer, it may also be seen by consumers as Odwalla reneging on its promise to provide consumers with un-processed, organic products. So there is also a risk of customer backlash with this strategy even though it is done is an effort to protect them.
Recommendations
In these circumstances I would recommend that Odwalla first of all update its vision and core values and add a line that reflects their new found passion for food safety. The company has done well to become an innovator in this area with the development of new methods of pasteurization that do not affect the taste of the product. The company should invest in an advertising and marketing campaign in order to re-shape its image and remove any lingering doubts about the company’s safety practices. The short term costs associated with this will result in long term gain for the company. Odwalla should also continually seek to reduce its production and distribution costs without sacrificing quality in order to increase profitability and shareholder wealth, which will result in further investment in the company.

Conclusion
The Odwalla case shows the uncertainty of doing business and how one crisis can turn a usually successful and thriving venture into a fight for survival. The case also shows the impact that a company’s vision and core values can have on an organization. In some respect, we could say that Odwalla’s passion and intention to satisfy the needs of their customers by providing fresh, tasty, unprocessed, organic juices was honorable. However because of the perishable nature of food and the extra risk associated with unprocessed foods, the company’s strength became a major weakness almost overnight. Throughout the case it was shown that sticking to your vision and core values, even in times of difficulty will make it easier for the organization to rebound and for consumer trust and confidence in the business to be maintained.

References
Waddock, Leading Corporate Citizens, Third Edition

Freiburger, Corporate Responsible Leadership

Eric Douglas, Crisis Leadershp, Article retrieved from: http://www.leadingresources.com/learning/tools/crisismanagement/crisisleadership/ Capstone Study, The Odwalla Juice Crises, retrieved from:
http://highered.mcgrawhill.com/sites/dl/free/0073377694/868035/mel77694_case1_656_658.pdf