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7699.Case Study in PR and Advertising.

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Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
Министерство образования и науки Российской Федерации
Федеральное государственное бюджетное образовательное
учреждение высшего профессионального образования
«МОСКОВСКИЙ ГОСУДАРСТВЕННЫЙ ЛИНГВИСТИЧЕСКИЙ
УНИВЕРСИТЕТ»
ЕВРАЗИЙСКИЙ ЛИНГВИСТИЧЕСКИЙ ИНСТИТУТ
Е. В. Подкаменная, С. А. Фетисова
CASE STUDY IN PR AND ADVERTISING
Учебное пособие
Иркутск
МГЛУ ЕАЛИ
2015
Copyright ОАО «ЦКБ «БИБКОМ» & ООО «Aгентство Kнига-Cервис»
УДК 81
ББК 81.432.1- 923
П44
Печатается по решению Ученого совета
Московского государственного лингвистического университета
План изд. учеб. лит. 2015, поз. 3
Рецензенты:
канд. пед. наук, доц., зав. каф. рекламы и связей с
общественностью МГЛУ ЕАЛИ Ю. С. Заграйская;
канд. филол. наук, доц. каф. английской филологии
МГЛУ ЕАЛИ О. В. Каверина
П44 Подкаменная, Е. В., Фетисова, С. А. Case Study in PR and Advertising:
учеб. пособие. – Иркутск: МГЛУ ЕАЛИ, 2015. – 81 с.
Учебное пособие «Case Study in PR and Advertising» состоит из четырех
частей,
включающих
теоретические
сведения
об
антикризисных
коммуникациях и практические примеры, основанные на реальных кейсах
зарубежных компаний. Практические задания направлены на формирование
иноязычной профессионально коммуникативной компетенции.
Настоящее учебное пособие предназначено для студентов старших
курсов направления подготовки Реклама и связи с общественностью.
УДК 81
ББК 81.432.1- 923
© Подкаменная Е.В., Фетисова С. А., 2015
©МГЛУ ЕАЛИ, 2015
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Contents
Part I What is crisis management? ………………………………………….……..5
Text 1 What is a Business Crisis? ……………………………………………………5
Text 2 Alan Hilburg‘s view of Business Crisis Categories…………………….……..6
Text 3 Types of Crisis ………………………………………………………………..6
Text 4 What is Crisis Management? ……………………………………..……….…..9
Text 5 Crisis communication……………………………………….………………..11
Text 6 Your Crisis Communication Response Plan is Due for Maintenance …..13
Text 7 Why you Should not use Written Statements as your Primary Communication
Method ……………………………………………………………………………15
Text 8 3 Examples of Crisis Management ………………………………………….15
Text 9 How Banks Can Avoid a PR Nightmare ………………………………...17
Part II Outstanding examples of good crisis management …………………..…18
Case Study 1(classical example): Tylenol Poisonings ……………………………..18
Case study 2: Virgin Airlines………………………………………………………..19
Case study 3: Walmart ………………………………………………………………19
Case study 4: PepsiCo's can tampering rumors (1993) ……………………………..20
Case study 5: Odwalla Foods' apple juice E.coli outbreak (1996)…………………..21
Case study 6: Cadbury's worm infested candy bars (2003) …………………..…22
Case study 7: JetBlue's week-long operational breakdown (2007) ……………..23
Case study 8: The Red Cross' rogue tweet (2011) ……………………………….24
Case study 9: Taco Bell's "seasoned beef" meat filling lawsuit (2011)…….……..25
Case study 10: Union Carbide ………………………………………………………25
Case study 11: Case Study: Dell Inc. Battery Recall …………………………….…26
Case study 12: LEGO‘s Shell-branded toys ………………………………..…….27
Case study 13: Genuine care delivers crisis management dividends …….………29
Case study 14: Can Apologies Be Funny? ……………………………….………31
Part III How not to handle a crisis …………………………………….….…….32
Case study 1: ―United Breaks Guitars‖ ………………………………….………32
Case study 2: Calls for United Airlines boycott …………….………….………..33
Case study 3: Domino‘s YouTube Video …………………………………….….35
Case study 4: Travelocity‘s Good Deed Goes….Punished ………………………35
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Case study 5: Knee-Jerk Crisis Management Hurts Black Milk
Clothing……………………………………………………………………….……36
Case study 6: Motrin Moms Ad …………………………..………………………38
Case study 7: Procter & Gamble's New Pampers Product Line …………………39
Case study 8: Toyota's recall fiasco ……………………………………………...…41
Case study 9: Nigerian Man Boarding a Virgin America Flight ……………………42
Case Study 10: Phthalates in Toys ……………………………………………….....42
Case study 11: Arla Product Boycott in the Middle East ……….…………………..44
Case Study 12: Ribena Found Wanting ………………….………….………………46
Supplement ……………………………………………………….…………..…….49
Part 1. Сases Analyses ………………….……………………….…………………..49
Part 2 Supplementary Reading ……………….………………..……………………53
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Part I What is crisis management?
Text 1 What is a Business Crisis?
A business crisis can be anything that can negatively effect a company’s reputation
or bottom line.
Natural catastrophes, product recalls, labor disputes, computer data losses. The list is
endless. Many events at first blush may not appear to be serious. Some are temporary.
Some can cause the demise of a company. Most can be handled with honesty and the
realization that it may be necessary to absorb losses over the short haul in order to
achieve a long and healthy business life.
Two Categories of Business Crises
Two distinct categories of crisis need to be recognized. To the first one we can refer
all those events over which we have no control, such as product tampering by outside
forces or natural disasters. Even in these situations there are always some actions we
can take: tamper-proof packaging, liability insurance, proper protocols. But generally
these events can blind-side us.
The second category contains all those events that might have been avoided had we
chosen to take the actions necessary to protect ourselves and the public. Some are
obvious. We look at the BP oil spill and see things that surely could have been done.
Other events are not so obvious and these are the ones that can be insidious. When a
management believes it is doing the right thing but in fact is fueling a potential crisis
we have the makings of a catastrophe. A couple of examples will make this
abundantly clear.
A crisis is not just the obvious explosion at a plant or a mine. Companies can and do
create their own crises. Companies must evaluate their philosophy, their strategy and
their honesty. They must take action to minimize their vulnerabilities but at the same
time be prepared to take action in the best interests of the public if they value
company longevity.
Task 1Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
Task 2 Explain the meaning of the following phrases: tamper-proof packaging,
liability insurance, proper protocols
Task 3 Surf the net and find some information about BP oil spill
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Text 2 Alan Hilburg’s view of Business Crisis Categories
Alan Hilburg, a pioneer in crisis management, defines organizational crises as
categorized as either acute crises or chronic crises. Erika Hayes James, an
organizational psychologist at the University of Virginia‘s Darden Graduate School
of Business, identifies two primary types of organizational crisis. James defines
organizational crisis as ―any emotionally charged situation that, once it becomes
public, invites negative stakeholder reaction and thereby has the potential to threaten
the financial well-being, reputation, or survival of the firm or some portion thereof.‖
1.
2.
Sudden crisis
Smoldering crises
Sudden crisis
Sudden crises are circumstances that occur without warning and beyond an
institution‘s control. Consequently, sudden crises are most often situations for which
the institution and its leadership are not blamed.
Smoldering crisis
Smoldering crises differ from sudden crises in that they begin as minor internal
issues that, due to manager‘s negligence, develop to crisis status. These are
situations when leaders are blamed for the crisis and its subsequent effect on the
institution in question.
Task 1 Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
Text 3 Types of crisis
During the crisis management process, it is important to identify types of crises in
that different crises necessitate the use of different crisis management
strategies. Potential crises are enormous, but crises can be clustered.
Lerbinger categorized eight types of crises
1. Natural disaster
2. Technological crises
3. Confrontation
4. Malevolence
5. Organizational Misdeeds
6. Workplace Violence
7. Rumours
8. Terrorist attacks/man-made disasters
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1. Natural crisis
Natural crises, typically natural disasters considered as 'acts of God,' are such
environmental phenomena as earthquakes, volcanic eruptions, tornadoes and
hurricanes, floods, landslides, tsunamis, storms, and droughts that threaten life,
property, and the environment itself.
2. Technological crisis
Technological crises are caused by human application of science and technology.
Technological accidents inevitably occur when technology becomes complex and
coupled and something goes wrong in the system as a whole (Technological
breakdowns). Some technological crises occur when human error causes
disruptions (Human breakdowns). People tend to assign blame for a technological
disaster because technology is subject to human manipulation whereas they do not
hold anyone responsible for natural disaster. When an accident creates significant
environmental damage, the crisis is categorized as megadamage. Samples include
software failures, industrial accidents, and oil spills.
3. Confrontation crisis
Confrontation crisis occur when discontented individuals and/or groups fight
businesses, government, and various interest groups to win acceptance of their
demands and expectations. The common type of confrontation crisis is boycotts,
and other types are picketing, sit-ins, ultimatums to those in authority, blockade or
occupation of buildings, and resisting or disobeying police.
4. Crisis of malevolence
An organization faces a crisis of malevolence when opponents or miscreant
individuals use criminal means or other extreme tactics for the purpose of
expressing hostility or anger toward, or seeking gain from, a company, country, or
economic system, perhaps with the aim of destabilizing or destroying it. Sample
crisis include product tampering, kidnapping, malicious rumors,terrorism, and
espionage.
5. Crisis of organizational misdeeds
Crisis occur when management takes actions it knows will harm or place
stakeholders at risk for harm without adequate precautions. Lerbinger specified
three different types of crises of organizational misdeeds: crises of skewed
management values, crises of deception, and crises of management misconduct.
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Crises of skewed management values
Crises of skewed management values are caused when managers favor short-term
economic gain and neglect broader social values and stakeholders other than
investors. This state of lopsided values is rooted in the classical business creed that
focuses on the interests of stockholders and tends to disregard the interests of its
other stakeholders such as customers, employees, and the community
It has 3 stages: precrisis -acute -chronic and -conflict resolution
Crisis of deception
Crisis of deception occurs when management conceals or misrepresents
information about itself and its products in its dealing with consumers and others.
Crisis of management misconduct
Some crises are caused not only by skewed values and deception but deliberate
amorality and illegality.
6. Workplace violence
Crises occur when an employee or former employee commits violence against
other employees on organizational grounds.
7. Rumors
False information about an organization or its products creates crises hurting the
organization‘s reputation. Sample is linking the organization to radical groups or
stories that their products are contaminated.
8. Other types
Boycotts, picketing, sit-ins, ultimatums to those in authority, blockade or occupation
of buildings, and resisting or disobeying police.
Task 1. Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
Task 2. Study the examples below and define their type. Follow the links where
possible or find information yourself.
2004 Indian Ocean earthquake (Tsunami)
Dow Corning‘s silicone-gel breast implant
Heartbleed security bug
1982 Chicago Tylenol murders
Exxon Valdez oil spill
Rainbow/PUSH‘s (People United to Serve Humanity) boycott of Nike
Procter & Gamble's Logo controversy
Chernobyl disaster
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Sears sacrifices customer trust
DuPont‘s Lycra
Text 4 What is Crisis Management?
Crisis management is the nature of activities to respond to a major threat to a
person, group or organization. Crisis management is a relatively new field of
management. Typically, proactive crisis management activities include forecasting
potential crises and planning how to deal with them, for example, how to recover if
your computer system completely fails. Many people would refer to this, instead, as
risk management and not crisis management.
Hopefully, organizations have time and resources to complete a crisis management
plan before they experience a crisis. Crisis management in the face of a current, real
crisis includes identifying the real nature of a current crisis, intervening to minimize
damage and recovering from the crisis. Crisis management often includes strong
focus on public relations to recover any damage to public image and assure
stakeholders that recovery is underway.
Crisis management is the process by which an organization deals with a major event
that threatens to harm the organization, its stakeholders, or the general public. The
study of crisis management originated with the large scale industrial and
environmental disasters in the 1980s.
Three elements are common to a crisis:
 a threat to the organization,
 the element of surprise,
 a short decision time.
There is an opinion that "crisis is a process of transformation where the old system
can no longer be maintained"(Venette). Therefore the fourth defining quality is the
need for change. If change is not needed, the event could more accurately be
described as a failure or incident.
In contrast to risk management, which involves assessing potential threats and
finding the best ways to avoid those threats, crisis management involves dealing with
threats before, during, and after they have occurred. It is a discipline within the
broader context of management consisting of skills and techniques required to
identify, assess, understand, and cope with a serious situation, especially from the
moment it first occurs to the point that recovery procedures start
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The aim of crisis management is to be well prepared for crisis, ensure a rapid and
adequate response to the crisis, maintaining clear lines of reporting and
communication in the event of crisis and agreeing rules for crisis termination.
Crisis management consists of different aspects including;
 Methods used to respond to both the reality and perception of crises.
 Establishing metrics to define what scenarios constitute a crisis and should
consequently trigger the necessary response mechanisms.
 Communication that occurs within the response phase of emergencymanagement scenarios.
Crisis-management methods of a business or an organization are called a crisismanagement plan.
A crisis mindset requires the ability to think of the worst-case scenario while
simultaneously suggesting numerous solutions. It is necessary to maintain a list of
contingency plans and to be always on alert. Organizations and individuals should
always be prepared with a rapid response plan to emergencies which would require
analysis, drills and exercises.
The credibility and reputation of organizations is heavily influenced by the perception
of their responses during crisis situations. The organization and communication
involved in responding to a crisis in a timely fashion makes for a challenge in
businesses. There must be open and consistent communication throughout the
hierarchy to contribute to a successful crisis-communication process.
There are five phases of crisis that require specific crisis leadership
competencies. Each phase contains an obstacle that a leader must overcome to
improve the structure and operations of an organization.
1. Signal detection
2. Preparation and prevention
3. Containment and damage control
4. Business recovery
5. Learning
Signal detection
Sense-making: represents an attempt to create order and make sense,
retrospectively, of what occurs. Perspective-taking: the ability to consider another
person's or group's point of view.
Preparation and prevention
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It is during this stage that crisis handlers begin preparing for or averting the crisis
that had been foreshadowed in the signal detection stage. Organizations such as
the Red Cross's primary mission is to prepare for and prevent the escalation of crisis
events. Walmart has been described as an emergency-relief standard bearer after
having witnessed the incredibly speedy and well-coordinated effort to get supplies
to the Gulf Coast of the United States in anticipation of Hurricane Katrina.
Containment and damage control
Usually the most vivid stage, the goal of crisis containment and damage control is to
limit the reputational, financial, safety, and other threats to firm survival. Crisis
handlers work diligently during this stage to bring the crisis to an end as quickly as
possible to limit the negative publicity to the organization, and move into the
business recovery phase.
Business recovery
When crisis hits, organizations must be able to carry on with their business in the
midst of the crisis while simultaneously planning for how they will recover from the
damage the crisis caused. Crisis handlers not only engage in continuity planning
(determining the people, financial, and technology resources needed to keep the
organization running), but will also actively pursue organizational resilience.
Learning
In the wake of a crisis, organizational decision makers adopt a learning orientation
and use prior experience to develop new routines and behaviors that ultimately
change the way the organization operates. The best leaders recognize this and are
purposeful and skillful in finding the learning opportunities inherent in every crisis
situation.
Task 1. Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
Task 2 Find more detailed information about Walmart and its strategy during
Hurricane Katrina
Text 5 Crisis communication
Crisis communication is the effort taken by an organization to communicate with
the public and stakeholders when an unexpected event occurs that could have a
negative impact on the organization’s reputation.
This can also refer to the efforts to inform employees or the public of a potential
hazard which could have a catastrophic impact.
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The Crisis Communication usually consists of three elements:
1. A holding statement (a passive prepared press statement which has been approved
by the Crisis Communicators and Legal Advisors),
2. Questions & answers (Q&A) with prepared and agreed answers for foreseeable
questions if asked and,
3. Internal communication.
Guidelines for Successful Social Crisis Planning
In an article for business2community.com, David Vap provided some solid tips for
getting an organization in position to handle social crises:
1. Understand your organization. Review external communication processes,
social capabilities, and corporate culture. This is where we recommend
scenario planning. Key questions could include: how would we respond if a
vocal customer complaint suddenly went viral? How would we respond to a
brandjacking attack?
2. Create a new social mindset in your organization. The social shift calls for a
mindset characterized by transparency, accountability, employee
empowerment, and planned spontaneity. Technology is certainly a crucial
component of dealing with crisis communication, but preparing processes and
practices must come first.
3. Know your consumers. Listen to conversations unfolding on the social web
about your brand, and respond/employ proactive social support. Also identify
your customer advocates on the social web – they will be invaluable in the
event of a crisis.
4. Form a social crisis team. A successful social strategy must cross the
boundaries of department and hierarchy because consumers expect a seamless
experience. Build a cross-functional team, including a social media manager, a
product owner, and at least one executive sponsor. Draw up a social team
charter to clarify roles and responsibilities and create an internal collaboration
space for this team.
5. Roll out a social crisis communications plan. Develop a playbook with
guidelines for the social crisis team. Define an escalation process for potential
PR issues. Build feedback into every step so you can adapt. Your plan needs to
think through three areas – process and culture (what / who needs to change),
technologies and tools (what to use to get there), and key metrics (what to
track).
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Task 1. Explain the meaning of the underlined phrases
Text 6 Your Crisis Communication Response Plan is Due for Maintenance
(And/ Or a Rewrite)
Task 1. Read the text and write a summary in the form of the tips. Start with “To
have a good crisis communication plan you should ….”
Any crisis communication plan that hasn‘t been updated or tested in at least the last
six months is fundamentally useless!
The rapid evolution of citizen journalism and the collaborative Web has changed the
way companies & countries need to watch for looming crises, assess the reaction to
crises, and respond.
Citizen journalism, of course, is nothing particularly new, but the speed with which
messages can circulate today – through the use of mobile phones, camera phones,
Blackberry, Twitter and the Net - have changed the dynamics of how a crisis unfolds.
In fact, it now even has the power of getting a momentum on its own and assist in
revolutions, such as what happened in Tunisia and Egypt.
Task 2. Take a look at this article Egypt: The camp that toppled a president and
click on the word blogger in the photo (http://www.bbc.co.uk/news/world12434787).
There are two factors at play when a story hits the Net. The first is the number of
people influenced by what the person is writing, either in a mail; a tweet, a web
forum or in a blog. The second is the attention paid to the spreading story by the
media, which is often compelled to pick up the story and mainstream it, which makes
it visible to all those people who don‘t have access to the internet.
Many crisis communication plans these days don‘t include specific strategies for
using the Net and other forms of online communication. Have you considered the
technology to use when there is a social media crisis via the Web? Do you know
when and how to respond to a particular stance by a blogger or a nasty tweet? Should
you even respond?
Unless you have a strategy in place and know how to use various tools and
technologies you will be at a disadvantage.
Here are some questions that you have to consider:
 How often do you monitor to determine your organisation‘s name in forums, e-mails,
online discussions or even in Messenger? Have you considered using online tools
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like Google Alerts, Cyber alert and SNS Analytics that can assist you with the
process?
 Do you participate in online networks like Linkedin and others? Since social media is
about being part of a conversation, the building of trust starts long before the issue of
a statement.
 Where do you keep your plan? Hopefully you have a copy on your smartphone,
in Dropbox, on the web and at home for real-time access.
 Can you update stakeholder (audience) details in real-time? Do you make use of
online address books/contact databases? You may want to consider
using Gist or Plaxo for this.
 Can you communicate with your audiences directly? How quickly can you get
messages to them using social Media tools like Twitter, e-mail and SMS?
 Have you considered using outside 3rd party experts, social media & crisis
communication management experts to assist you with an independent analysis
before a crisis hits?
With the emphasis today on speed, any strategic crisis communication response plan
should include prioritization of audiences (stakeholders), honesty and transparency
(levels of disclosure), concern for victims, and avoidance of speculation and selection
of appropriate spokespersons.
But the new focus should take into account the era of the 24-hour news cycle or what
David Meerman Scott calls the ‗real-time‘. A Company has nanoseconds available
today to respond to bad news or rumours.
That‘s no joke. That‘s for real and if your crisis communication response plans are
not based on the ‗real-time ‗ principle it is not worth a tweet.
Don‘t wait. Dust off that crisis plan before a crisis finds you.
HP‘s firing of Mark Hurd and the subsequent entanglement with Oracle was not a big
deal in the scheme of things, even though internally it must have been a shocker.
However, the death or resignation of a key person in any organization could very well
be serious for any company depending on just how key that person really was.
Task 3. Find more information about the example given in the last paragraph, be
ready to comment on it.
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Text 7 Why you Should not use Written Statements as your Primary
Communication Method
In an article for his website, Mr. Media Training, Brad Phillips composed a solid list
of reasons why you should not use written statements as your primary
communication method:
1. They Don‟t Make You the “Go-To” Source: One of the most important things in
the early hours of a crisis is to establish your company or organization as the
primary source for information. If reporters believe they can get the relevant facts of
the story directly from you in a timely and transparent manner, they will have less
incentive to seek out alternative sources.
2. They Make You Look Guilty: A written statement too often looks like the Fifth
Amendment – an obstruction guilty parties hide behind when they want to avoid
saying something self-incriminating. Sources that communicate openly are usually
treated better by reporters than those who refuse to talk or speak only through the
written word.
3. Reporters Hate Them: Reporters want the opportunity to ask questions, clarify
points, and pursue their own angles. Sources that don‟t speak to reporters often
suffer more hostile coverage.
These are three HUGE negatives that combine to make battling a crisis much harder
than it would be had you simply spoken in person with reporters. Throwing a new
wrench in this theory is the ongoing infatuation with social media. Are these new
media platforms responsive and pervasive enough to act as a primary communication
tools, or should they be relegated to the role of support? What do you think?
Task 1. Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
Task 2 Ponder on the questions at the end of the text.
Text 8. 3 Examples of Crisis Management
As all business owners know – both big and small – sometimes there are situations in
which the whole company goes into frenzy because of one bad decision. In the
modern age, the crisis often starts online. This text outlines some examples of how to
properly handle a crisis:
1. React quickly
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Even big brands have experienced a marketing move gone totally
wrong and having to go through major damage control to get their audience back.
One great example of this is when McDonald‘s started a Twitter hashtag:
#McDStories. The point was to encourage customers to share their fun stories that
take place at various McDonald‘s locations. Instead, the bashing began and people
began using the hashtag to talk about their horrible experiences at the chain
restaurant. By reacting to this situation quickly and efficiently, McDonald‘s was able
to put the Twitter backlash behind them. Now customers are encouraged to ask
questions on the company‘s website and all controversy is discussed through this new
outlet.
2. Apologizing
Sometimes it‘s not as simple as a Twitter slip-up. Sometimes it‘s
much bigger than that and the public shows massive outrage for a comment that
could have been avoided. Exhibit A: Karl Lagerfeld calls Adele fat. It‘s one of those
jaw dropping moments that you simply can‘t believe happened, but it did. We‘re
certainly not condoning Lagerfeld‘s comments, however, he ultimately did the right
thing, which was apologizing. Knowing when you‘re wrong is important and
apologizing is the right move to make, but don‘t be surprised if you‘re not
automatically forgiven. Coming back from shocking comments or incidents can take
a while.
3. Communication
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Online reports are almost never 100% true. There have been
countless incidents where someone‘s words were taken out of context or a ―source‖
gave away some shocking piece of company information. In these situations, stay
calm. Simply communicate your side of the story and you may be surprised at how
easily this problem can be resolved. When rumours swirled about JC Penney
regretting their decision to use celebrity talk show host Ellen Degeneres as their new
spokesperson. The company‘s CEO made a simple statement clearing up any and all
rumours and expressed no plans to drop Ellen as spokesperson.
Task 1. Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
Task 2. Search the net and find more detailed information about the cases given in
the text.
Text 9. How Banks Can Avoid a PR Nightmare
Texas Banking published the article, ―Crisis Communication: How Banks Can
Avoid a PR Nightmare‖ extensively quoting and pulling from Merrie‘s more than
two decades of experiences working with banks and the banking industry.
The article is an interesting read for anyone because, not surprisingly, many of the
lessons translate to any industry.
Task 1: Follow the link below and read the detailed information about bank crisis
communication plans
http://spaethcom.com/images/uploads/How_banks_can_avoid_a_PR_nightmare_Sept
._2014.pdf
Task 2: After reading the article be ready to discuss the following: why the “best
defense is a good offense,” the problem with saying “no comment” and why crisis
communication plans are crucial.
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Part II Outstanding examples of good crisis management
Case Study 1(classical example): Tylenol Poisonings
Seven people died in 1982 after taking
Tylenol capsules, which had been
tampered with and contaminated with
cyanide. According to Effective Crisis
Management, Tylenol‘s market share
quickly went from 37 percent to only
seven percent.
Johnson & Johnson faced a huge
challenge. Not only did the company
have to manage the crisis communication of just Tylenol, but also of the entire
company‘s reputation.
J&J recalled approximately 31 million bottles of Tylenol from across the country and
stopped all advertising.
On the first day of the crisis, the Tylenol poisonings were the top story for all three
broadcast outlets. By the end of the crisis, there had been more than 100,000 news
stories run in newspapers.
A seven-member team was put together by James Burke, J&J‘s chairman. His first
focus was to protect the people and his second focus was saving the product. The
company also used the media to issue alerts and held several press conferences at the
corporate headquarters with a live satellite feed. There also was an 800-number
available for consumers.
J&J assumed responsibility by ensuring public safety first and recalled all of their
capsules from the market, despite the fact that the bottles were tampered after
reaching the shelves.
Tylenol was reintroduced into the market with triple-seal tamper-resistant packaging,
offered coupons for the products, created a new discounted pricing program, new
advertising campaign and gave more than 2,250 presentations to the medical
community.
J&J actually increased their credibility during the crisis because of the candidness of
the executives.
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Notre Dame expert Professor Patrick Murphy said J&J set a ―gold standard‖ in
regards to business ethics as well because J&J was proactive and transparent.
Task 1. Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
Task 2. Pay attention to the underlined grammar structure in italics. Make up your
own examples with it.
Task 3. How different should be J&J crisis management plan if it took place
nowadays?
Case study 2: Virgin Airlines
The primary goal of Merrie Spaeth‘s ―Bimbo Awards‖ is to give a humorous look at
crisis communications gone wrong. Occasionally, though, Spaeth picks out a few
examples that stand in stark contrast to her usual fare – those who got things right.
Here‘s a sample, from her ―Bimbo of the Year‖ list:
A passenger on a Virgin Air flight wrote a humorous and illustrated letter of
complaint regarding food he was served on a flight. It generated a personal response
from CEO Sir Richard Branson who invited him to help select meals for the airline in
the future. This is a good example of how important it is to respond quickly, to have a
conversational and humane tone, and to use humor. If communication is to be a
strategic tool for business, this is a good example of how to handle
complaints. Telegraph, ―Virgin complaint letter: Author of Virgin letter offered
chance as airline‘s food tester,‖ Jan. 28, 2010
Case study 3: Walmart
Another good example is how Walmart reacted when an announcement over their
loud speaker in a New Jersey store ordered all black people to leave. Predictably,
shoppers were horrified, angry, and word spread quickly. Rather than wait to find out
what had happened, Walmart immediately apologized saying it was unacceptable,
and pledged to find out what had happened and share whatever they found with the
public. A 16-year-old boy was discovered to have commandeered one of the courtesy
phones. This is how a company has to react in this day of instant news, even before it
knows all the facts. The county prosecutor ―praised the company for their strong
cooperation in the investigation,‖ and the NAACP, which has been critical of
Walmart in the past, weighed in to say that the company has worked hard to show it
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cares about diversity. (The moral: even bad news can be a platform for positive
news). MSNBC, ―Police: Boy, 16, made racial comment at NJ Walmart,‖ March 20,
2010
While these two cases took different approaches to these negative incidents, the
constant was direct, honest and public communication. As a result, both came out
with improved reputations and a bundle of free publicity.
Task 1. Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
Task 2 Look through Merrie Spaeth’s “Bimbo Awards” list, choose 1-2 cases and be
ready to speak about them in class.
Case study 4: PepsiCo's can tampering rumors (1993)
The crisis: A syringe was allegedly found in a can of Diet Pepsi in Washington state.
The following week, more than 50 reports of Diet Pepsi can tampering sprung up
across the country. It turned out to be a hoax.
How PepsiCo responded: Both PepsiCo and the FDA were confident that the
reports were fabrications, so the company came out hard, defending itself staunchly
against the accusations.
But PepsiCo didn't make vague statements telling the public to simply trust it. The
company produced four videos throughout the crisis, such as a comprehensive report
on its soda canning process. The most compelling was a surveillance tape of a woman
in a Colorado store putting a syringe into a can of Diet Pepsi behind the store clerk's
back.
PepsiCo North America CEO Craig Weatherup appeared on news stations armed not
only with visual evidence of the bogus reports, but with the explicit support of the
FDA. He appeared most notably on Nightline with FDA Commissioner David
Kessler, and they both assured the public that Diet Pepsi was safe.
The result: The rumors fizzled out within two weeks following multiple arrests by
the FDA for filing false reports. Diet Pepsi sales had fallen 2% during the crisis but
recovered within a month.
The situation required an aggressive defense because PepsiCo hadn't done anything
wrong. If the company remained quiet and complacent the damage could have been
far worse.
Task 1. Translate the underlined words and phrases, learn them by heart, make up
sentences of your own with the words.
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Task 2. How different should the company’s crisis communication be if it took
place nowadays?
Case study 5: Odwalla Foods' apple juice E.coli outbreak (1996)
Task 1. Read the case and summarise the right steps of crisis management.
Wikipedia
The crisis: Washington state
health officials confirmed a
link
between
a
local E.coli outbreak
and
Odwalla's fresh, unpasteurized
apple juice. One child died
and more than 60 people
became sick, prompting more
than 20 lawsuits.
How
Odwalla
responded: CEO Stephen Williamson immediately recalled all Odwalla products
containing apple or carrot juice, which cost the company around $6.5 million. He
accepted responsibility when talking to the media and promised to pay all medical
costs for those affected by the outbreak.
Daily press briefings by Odwalla were used to update the public, along with full-page
newspaper ads and a website explaining the situation.
The result: The company had faced its worst-case scenario: death caused by one of
its food products. Odwalla lost a third of its market value by the time everything
subsided, and pled guilty to criminal charges relating to the outbreak, which resulted
in a $1.5 million fine from the FDA.
But Odwalla was still standing. It focused on customer relations in the months
following, attempting to rebuild trust. Odwalla fixed the contamination issue and
improved its quality control and safety system.
Odwalla re-launched its apple juice two months later. In 2001, Coca-Cola bought
Odwalla for $186 million.
Source: mallenbaker.net
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Case study 6: Cadbury's worm infested candy bars (2003)
Task 1. Read the case and summarise the right steps of crisis management.
The
crisis: Two
Cadbury
chocolate bars were found
infested with worms in Mumbai,
India. The Maharashtra FDA
quickly seized the chocolate stock
at
Cadbury's
closest
manufacturing plant in Pune.
How Cadbury responded: The
company was slow out of the
gates. It released a statement
claiming that the infestation was
not possible at the manufacturing stage, while the FDA disagreed, prompting a tussle
between the two. The media jumped on Cadbury, and the brand was under
widespread assault.
Cadbury took its advertising off the air and launched an educational PR project that
targeted retailers. It kept the media updated through press releases on the specific
measures it was taking to correct its manufacturing and storage processes. The
company also imported new machinery and changed the packaging of its Dairy Milk
bars.
Four months later, Cadbury began advertising more aggressively. By then, the
company's relationship with the media had improved greatly.
The result: Cadbury's sales in India plunged 30% in the wake of all the negative
media coverage, and this was during a season when its sales usually increase by 15%.
But over time, Cadbury began to recover.
Within eight weeks of the introduction of its new packaging and advertising
campaign, sales had almost reached pre-crisis levels. The company announced eight
months after the incident that its consumer confidence was back to to normal.
Cadbury has maintained its position at the top of the Indian chocolate industry ever
since.
But Cadbury suffered three years later when a salmonella outbreak wasn't handled
nearly as well.
Sources: Rediff, Public Relations Consultants Association of India
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Case study 7: JetBlue's week-long operational breakdown (2007)
Task 1. Read the case and summarise the right steps of crisis management.
The crisis: JetBlue's operations
collapsed after an ice storm hit
the East Coast of the U.S.,
leading to 1,000 cancelled
flights in just five days.
How JetBlue responded: CEO
David Neeleman never blamed
the weather. He wrote a public
letter of apology to JetBlue
customers, introduced a
customer's bill of rights, and presented a detailed list -- which included monetary
compensation -- of what the company would do to help all the affected passengers.
The result: JetBlue didn't dodge the backlash completely. Throngs of enraged
passengers toiled in airports for nearly a week, and they had reached their boiling
point by the time Neeleman spoke up.
But in the weeks that followed, JetBlue managed to quash much of the uproar by
being as public and straightforward as possible. Neeleman went on YouTube, the
Today Show, Letterman, and Anderson Cooper, not pleading his case, but
apologizing for his company's faults.
Though there was much reputational damage done, JetBlue's comeback allowed it to
regain some of its luster. For an airline that differentiates itself so heavily on
customer service, it was crucial that they did.
Sources: NYT, TheMarketplaceofLife, Time
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Case study 8: The Red Cross' rogue tweet (2011)
Task 1. Read the case and summarise the right steps of crisis management.
Twitter
The crisis: One of the Red Cross' social media employees accidentally sent the tweet
-- which was meant for her private account -- and didn't realize it. It stayed up for
about an hour before the company's social media director was alerted and took it
down.
How the Red Cross responded: Social media director Wendy Harman followed up
with a humorous tweet from the official Twitter account and acknowledged the
mistake.
It got support from Dogfish Head too, who embraced the hashtag #gettngslizzerd and
encouraged its followers to donate to the Red Cross.
The result: The tweet generated a bit of buzz among bloggers and the Twitterverse,
but so did the fun response by the company.
Fortunately for the Red Cross, although the nature of the tweet wasn't professional, it
wasn't too controversial. Nobody was outraged, and the Red Cross had to deal with
nothing more than a little embarrassment.
Source: Mashable
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Case study 9: Taco Bell's "seasoned beef" meat filling lawsuit (2011)
Wikimedia
The crisis: Yum! Brands,
Taco
Bell's
parent
company, was sued over
the contents of its meat.
The lawsuit alleged that the
company's "seasoned beef"
contained only 35% beef,
and that Taco Bell was
lying in its advertising.
How Taco Bell responded: Taco Bell explicitly declared the claims false, and shared
with the public its percentages (88% beef, 12% secret recipe), along with the
ingredients in the secret recipe itself.
The company quickly fired up a multi-platform PR campaign to shoot down the
allegations and get the word out about its "not-so-secret" recipe. It included
traditional local market newspaper ads, but focused on online marketing with a
YouTube channel, Facebook page, and more.
The result: Taco Bell's existing consumer base responded overwhelming well to the
campaign. The social media platforms shined, with the vast majority of
commenters supporting the company's stance.
Less than four months later, the lawsuit was dropped, and Taco Bell had completely
averted a potential PR disaster.
Source: WaveMetrix
Case study 10: Union Carbide
The Bhopal gas tragedy would be a nightmare of a case to handle. At the Union
Carbide plant in Bhopal, India, toxic gases were released. More than 2,000 people
died immediately. It is estimated that 8,000 died within the two weeks following in
addition to the approximate 16,000 more who have died from disease related to the
incident. It is said that the crisis was caused by a sabotage.
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From a crisis communications standpoint, getting a good idea of the situation would
have been difficult considering the distance between India and the US (Hendrix).
Considering this, a decent job managing the crisis was done.
Union Carbide made some very important decisions early on. The company decided
to accept responsibility using an attachment/forgiveness strategy and provide aid to
victims. This strategy was quite effective because it showed the public that they were
not denying what had happened and gave people the feeling that Union Carbide
would attempt to take care of the situation.
It also was decided to be available to and share information with the media. Union
Carbide:
 Held press conferences
 Hosted press tours
 Had key people available for interviews
 Issued press releases
Although the incident occurred more than 20 years ago, the same principles apply:
short, concise writing.
Included in the fact sheet is information on the incident, the cause, who is taking
responsibility, legalities, settlement information, relief efforts, medical assistance,
medical effects, status of the plant in Bhopal and litigation. There also is
environmental and safety information about the company‘s safety record, safety and
environmental goals and achievements and improvements made to training and
procedures.
Union Carbide also had to keep its internal audiences informed, which was done
through employee news bulletins, employee publications, video messages,
newsletters, annual stockholder meetings and individual letters and phone calls.
Task 1. What would the company’s strategy have to be nowadays?
Case study 11: Case Study: Dell Inc. Battery Recall
In 2006, Dell voluntarily recalled 4.2
million lithium-ion batteries. The batteries,
under certain conditions, could overheat
and cause fire. The media had previously
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noted a Dell laptop going up in smoke and another that had melted.
It was the ―largest recall in the history of consumer electronics‖. According to Time
Magazine, the recall affected 15% of laptops sold from 2004 to 2006.
Following a leak to the press, Dell launched its communication plans about 12 hours
early. According to the case study, ―Dell became a model for how a company could
rapidly and accurately respond to its customers.‖
Dell provided a Web site – http://www.dellbatteryprogram.com – with details and
instructions for customer. There also was a customer service line available.
Although Dell handled the crisis, the batteries were actually manufactured by Sony.
Time Magazine quoted Richard Shim, a PC industry analyst:
―Shim says that Dell, hit by bad publicity that could harm consumer sales, took this
opportunity to reach out to its customers. ‗It‘s part of a long-term strategy to build
back the trust of consumers,‘ he says.‖
Dell‘s credibility was negatively affected with headlines such as ―Dell laptop become
a flamethrower.‖
But, the open dialogue and effectiveness of the recall probably helped Dell‘s image.
Dell was the first company to address the issue of the Sony batteries. According to
the case study, ―Dell initiated the recall on the basis of six incidents among almost 20
million batteries in the marketplace.‖
Task 1. Search social media platform for Dell communication with the customers.
Analyse them.
Case study 12: LEGO’s Shell-branded toys
LEGO is proof positive that tablets and
smartphones have not replaced analog toys.
Currently, LEGO is the world‘s largest and
most valuable toymaker.
In Danish, LEGO loosely translates to
―play well‖, and is the foundation of their
philosophy. The tale of the 83-year-old
Scandinavian company from Billund, Denmark, is truly remarkable – they‘ve
survived factory fires, economic hardship during World War II, kept the company
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thriving through four family generations, and recovered from near bankruptcy in
2004 and put itself back together again to achieve explosive growth.
The successful turnaround is built on their ability to stay relevant in the eye‘s of
children and parents alike.
LEGO is achieving this in two ways. The first is staying true to their identity and the
―LEGO system‖ by designing products that are versatile, as they expand with popular
characters and themes by tapping new fan bases such as Harry Potter, SpongeBob
SquarePants, and Star Wars. Second, they do a stellar job at building and connecting
to online communities through a unique social marketing strategy.
Social Media at the Core
LEGO understands the importance of their following and the strategic role social
media plays for the brand. Their Fans/Followers/Subscribers aren‘t just a vanity
metric, they help to strengthen their name, and are a powerful resource for their
innovation strategy. Fans are at the heart of what they do and where they‘re going.
LEGO‘s social media strategy pays tribute to them and their worlds – after all,
it‘s about the memories they make from the stories they create with those plastic
bricks. LEGO even launched ReBrick in 2011 – a social bookmarking platform
designed for members to share creations and that of other users they find around
the web.
LEGO‘s official YouTube channel is awesome. They generate a ton of content that is
sorted in playlists by category like short movies, superheroes, cities, and languages.
Managing a PR crisis
LEGO experienced a lot of buzz around their brand on social when Greenpeace
targeted the toy manufacturer for their marketing partnership with Shell. The
environmental NGO was using LEGO to attack the oil giant‘s plans to drill in the
Arctic through a YouTube video depicting a pristine Arctic built from LEGOs
gradually being submerged in oil. The video has attracted over 6.9 million views.
Task 1.Follow the link and watch the video. Think how would you react to it if you
worked for Lego company?
https://www.youtube.com/watch?v=qhbliUq0_r4
Task2.
Read
the
article
about
Shell
and
Lego:
http://www.theguardian.com/environment/2014/oct/09/lego-ends-shell-partnershipfollowing-greenpeace-campaign .
Take note, LEGO should be commended for how they dealt with the negative
targeted campaign on social media. They leveraged the power of Twitter to be part of
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the conversation as is it unfolded in real-time. This provided LEGO the opportunity
to communicate their values, and demonstrate their position on this issue.
This not only restored the brand‘s positive reputation, but it helped to increase their
interactions, capture new fans, and improve brand affinity which can lead to website
conversions. Today, brands are living breathing entities with a company culture and
value system. Choosing to ignore or leaving an issue unresolved in the scrutiny of the
public eye can greatly harm a brand‘s reputation and significantly impact their sales.
LEGO has decided not to renew its marketing contract with Shell – a partnership they
forged in the 1960s – since the 2011 agreement for the distribution of 16 million
Shell-branded toys at petrol stations in 26 countries valued at $116 million. The
president and Chief Executive of LEGO, Jørgen Vig Knudstorp, stated, ―As we
expand globally, we are determined to leave a positive impact on society, and the
planet that our children will inherit.‖
LEGO successfully engaged in real-time conversation to address the issue in a series
of tweets with the quote below. Social media is an extension of their brand – a
channel to communicate with their fanbase and the love of these awesome plastic
bricks.
“We‟re always thankful for input we receive from fans, children, and parents alike.
We know the importance of this issue. We‟re determined to leave a positive impact on
our society & children. We‟re saddened when the Lego brand is used as a tool in any
dispute between organisations. However, we fully expect Shell to live up to their
responsibility & take appropriate action to any potential claims. It is important to us
that any partnerships we have support our vision, promise, & has Lego play at
the core”.
Case study 13: Genuine care delivers crisis management dividends
We see a lot of apologies these days, but more often than not they fail to hit home.
Whether they‘re lacking critical components like compassion, competence and
confidence dragging or they take the route of the ugly ―non-apology‖, it seems tough
for many to say ―I‘m sorry‖.
That‘s why, when Phil Cogan forwarded this spectacular message that went out to
customers of car service car2go, we knew we had to share:
Yesterday, at 4:30pm CST, our car2go vehicles experienced a disruption in service
that was directly related to our Germany-based mobile provider. At that time, our
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provider had undergone a malfunction within their network that disabled cell phone
roaming, resulting in a break in remote connection with all of our car2go vehicles
across North America and their network in Germany. Thus, members were not able
begin or end their trips until the issue was resolved at 12:54am CST today.
Actions are quickly being taken to mitigate this occurrence from happening again,
but in complete transparency, since we are only 24 hours fresh, we are at the
beginning stages of analysis to understand the root causes with our provider.
Stability of our network has always and is still a core focus, but last night‟s
disruption strengthened our resolve to get a solution more quickly.
We all here at car2go feel the disappointment and the distress that we put many of
you through. We heard it through phone calls, tweets, posts, and emails since the
disruption started. For those members who have shared, “That‟s it…I am done with
car2go.” I totally understand why. But I hope that you know that each of us here are
members as well, and that with each heartfelt apology we wrote – we sincerely meant
it. We didn‟t shy away from this event – we owned up to it as quickly as we found
out, and worked throughout the night to communicate to all of you via the channels
we have in the toolbox. Are there things we need to improve with the
communications? There‟s always room for improvement, but please know that it was
my call to utilize the resources we had to its maximum impact.
For those who were directly impacted, our teams will be in contact with you shortly,
if they haven‟t already. For many of our members who were indirectly impacted, I
can tell you that it is on us to restore your faith in our service in the days, months,
and years to come.
After this week‟s announcement of car2go being the largest carsharing company in
the world, I could look at this as a huge embarrassment. But to be honest with you,
last night‟s disruption was a defining moment for us. It showed me – and all of our
team members across North America – that even though we are the largest
carsharing company in the world, we remained true to you, our members – that
during a sensitive time, we demonstrated the responsibility and the compassion as a
leading brand should. I saw and heard the grace our car2go team exhibited into the
early morning hours working on this issue, and I also saw and heard the many of you
say “Thanks, car2go – we still love ya.” And that, that means the world to us.
On behalf of car2go, I truly apologize for the inconvenience and trouble that the
disruption caused you, and I want to promise each of you that, as a company, we will
continue to improve and innovate our service to help you get from Point A to B with
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complete ease. And for those who have expressed their disdain for our apologies, I
ask that you don‟t put that on our team – the team who will be working hard the next
several days on this, put that anger on ME.
Personally committed,
Paul DeLong
Chief Marketing Officer car2go NA, LLC
Task 1. Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
Task 2. Look through the message again and think what makes it so unusual? Find
the phrases and sentences that support your point of view.
Case study 14: Can Apologies Be Funny?
Apologies are supposed to be serious. If you‘re joking, then you don‘t really mean it,
right?
Johnson & Johnson, whose handling of the infamous 1982 Tylenol tampering
murders and ensuing crisis management still stands as a ―how-to‖ case study today,
begs to differ, and did so in style with a hilarious video apologizing for shortages in a
particularly popular brand of tampon.
Task 1: Watch the video and analyze the crisis management strategy of the
company:
http://www.youtube.com/watch?v=cNsUZGvLnMY
The danger of the joke fall flat can be devastating to a company‟s reputation and
brand. This time, however, humor works perfectly. Why? For one thing, nobody died.
Second, it‟s personalized in a way that seems downright magical. Third, the company
makes fun of the shortfall in a way that is not mean spirited but jests, ever so slightly,
at the personal affection and loyalty women feel for this product. J&J has found the
perfect mix of „we‟re truly sorry,‟ and „gee, we didn‟t realize how much you cared.‟
They show that they appreciate the ardor women have for the product but also make
a bit of fun at how overzealous this love can be. They‟re also making light of romance
novel and cheesy nighttime drama stereotypes. It‟s a balance that is nearly
impossible to pull off, but they did.
The topper is that they offer a free coupon for the product at the video‟s end.
Nothing says sorry like free.
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The key to this working was that the apology wasn‘t really needed at all. A shortage
of one particular product on a flooded market isn‘t a major crisis management
concern, but spotting the opportunity to create positive online buzz regarding a
returning product and brand in general? That‘s the type of move that separates the
good from the great.
Task 2:What do you think about using humour in crisis management?
Part III How not to handle a crisis
Case study 1: “United Breaks Guitars”
Welcome to United Airlines‘ waking nightmare – a Crisis
Communications Case Study and a case for Social Media
consultants to share with brand managers for years to come.
Dave Carroll, a musician, sees his $3500 guitar being THROWN
by airline baggage handlers on a stopover in Chicago. He tries to alert airline
personnel, but they don‘t listen. He confirms the damage when he arrives at his
destination but doesn‘t file a formal complaint till his trip back one week later.
After arguing with United for about a year, he makes sad video (and threatens that
it‘s number one of three!)
Let‘s watch the video now, shall we? It‘s called, aptly enough ―United Breaks
Guitars‖: http://www.youtube.com/watch?v=5YGc4zOqozo
Consumerist.com picks up the story about ―United Breaks Guitars‖ the day after the
video shows up on YouTube. So does the LA Times Daily Travel & Deal blog, which
notes the video is ―showing more than 24,000 views by Tuesday night.‖ Wow, now
United is paying attention. Then Dave says ―Nope, I won‘t take your money, how
about you donate it to charity?‖ Meanwhile AdAdge publishes a piece called ―United
is Happy to Answer Your complaints After You Humiliate Them‖ in which author
Ken Wheaton notes:
―Listen, this isn‘t a problem unique to United Airlines. This happens with companies
in every sector — which is why The Consumerist never has a shortage of blog
fodder. You should be addressing consumer complaints the right way during the very
first round. The folks in the plane should have done something. The first rep Carroll
talked to should have done something. For example, the company could have started
by not hiring goons to handle the luggage in the first place.‖
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What could be done:
1. Don‘t just tweet your apology. Make a YouTube Video as a response to Dave‘s
first video, and have your CEO (yes, your CEO) say he‘s sorry about the treatment
and the run around.
2. Have him commit to not only using this video as training material, but commit to
firing anyone who gives customers a run-around like this. Give a number or email
where he‘ll take such complaints, and staff it, and respond to every one of the
complaints. Guess what, that info will help write new policies. It could also make
thousands of unhappy customers happy again. You could even use
GetSatisfaction.com as the interface.
3. Promote the new ―customer satisfaction‖ program – even make a TV commercial
that excerpts the Dave Carroll video and tells how you‘ve responded to it.
Task 1. Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
Task 2. Do you agree with the suggested plan of actions? What would you do?
Case study 2: Calls for United Airlines boycott after Muslim woman
denied Diet Coke
Unfortunately it was not the only case of customers’ dissatisfaction with the United
Airlines service.
TORONTO 1 June, 2015 — A flight
attendant‘s refusal to give an unopened can of
pop to a Muslim woman on a United Airlines
flight has some people threatening to boycott
the company. It‘s the latest in a string of
negative publicity for the airline.
A month before, United faced a ton of backlash after it made an emergency landing
to kick an autistic girl off a plane. Another controversy erupted at the end of May:
Sarah Blackwood, a singer in the Canadian group Walk off the Earth, told Global
News she was forced off a United flight after a flight attendant told her to ―control‖
her crying son.
The latest incident to spark outrage happened just two days later, when Tahera
Ahmad — an associate chaplain and director of interfaith engagement
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at Northwestern University — asked a flight attendant for a can of Diet Coke. She
requested that it be unopened ―due to hygienic reasons.‖ What happened next left
Ahmad in ―tears of humiliation,‖ according to a Facebook post.
The female flight attendant reportedly told her that she couldn‘t do that, but then
apparently brought the man sitting next to Ahmad an unopened can of beer.
―So I asked her again why she refused to give me an UNOPENED can of diet coke.
She said, ‗We are unauthorized to give unopened cans to people because they use it
as a WEAPON on the plane,'‖ Ahmad wrote Friday night.
―So I told her that she was clearly discriminating against me because she gave the
man next to me an unopened can of beer. She looked at his can, quickly grabbed it
and opened it and said, it‘s so you don‘t use it as a weapon.‖ Apphauled [sic] at her
behavior I asked people around me if they witnessed this discriminatory and
disgusting behavior and the man sitting in an aisle across from me yelled out to me,
‗you Moslem, you need to shut … up.'‖
Ahmad said she was brought to tears after nobody came to her defense. She ended
her post with ―#IslamophobiaISREAL.‖
The airline released a statement about the incident, saying the flight attendant
―attempted several times to accommodate Ms. Ahmad‘s beverage request after a
misunderstanding regarding a can of diet soda.‖ United also apologized ―for not
delivering the service our customers expect when traveling with us.‖
That statement trivialized the matter, Ahmad felt, by reducing it to a can of soda.
While some are using the incident as an opportunity to spew Islamophobic statements
on social media, many others are expressing their outrage over it. By Monday
morning, there were more than 26,000 tweets with the hashtag #UnitedforTahera. In
the last two days, there have also been more than 1,300 tweets with the
#BoycottUnitedAirlines hashtag.
Here‘s a look at what some people said:
James Faghmous posted: ―Stay classy @united. Not setting foot in your flights until
apology & staff get sensitivity training.‖ Another man, Abdel, wrote that he would be
skipping his upcoming United flight and purchasing a new one from a different
airline.‖
Omar Suleiman said he is refusing to fly on the airline ―until they learn how to not
discriminate. Pathetic behavior.‖
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Two days later, United published a statement on the company‘s website saying
they had apologized to Ahmad and indicated that a Shuttle America employee ―will
no longer serve United customers.‖
―While United did not operate the flight, Ms. Ahmad was our customer and we
apologize to her for what occurred on the flight,‖ read the post.
―United does not tolerate behavior that is discriminatory – or that appears to be
discriminatory – against our customers or employees.‖
Task 1. What do you think about the company’s strategy of crisis management?
What would you recommend them?
Case study 3: Domino’s YouTube Video
In a small Domino‘s franchise in North Carolina, two employees posted a prank
video of some unsanitary and pretty disgusting food-preparation practices. Thanks to
the power and reach of social media, within a few days there were more than a
million views on YouTube, a viral spread of the subject on Twitter and five
references on page one of a Google search for Domino‘s.
The company‘s first strategy seemed to be ―wait and see,‖ with hopes it would blow
over. Domino‘s responded about 48 hours after the video post, and it took time to get
the video down from YouTube.
Although the employees claim none of the food they tampered with was served, the
video and media coverage caused damage to the company. The president of the
company posted a YouTube response:
In the video, he reassures customers and tells people exactly what is being done to
make things better. There also is a very active Twitter account, linked to the
YouTube page of the video, which was used to respond to customer‘s concerns.
Task 1. What do you think would be the effect of the video on the company if they
didn’t react to it?
Task 2. Read the analysis of the case at p.49
Case study 4: Travelocity’s Good Deed Goes….Punished
By Jonathan & Erik Bernstein on August 10, 2012
Sarcasm becomes reality for Travelocity
The old, sardonic phrase ―no good deed goes unpunished‖ isn‘t exactly true. Doing
good for your stakeholders is a great way to sink roots into your community and grow
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your reputation. The lesson that Travelocity should learn from its latest social media
misstep is that ―no incautious good deed goes unpunished.‖
Travelocity set out with all the right intentions. Speaking at a conference for the
National Federation of the Blind, Senior VP of Travelocity‘s global strategy and
project innovation promoted the company‘s new vision-impaired-friendly website,
and offered attendees a $200 discount on their next booking.
Things started to get out of control when the NFB shared (and Travelocity RT‘d) the
code for the discount via Twitter, but forgot to stipulate that it was for attendees only.
Unfortunately for Travelocity, there are several million people on Twitter that
weren‘t at that conference, and quite a few of them thought they would go ahead and
use the discount code themselves. The situation got even worse when several other
travel sites across the ‗net picked up the code, but without the qualifying text, leading
many buyers to believe it was a public discount.
It was only after several days that a spike in use of the coupon code was spotted,
leading the company to cancel the discounted reservations that were not attributed to
NFB conference attendees. The company sent out letters stating that full cancellation
fees would be charged for those who used the coupon erroneously, and only retracted
that statement after a flood of furious stakeholders took to Facebook and Twitter to
voice their complaints.
Task 1. Outline major mistakes of the company and work out a crisis management
plan for them
Task 2. Read the analysis of the case at p.49
Case study 5: Knee-Jerk Crisis Management Hurts Black Milk Clothing
An example of a poorly handled social media crisis
Shouting from your soapbox that offended stakeholders are wrong, deleting Facebook
comments, banning users, and finally a full 180 and mea culpa – Austrialian org
Black Milk Clothing ran the full circle of poorly handled social media crisis
management, and it all started with a single post:
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Followers of the page instantly pointed out that the image seems very much to be a
violation of one of Black Milk‘s self-imposed ―Facebook Commandments‖, ―You
shall not make critical comments about other women‘s bodies.‖, and a highly volatile
discussion about the brand‘s seeming misogyny and body shaming leapt into
existence.
Instead of stepping back and examining what had upset so many stakeholders, Black
Milk‘s social media staffers started cranking out posts ranging from defensive to
insanely passive-aggressive. Here‘s a quote from one:
“If the fan page offends you and you don‟t like the way we roll, you probably want to
unlike the fan page. If that experience causes you to have negative feelings towards
the company itself, then you can always stop shopping with us. We‟ll understand.”
You can pick your jaw up from the floor now, but suffice to say it went on like that
for some time. With fans flying off the handle following these responses, the
company then started swinging the ban stick left and right. The furor began spreading
to other social networks, and critics around the web were throwing hate towards
Black Milk.
Finally, after nearly 48 hours of constant negative attention, Black Milk published a
lengthy apology to Facebook:
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I want to start off by saying I am incredibly sorry for everything that has happened
over the last couple of days.
We made a mistake and we apologise sincerely.
The intention behind the meme was to share a personal experience, and never meant
to offend anyone. We misjudged the line between funny and offensive, and
underestimated the true impact it would have. I am so sorry.
The senior management at Black Milk take full responsibility for the post and the way
complaints following the post were handled. Any criticism should be directed there,
and not to the social media team who were simply acting under the direction of
management.
I want you guys to know that this wonderful, diverse community means so much to me
personally. Having gone to meet ups and being involved in all the amazing things you
guys do for each other is such a humbling experience. I don‟t want to think that what
has taken years to build could be jeopardised.
We are taking ownership of this situation, from the original post to the way
complaints were handled. I will work together with the Black Milk team to ensure we
learn from this.
We are a small, passionate team who truly value the friendships we have with you
guys. I hope that the past four years are a testament to how proud we are of the
diversity and inclusiveness within our communities. In saying that, we are human and
unquestionably have made a mistake.
Again, we are truly sorry for everything that has happened. I really hope any damage
caused over the last few days can be repaired.
This community is such a special place and we want everyone to fun and share the
love.
Task 1. What do you think about the company’s behavior? What was wrong with
it? What would you recommend them?
Case study 6: Motrin Moms Ad
In September, Motrin launched a new ad
campaign online and in magazines. The ad,
which you can see following the link below,
focuses on how wearing a baby can give you
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a backache. It also gives the impression that baby slings are worn as a fashion statement.
After the ad aired, there was an online explosion of negative PR. One story in USA
Today said it perfectly: ―Offended moms get tweet revenge over Motrin ads.‖ The
controversy also was one of Advertising Age‘s Stories of the Year.
Task 1. Watch the ad and say what you think about it:
http://www.youtube.com/watch?v=XO6SlTUBA38
Task 2. What did the company do wrong? What actions would you undertake in
this situation?
Case study 7: Procter & Gamble's New Pampers Product Line
Procter & Gamble's new Pampers product line caused an uproar among mom
bloggers and consumer media outlets. See how the brand turned the tide of the social
media conversation and set the record straight.
Procter & Gamble's Pampers brand had a rough summer in 2010. Shortly after the
company launched its new line, Pampers Dry Max, a group of mom bloggers came
forward with allegations that the new products caused severe diaper rash. These
allegations spread into mainstream media, sparking an investigation by the Consumer
Product Safety Commission (CPSC).
In the face of every brand's worst nightmare, P&G was able to turn the tide by
following a path of transparency and engagement, said Bryan McCleary, director of
public relations for baby care at Procter & Gamble, during his keynote address at the
iMedia iMoms Summit.
As McCleary noted, all new diaper products -- even those boasting something as
simple as a color change -- are greeted by increased complaints of diaper rash. "In the
past, all this was fairly invisible because complaints came through a 1-800 line," he
said. "But that no longer applies. Complaints can now be very public."
In the months that following the social media uproar, P&G worked to address
complaints in a one-to-one manner. The company reached out to the mom blogger
community and brought influential community members to its defense. Over time,
consumer trust was restored, and the CPSC vindicated the product of all allegations
against it.
But it wasn't easy, and mistakes were made along the way, McCleary admitted.
Here's what the brand learned:
Don't default to an apology
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After the crisis broke, interactive gurus called on P&G to apologize to consumers,
McClearly said. But that's the one thing the company couldn't do. It had to maintain
that the product was safe.
That said, there are different ways of communicating safety, McCleary added. And
the company's first tactic -- insisting that there were no examples to support
allegations -- came off as a guilty response. Quickly, the company shifted course. Its
representatives communicated with parents on a personal level -- as parents
themselves. They noted that, as moms and dads, they'd be the first people to pull a
product from the shelf if they believed there was any danger to their children.
Arm your front lines
Make sure your consumer relations staff has the resources it needs to respond. P&G
was slow to do that, McClearly noted. Early responses came off as robotic, which
only fueled the fires.
Try to change the narrative
The Pampers situation was irresistible to mainstream media: Pampers vs. moms.
Thus, the company had to shift the story line by bringing parents and mom bloggers
onto its side as well.
Track, track, track
Know where you stand, McClearly advised. Track consumer awareness and
willingness to purchase throughout the process so you know if -- and when -- the
conversations begin to turn.
Accentuate the positive
Don't exist entirely in a defensive stance, if possible. In the case of Pampers, the
brand found it was useful to find something that it could apologize for: its initial
corporate response to the allegations. And with that, the brand was able to turn the
focus to education.
Be human
Consumers expect corporate-speak from a company the size of P&G -- so Pampers
had to break that perception. Instead, the brand engaged in a two-way dialogue and
sought to put a human face on the people behind its product.
Task 1. Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
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Case study 8: Toyota's recall fiasco (2010)
The crisis: Toyota recalled a
total of 8.8 million vehicles for
safety defects, including a
problem where the car's
accelerator would jam, which
caused multiple deaths.
How
Toyota
responded: Toyota
initially
couldn't figure out the exact
problem, but it sent out PR
teams to try and stop the media backlash anyway. The upper management was
invisible in the early stages of the crisis, skewing public perception further against the
company.
Toyota's response was slow, with devastating results. But it served as a wake-up call
for the company, which somehow turned it around in the months following the
debacle.
The company failed miserably in its initial crisis management, but that's what makes
Toyota's case so intriguing. Despite its monumental mistakes early on, Toyota still
bounced back. Why?
It didn't take long for the public to remember Toyota's previously stellar reputation.
The company offered extended warranties and pumped up marketing, leveraging its
long-term track record and reassuring consumers about safety.
Its ads in the following months were more thoughtful and sincere, showing the
company's dedication to fixing the problem. Toyota's executives -- especially in the
US -- became more visible, speaking to the media and becoming active in the
investigations.
Task 1. Outline major mistakes of the company and work out a crisis management
plan for them
Task 2. Read the analysis of the case at p.50
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Case study 9: Nigerian Man Boarding a Virgin America Flight Using an
Expired Boarding Pass
The Nigerian man succeeded in boarding a Virgin America flight from New York to
Los Angeles using an expired boarding pass in another person's name. According
to news reports, the man was briefly detained by the FBI on landing and released. He
was arrested several days later trying to board a Delta flight to Atlanta using the
same method.
TSA freely admited that "...TSA did not properly authenticate the passenger‘s
documentation." They further promise, "...disciplinary action is being considered for
the security officers involved and all appropriate actions will be taken."
TSA then proceeded to blow the responsibility by trying to minimize the problem by
saying, "...it‘s important to note that this individual received the same thorough
physical screening as other passengers, including being screened by advanced
imaging technology..." In other words, "we screwed up but it didn't really matter."
One can certainly make the case that a layered security approach is designed to
compensate for mistakes in any one part of the system. There is no doubt that the
individual was identified by the flight crew and reported to the FBI. But this
occured after he had boarded the aircraft in response to passenger complaints about
his body odor.
TSA has a fairly well publicized record of failing its own tests and for
letting knives, pistols and box cutters slip through the "thorough physical screening"
provided by its officers. To say that this man posed no threat simply because he went
through the same screening process as other passengers is a bit disingenuous.
Task 1. What should TSA change in their policy?
Task 2. What would you recommend them in this very case?
Case Study 10: Phthalates in Toys
Task 1. Read the text and answer the questions inside:
Phthalates have been used in a wide range of products for almost 50 years, because of
their ability to turn rigid polyvinyl chloride (PVC) into a flexible product. In the mid1990s the safety of phthalates, particularly in children's toys, was called into question
amid claims that they could cause cancers, liver damage and hormonal disruption.
Environmental NGOs in Europe and the United States launched a concerted
campaign to ban phthalates in children's toys, and despite a lack of clear scientific
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evidence that phthalates could pose a health risk, the EU eventually banned
phthalates at the end of 1999 in teething rings and toys that could be sucked by
children under the age of three. Similar measures were subsequently introduced in the
United States.
Why did the EU banned the use of phthalates in toys? Were they right?
Greenpeace was the most influential campaigner against phthalates in toys, and for
many years had highlighted environmental health risks from chlorine and associated
plastics manufacture. In 1996 it began contacting leading toy manufacturers
requesting meetings to discuss concerns about PVC toys, and began targeting the
European Commission.
In the United States, industry capitulation was also swift. Government agencies, toy
manufacturers and toy retailers came under pressure to remove phthalates from their
products following the regulatory action in EU countries. Greenpeace accelerated its
campaign in the United States during this period; at the opening of the International
Toy Fair in New York in autumn 1998, activists abseiled down the side of a building
to unfurl a banner that said 'Play Safe, Buy PVC Free'. Relentless pressure from
Greenpeace and the US environmental NGO Environmental Defense (ED) led some
larger US manufacturers to remove phthalates from their products, and Mattel
announced voluntary action to remove phthalates from soft toys in 1998.
The plastics industry was requested to remove phthalates from soft toys and teethers
to 'alleviate the mood of fear and as a precaution while more scientific work is being
done'.
Environmental Defense maintained the pressure. In October 2000, it wrote to 100 US
toy manufacturers requesting voluntarily disclosure of the chemical constituents of
their products 'either targeted for young children or that in use involves mouthing or
extensive skin contact by children including older children'.
How did Greenpeace promote PVC free products?
Unwisely, the Juvenile Product Manufacturers Association (JPMA) and the Toy
Manufacturers Association (TMA) responded by saying that they did not think this
was necessary, enabling Environmental Defense to claim that 'they would say that,
wouldn't they?' through ongoing media articles and advertising campaigns.
European and American regulatory reaction towards the phthalates campaign
ultimately forced the plastics industry to withdraw its products.
What did JPMA and TMA do wrong?
Result
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Companies producing, selling and using phthalates took a wholly unnecessary hit to
their reputation and to their financial performance. Why? Because of a total failure to
understand the dynamics of the issue lifecycle curve, the triggers that can escalate a
risk issue out of control, and a complete inability to communicate early on and in any
concerted way to offset public perception of a wildly exaggerated health risk. If you
see national regulatory agencies calling for voluntary restrictions on products,
recognize that you are already forfeiting any chance of navigating your way round the
risk perception icebergs!
Task 2.Summarise the main idea of the text in the form of crisis management rule.
Case study 11: Arla Product Boycott in the Middle East — Issues
Management Planning Needs to be Global
Arla Foods is a cooperative based in Arhus, Denmark, and the largest producer of
dairy products in Scandinavia. It is owned by 11,000 Danish and Swedish farmers.
The company has a large presence in the Middle East, with annual sales there of
US$480 million.
On 30 September 2005, Danish newspaper Jyllands-Posten published 12 editorial
cartoons that depicted the prophet Muhammad. Besides depicting the prophet —
which is blasphemy to Muslims — the cartoons were considered by many to be
Islamophobic and racist. The newspaper said the cartoons were an attempt to
contribute to the debate regarding criticism of Islam and self-censorship. Between
October 2005 and February 2006, the cartoons were reprinted in several major
European newspapers in Norway, the Netherlands, Germany, Belgium and France.
This led to protests from Muslims across the world. Protest action included: setting
fire to the Norwegian and Danish embassies in Damascus and Beirut; attacks on the
Danish embassy in Tehran; and gunmen storming an EU building in Gaza City
demanding an apology from Denmark and Norway.
Soon after the widespread publication of the cartoons, ambassadors from Muslimmajority countries requested a meeting with the Danish prime minister, Anders Fogh
Rasmussen, to discuss the publications and perceived wider mistreatment of Muslims
in Denmark. The Danish government declined the meeting, saying it could not
influence the press. In his New Year speech, the prime minister chose not to
apologize, but instead spoke of sensitivities when exercising free speech.
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On 20 January 2006, Saudi Arabian political and religious figures called for a boycott
of Danish products. Arla responded by placing advertisements in Saudi newspapers
distancing itself from the cartoons. Arla told the offending newspaper, JyllandsPosten: 'We fear that we will be hit by a wave of consumer anger.' The company also
decided to put full-page advertisements in Saudi newspapers showing the official
Danish stance on Islam. But Arla later admitted this action had not helped. On 27
January, the Confederation of Danish Industries appealed to Jyllands-Posten to print
an apology for having commissioned the drawings, which they did on 31 January.
The newspaper published two open letters on its website: one from the newspaper
itself apologizing for the offence caused to Muslims; and the other from the artist
who had depicted Muhammad with a bomb in his turban, justifying his cartoon. The
prime minister welcomed the apology, but said: 'The Danish government cannot
apologize on behalf of a Danish newspaper… independent media are not edited by
the government.'
Meanwhile, Swiss giant Nestlé admitted to advertising in a Saudi paper telling
consumers that two of the products it sold in the region were not of Danish origin.
The company denied it was an 'anti-Danish' measure and justified the advert by
saying it had achieved its purpose, with Nestlé sales normalizing.
At the end of January, Arla said the boycott of Danish products in the Middle East
was almost total and that all its customers in the region had cancelled their orders.
This resulted in 100 lay-offs. Arla said: 'We have found ourselves in the middle of a
game we have no part in.' It added that it was very difficult to get this particular
message across to its Muslim customers. 'We have taken 40 years to build up a very
big business in the Middle East, and we've seen it come to a complete stop in five
days.' January also saw an attack on two Arla employees, and in February Arla said
the boycott was costing the company £1 million per day.
Outcome
On 1 March, Arla estimated the cost of the boycott would amount to US$64 million.
But it reaffirmed its commitment to the Middle East: 'Even if the situation looks very
difficult, we believe that Arla has a future in the Middle East.' Later that month, Arla
began remarketing in the Middle East with full-page advertisements in 25 Arab
newspapers. At the beginning of April, Arla products were beginning to be put back
on the shelves of stores in the Middle East. It also said it would be sponsoring
humanitarian causes in the region. However, it said: 'While we may be seeing a slow
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lifting of the boycott by retailers, it remains to be seen whether customers will in fact
buy our products.'
By August, sales had returned to pre-boycott levels in most Gulf states with the
exception of Saudi Arabia (Arla's largest market in the region). Arla's chairman,
Knud Erik Jensen, said: 'With regard to the Middle East, the outcome has been
slightly worse than expected last spring'.
Task 1. Translate the underlined words, learn them by heart, make up sentences of
your own with the words.
Task 2.What was the reason for the crisis? What should Arla have done in this
situation? Work out a crisis management for them.
Task 3. Read the analysis of the case at p.50
Case Study 12: Ribena Found Wanting
Never underestimate stakeholder concerns
In 2004, two New Zealand secondary school students completed a science project
comparing the Vitamin C content of their favourite drink, Ribena, against other
leading brands of fruit drinks and testing the sentence 'The blackcurrants in Ribena
contain four times the Vitamin C of oranges' printed on the packaging of Ribena's
ready-to-drink products.
Vitamin C is naturally occurring in juices but can be added to products to boost the
Vitamin C content. Vitamin C will degrade over time and, to compensate, many
companies put higher levels of Vitamin C in their products to allow for a longer shelf
life.
Armed with this knowledge, the schoolgirls were amazed to discover the Ribena
ready-to-drink products had very little Vitamin C content at all, let alone four times
the content of other drinks. They took their findings to GlaxoSmithKline, which said
'It's the blackcurrants that have it [Vitamin C].'
Not content with GlaxoSmithKline's semantics argument, the girls took their findings
further — approaching the Advertising Standards Authority, consumer television
programme Fair Go and the Commerce Commission — which took the secondary
school students' findings very seriously. As a result, GlaxoSmithKline was charged
with 88 counts of false advertising between March 2002 and March 2005.
In December 2006, GlaxoSmithKline found itself in court facing a fine of up to NZ
$3 million. The following March, the company pleaded guilty to 15 charges of
breaching fair trading laws and was fined NZ $217,500 and ordered to pay for
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corrective advertising (a further NZ $100,000). The outcome was fiercely debated in
the media, with some commentators arguing that GlaxoSmithKline had effectively
walked away from the incident with a 'smack on the hand', while others took a more
objective approach, predicting a fallout on the Ribena brand and sales. Indeed, in
April the New Zeland Heraldreported that Ribena sales had slumped following the
court case (down 12 per cent from the same period the year before).
Needless to say, GlaxoSmithKline went into damage control mode following the
court case. As ordered by the courts, it ran a series of half-page newspaper ads in
national newspapers under the title of 'Ribena: keeping you informed' — giving the
impression the company regularly made contact with its consumers to keep them up
to date with matters (which the media gleefully pointed out it hadn't).
The advertisements would have been an ideal vehicle for making a public apology.
However, the final wording agreed by GlaxoSmithKline and the Commerce
Commission (after fierce debate) focused more on GlaxoSmithKline's desire to prove
its point that its products did contain Vitamin C ('Our syrup concentrate has always
been and continues to be a rich source of Vitamin C'). The closest the company got to
apologizing was in the statement: 'We also made the claim "that blackcurrants in
Ribena contain four times the Vitamin C of oranges." This may have misled you to
believe that Ribena contains four times the level of Vitamin C than in the same
quantity of orange juice. That was never our intention and is incorrect. We are
sincerely sorry for any confusion caused.'
The advertisements featured a repentant-looking GlaxoSmithKline consumer
healthcare New Zealand general manager Paul Rose, the 'author' of the
advertisement. He was later referred to in the media as the 'scapegoat' of the Ribena
fiasco.
The ads referred consumers to a website that provided more information about the
case and how GlaxoSmithKline was rectifying the situation, including reformulating
the drink and setting up 'more accurate testing' methods. This was the only online
reference to the case — neither GlaxoSmithKline's New Zealand website nor its
global counterpart's or other international Ribena branded websites made mention of
the incident.
At the same time, GlaxoSmithKline sent letters out to all stakeholders across its
consumer healthcare and pharmaceuticals divisions (including medical practitioners
around New Zealand) reiterating the comments from the advertising material.
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The company also filmed new television commercials with Paul Rose walking
through local blackcurrant orchards and discussing the fruit's Vitamin C content.
Overall, between March and May, GlaxoSmithKline spent (full advertising retail
value) NZ $652,278 on Ribena product advertising. Television spend in May leapt
NZ $215,075 on the March spend to NZ $315,960, while press advertising increased
from zero spend in March to NZ $98,617 in May. But, as Mr Rose reported in a
newspaper article after the television ads had aired, 'Cost is not the issue. We want to
rebuild customer confidence in the brand, and we will spend what we need to do that.'
Media coverage of the case continued throughout March to August in New Zealand
and Australia across metropolitan newspapers, business and trade publications, radio
and television. While the coverage initially focused on the court case, the media went
on to focus on the fallout effect of the case and surrounding issues — reviewing how
companies handle crises in general, the impetus for food labelling, and the public's
trust in corporate giants.
Interestingly, the media coverage surrounding the case was largely contained to
Australasia, with the exception of one article in London's Daily Telegraph (written by
a Sydney correspondent), in which a GlaxoSmithKline spokesperson was quoted as
saying that the problem arose in Australia and New Zealand because the product was
'left on the shelves for too long, causing the Vitamin C to degrade… our testing
equipment in New Zealand and Australia was not sensitive enough to pick up the fact
that the Vitamin C was degrading.' She went on to reassure UK consumers that 'there
was no such problem with Ribena sold in Britain'.
Aside from this statement, other international Ribena coverage during the period
focused solely on northern hemisphere-related product issues, including the effects of
climate change on growing blackcurrants and introduction of new strains of the fruit
and pressure mounting on GlaxoSmithKline to sell off its Ribena and Lucozade
brands. This could be attributed to GlaxoSmithKline's international head office
choosing not to publicly acknowledge an otherwise 'regional' problem.
In effect, the consumer fallout from the Ribena Vitamin C saga was limited to New
Zealand and Australia. But, as we've since found out, these audiences are less than
forgiving of the global giant's mistake.
Task 1. Identify the company’s mistakes and work out a plan of actions for them.
What should they have done to avoid it? What did they do wrong in their crisis
management?
Task 2. Read the analysis of the case at p.51
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Supplement
Part 1. Сases Analyses:
Case study 3: Domino’s YouTube Video
According to the Wall Street Journal, the president of Levick Strategic
Communications, Richard Levick, ―gives an F to Domino‘s response for the first 24
hours, but an A for everything after.‖
In AdAge, Levick suggested companies do several things to prepare for a crisis; (1)
Identify who you need during a crisis, from PR to HR, (2) Be prepated for worst-case
scenarios, (3) Own SEO keywords you may need in a crisis, (4) Be connected online,
(5) Respond as soon as possible.
The biggest mistake Domino‘s made was that they waited to respond. It is not
doubtful if they had a crisis plan in place for a situation such as this. Food tampering
is a common enough occurence, but it seems that many companies still have not
grasped how much social media can affect a crisis situation.
The YouTube video response was a good idea. Many people still searched for the
video and this was at the top of the results. Having the president of the company
respond and tell exactly what the company was doing also was effective. Having a
social media presence before the crisis would have bought the company more
credibility and time. Domino‘s started a Twitter account after the video had been
aired. Had a Twitter account already been set up, they probably would have been
alerted to the video much more quickly and already had followers to respond to.
Case study 4: Travelocity’s Good Deed Goes….Punished
In a US News and World Report article by Danielle Kurtzleben, BCM president
Jonathan Bernstein shared his thoughts on the use of online media to push proactive
work:
“Mass media online has dramatically increased the need for thought and planning
before you do any proactive work,” says Jonathan Bernstein, president of Bernstein
Crisis Management, a California-based consulting firm. “Something can go viral in
minutes, and unless you are a) monitoring it very closely to catch those things and try
to respond very quickly and b) have an infrastructure to respond quickly, you can
quickly get overwhelmed.”
Travelocity had neither, and it was only after several days that a spike in use of the
coupon code was spotted, leading the company to cancel the discounted reservations
that were not attributed to NFB conference attendees. The company made another
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mistake when it sent out letters stating that full cancellation fees would be charged
for those who used the coupon erroneously, and only retracted that statement after a
flood of furious stakeholders took to Facebook and Twitter to voice their complaints.
The NFB‘s PR director spoke out in support of Travelocity, but the damage was
done. Will this break Travelocity? No. The company is successful and generally wellliked. Has this incident created a weak spot in the company‘s reputation that could
lead to major problems if such a mistake is made again? Absolutely. We‘d bet good
money that Travelocity has already made changes to its social media policy, and will
be curious to see when it ventures into this arena next.
Case study 8: Toyota's recall fiasco (2010)
The result: The Toyota brand showcased its resiliency, with its positive reputation
built up over decades of good performance. The company leveraged this, focusing its
marketing once again on safety and its proven track record. It had to show that this
disaster -- including its own horrible mishandling of the situation -- was an
aberration.
And it worked, with a little bit of luck. NASA exonerated Toyota of the blame for
most of the accidents in 2011 and the company's brand equity leapt 11% this year,
according to WPP.
Case study 11: Arla Product Boycott in the Middle East — Issues
Management Planning Needs to be Global
Key lessons
This boycott was very unusual because such targeted campaigns are usually carried
out against a company that has perceived to have transgressed in some way. This
crisis did not evolve as an issue, but exploded into life almost totally unexpectedly. In
the same way that Arla did not have control over the publication of the cartoons and
subsequent outrage, it could not control the actions of the Danish prime minister or
the reconciliatory actions of the newspaper. However, this type of crisis is not
without precedent. In 1995, countries around the world boycotted French goods
(especially wine) in protest over the French government's decision to resume nuclear
weapons testing in the Pacific Ocean.
And so, although this particular crisis was unavoidable, it was not unmanageable.
Arla's actions and communications were good, but it took too long to make itself
heard. The company reacted only after Saudi calls for a boycott, by which time
perceptions had been formed. It was not essential for the company to condemn the
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cartoons, but it should have been quicker to distance itself from them. It might also
have been advisable for the company to adopt more robust messages. The company
placed adverts in Middle Eastern newspapers that clarified the Danish government's
position on Islam, which would not have helped the perception that Arla might have
been in league with its national government. Perhaps Arla should have had a key
message that severed any perceived links between it and the Danish government and
should have positioned itself as a multinational business with equal interests in every
country in which it operated. It could also have been more robust and confident in
times of difficulty. The complaint from a company spokesman who said it was 'very
difficult to get our message across' would not have given Arla's 11,000 owners much
confidence.
A wider lesson from this crisis relates to the major political, cultural and social
differences between the Middle East and Western Europe. There is a marked
difference between media freedom and business protectionism between the two
regions. The plethora of campaign groups in Western Europe is not mirrored in the
Middle East, and consumer protection is less of an issue. With such marked
differences, it is important for any company to understand fully the expectations and
sensitivities of the culture in which it operates.
Case Study 12: Ribena Found Wanting
Forgive and forget?
Regester Larkin's partner consultancy in New Zealand, Senate Communications,
surveyed a random sample of shoppers (n=50) and retailers (n=10, including large
supermarkets and suburban superettes) around New Zealand in August to gauge
perceptions of Ribena and GlaxoSmithKline four months after the court case. The
results from their conversations showed that the issue is far from forgotten and
audiences have yet to forgive Ribena and GlaxoSmithKline for what they perceive as
a 'blatant breach of trust'.
Of the shoppers surveyed, 96 per cent had positive feelings toward Ribena prior to
the case going public but less than a third said they would buy the ready-to-drink
products now, stating '[GlaxoSmithKline] lied to us' and '[Our] view of Ribena and
GlaxoSmithKline has been tarnished.' Of note, up until the case went public few of
these shoppers had been aware of GlaxoSmithKline as a global corporation or
realized it was Ribena's parent company. Those who were aware of GlaxoSmithKline
knew of the company solely through its pharmaceutical business.
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Interestingly, half the shoppers surveyed still trusted GlaxoSmithKline's claim that
the syrup is still a rich source of Vitamin C, but many stated they would still refuse to
buy this product.
Asked their opinions of GlaxoSmithKline's response to the court action, 53 per cent
of shoppers said they would have liked the general manager to have made an apology
at the time — immediately after the case went public — not just in the advertisements
weeks later. Of these shoppers, two-thirds thought it would have changed their
opinion of the company positively.
Retailers, while somewhat more circumspect about their impressions, also
acknowledged failings in GlaxoSmithKline's response. All reported the product had
sold averagely to well prior to the court case, despite being a more expensive drink
than others on the market. Half noticed an abrupt fall in sales following the court
case, with one retailer reporting they had sold just six Ribena drinks in the past month
while another said they hadn't sold any for months since the case.
GlaxoSmithKline's stakeholder response was also discovered to be varied among
retailers: some reported that sales representatives had made personal visits to their
stores, some reported receiving a memo from GlaxoSmithKline via their store's
parent company, and others reported hearing nothing from the company — save for
media reports from the general manager and the advertisements. Almost all had found
out about the case first through the media.
Seventy per cent of retailers said they would have liked the general manager to have
made an apology at the time. Of these, 70 per cent thought it would have changed
their opinion of the company positively. However, overall, 80 per cent said their
impressions of GlaxoSmithKline had not changed since the case.
Asked whether they thought customers would still trust GlaxoSmithKline's claim that
the syrup is still a rich source of Vitamin C, 60 per cent of retailers thought customers
would be hesitant and not likely to be completely trusting of the claim given the bad
publicity the ready-to-drink product had received.
Building trust
At the time of writing, it's clear the case is still resonating in the public eye and in the
media — particularly within New Zealand. With the fallout over its Ribena Vitamin
C saga, GlaxoSmithKline has become one of Australasia's 'poster companies' for
what can happen after a company crisis. It was a prime example of the dramatic
effect poor risk management can have on a company's brand and reputation, and
provided a salient lesson about the need to act ethically at all times.
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In our opinion, GlaxoSmithKline's court case appears to have effectively destroyed
70 years' worth of consumer trust in its Ribena product overnight. In some cases, a
good reputation has been shown to help when a crisis hits. As a corporate entity,
GlaxoSmithKline appears to have weathered the storm, aided by its global empire
and other ventures. However, in the public eye, the company still has a long way to
go to remedy consumer trust in Ribena.
Part 2 Supplementary Reading
Food for thought:
The Importance of Market Share
Market share is usually very important to a company, oddly sometimes more
important than the bottom line. There is always great competition for new customers.
Many times the efforts and resources devoted to advertising, marketing and selling to
new customers are at the expense of a company‘s loyal customer base. This can even
be seen at the local level. Where I live heating oil companies consistently offer new
customers a deal for the first year in order to lure them in. This, of course, is done at
the expense of old, loyal customers who have to make up the slack. The result is that
many savvy oil customers these days do a lot of shopping each year to find the best
deal. Loyalty is a thing of the past. On a national level the problem has gotten even
more serious. A recent financial story in The New Yorker last month observed that
there is almost universal recognition that customer service in this country has
deteriorated. Such service is considered a ―cost‖. Companies are looking for the
customers they don‘t have so they are willing to spend on marketing and advertising
but are not as interested in adding to their costs of service. The article made it sound a
little like cynical dating. Companies are interested in luring you in but then once they
have you, they don‘t quite value you as much as the next potential customer they
want to corral.
Lack of service is not just a pain for helpless consumers. In this internet age they can
do something about it. This is how a company can sow the seeds of its own
destruction, and inexorably create its own crisis. Companies and their products and
services are being rated on the internet and consumers don‘t hold back. They tell it
like it is. Granted, competitors may be planting some of these negative comments but
for the most part product and service evaluations are being taken at face value. The
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moral of the story: be faithful to those who brought you to the dance, or the
consequences could be severe.
Another form of self-inflicted crisis involves weathering the storm
Whether in politics, professional sports, or in business, ―players‖ still believe that
because of their importance they can ride out any issue or problem. They can‘t. We
can all easily tick off a dozen or so examples, but the latest is surprising. Johnson &
Johnson has recently gone through a spate of recalls of tainted children‘s Tylenol and
Motrin. The Company has generally kept a low profile and even contracted with a
third party to buy up Motrin off retail shelves rather than announce an actual recall.
And for the last decade it has been settling with claimants for a variety of injuries and
death allegedly due from Ortho Evra, a contraceptive patch made by its subsidiary,
Ortho McNeil. It appears clear that the current management of J&J has not followed
in the footsteps of the management that handled the Tylenol crisis of 1982 which is
often cited as the quintessential example of crisis management in modern corporate
history. Back then cyanide had been found in bottles of Tylenol in the Chicago area.
J&J immediately issued public warnings, issued a product recall, created tamperproof packaging, and before long was back in business. The Company was up-front
and willing to bite the bullet in the best interests of the public. Unfortunately that
does not appear to be the philosophy today. There is clearly a danger in believing
one‘s invincibility. The trust and respect of the public is at stake, and once lost, is
very difficult to retrieve.
The vice-president of Korean Air has quit over an embarrassing incident involving a
bag of nuts. Cho Hyun-ah, daughter of the airline's president, was on a flight from
New York to South Korea on December 5. She was sitting in the first class cabin
when a flight attendant served her a snack of a bag of macadamia nuts. Ms Cho, 40,
was angry that the nuts were not given to her on a plate. She shouted at the flight
attendant and told him the training manual said the nuts should be served on a plate.
Cho forced the man to kneel down and apologise. She ordered him to leave the
airplane, which had to return to the departure gate to let him off. The flight was
delayed
for
20
minutes
because
of
Cho's
actions.
The incident is big news in Korea, where journalists are calling it "nut rage". Aviation
officials in Korea could take legal action against Cho. They said her actions could
have put the 250 passengers on the flight in danger. Officials may also question the
captain for turning the aircraft round without a good reason. Cho's father asked the
Korean public to forgive the "foolish" actions of his daughter. He told reporters: "I
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am making my apology both as head of Korean Air and as a father. I beg the people
to blame me for the current situation, because everything is my fault….I failed to
properly educate my daughter." He has also removed his daughter from all the posts
she held in his companies.
Some More Cases:
Case Study: BP's Fall from Grace
Despite reporting huge profits for the year, 2006 was a terrible year for BP. A fatal
explosion, two oil spills, price manipulation and workplace bullying have dragged the
once-favourable reputation of the oil company through the mud. This case study
documents the three major incidents that have undermined stakeholder confidence:
the Texas City Refinery explosion, the Prudhoe Bay oil spill and price manipulation
allegations.
Case Study: Texas City Refinery explosion
BP's Texas City Refinery in Texas City is the second-largest oil refinery in Texas and
the third-largest in the United States. It processes around 450,000 barrels of crude oil
per day — 3 per cent of the domestic oil supply in the United States and one-third of
BP's output across the country. On Wednesday 23 March, a cloud of volatile
hydrocarbon vapour ignited after it had escaped from an octane unit, killing 15
people and injuring over 170.
The refinery had a chequered safety record leading up to the explosion. In March
2004, it was evacuated after an explosion, costing the company US$63,000 in fines,
and in September 2004 two workers died and one was injured when they were
scalded by superheated water that escaped from a high-pressure pipe. Texas City was
also the scene of the United States' worst industrial explosion in 1947, when a ship
carrying ammonium nitrate exploded in the harbour, killing at least 576 people.
After the explosion, several BP spokespeople were available for comment. The
following is a selection of the most prolifically quoted employees:
 The refinery site director, Don Parus, said: 'The explosion has caused injuries
to multiple BP workers, and it is with deep sadness that I must report that there
have been fatalities. We believe 14 people lost their lives as a result of the fire.
It's a sad day for BP… We have not had time to investigate causes, and we will
not speculate. But at this time terrorism is not a primary focus of our concern.'
 Annie Smith, a spokeswoman, said: 'This will have a huge impact on the plant.
But it won't shut it down. There will be a long and intensive investigation to
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determine the cause of the explosion. But we don't believe it to be an act of
terrorism. So that leaves something in the operation of the plant.'
 Spokesman Hugh Depland ruled out the idea that terrorism was to blame after
the FBI confirmed their agents had concluded work at the facility. He said: 'We
have no reason to believe this was anything caused by an outside agent.'
 BP spokesman Bill Stephens said of the investigation: 'We're going to be very
thorough on this one. I can't tell you exactly when we will finish this
investigation, but no stone will go unturned.' He also said: 'Bringing units up
and down can be a tricky business, but we approach everything we do as
potentially dangerous, and that's why we have rigorous policies and procedures
in place. That's why this situation is so sad and puzzling to us all.'
 Ross Pillari, BP's US president, said: 'It's clear we have a lot of work to do in
the coming days to make sure exactly what happened, and we're going to do
that.'
 Lord Browne, the company's chairman at the time, said it was the 'worst
tragedy I've known during my 38 years with the company. All of us have been
profoundly affected. All of us want to know what happened… I came to Texas
City to assure people the full resources of BP will be there to help the bereaved
and the injured… I spent the morning with the men and women that operate
and maintain the refinery. I have heard many harrowing stories but the team is
in very strong spirits.' Lord Browne also promised BP's 'best people' would be
deployed immediately to investigate the cause of the explosion and said the
company would 'cooperate fully with government officials responsible for
examining the circumstances of this terrible explosion and fire'. Asked if the
explosion was an explosion waiting to happen, Lord Browne said: 'I don't
believe it was. There is no stone left unturned in making sure all events are
investigated and remediation is done after the event. There is no limit to the
amount of action we have undertaken. It is a very safe plant. If there is more to
be done we will do it.'
By 16 May 2005, BP had completed an interim report into the explosion, which
concluded that managers had failed to supervise the isomerization unit, operators
were absent at crucial periods and they had failed to take corrective action early
enough. It also said that the refinery working environment 'had eroded to one
characterized by resistance to change, and lacking of trust, motivation and a sense of
purpose'.
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Ross Pillari said after the conclusion of the report: 'The mistakes made during the
start-up of this unit were surprising and deeply disturbing. We regret that our
mistakes have caused so much suffering.' He added: 'The failure of unit managers to
provide appropriate leadership and of hourly workers to follow written procedures are
among the root causes of this incident. We cannot ignore these failures.' However, BP
later retracted this statement, and acknowledged that complacency among the
management was an important factor. In June 2005, a sacked employee filed a
slander lawsuit against BP, alleging that the company had wrongly blamed him and
five other colleagues for the refinery explosion. BP refused to comment, saying that it
did not comment on personnel matters. (BP settled the suit in September 2006 for an
undisclosed amount.)
It was BP's stated intention to offer 'fair compensation' to the families of the deceased
and injured without the need for litigation. Initially, BP allocated US$700 million to
compensate the victims of the explosion. This was raised to US$1.2 billion in July
2006.
In December 2005, the US Department of Labor referred the Texas City case to the
Department of Justice, raising the possibility of BP facing criminal charges in the
United States. The referral came after a US Occupational Safety and Health
Administration investigation, which found more than 300 violations of health and
safety standards at the refinery. During this month, BP announced that it would spend
US$1 billion on the Texas City Refinery over the following five years.
In September 2006, the company announced a complete review of its global
operations to take place over 5 to 10 years. The next month, a judge ruled that Lord
Browne should testify over the explosion, requiring him to give six hours of his time
to lawyers. The Chemical Safety Board (CSB) then concluded that BP knew of
'significant safety problems' well before the explosion. Carolyn Merritt, CSB
chairwoman, said: 'BP implemented a 25 per cent cut on fixed costs from 1998 to
2000 that adversely impacted maintenance expenditures and infrastructure at the
refinery.' BP spokesman Ronnie Chapman said in response that the CSB investigation
findings were generally consistent with those of BP's. But he said: 'The BP Texas
City fatal investigation team did not identify previous budget decisions or lack of
expenditure as a critical factor, or immediate cause of the explosion.' He added that
maintenance spending at the refinery had increased by 40 per cent over the previous
five years.
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Also in September 2006, BP settled its final lawsuit just before a jury were to be
sworn in for what would have been the first civil case resulting from the explosion.
The Baker Panel report, led by former US Secretary of State James A Baker, was
released in January 2007 and found 'material deficiencies' in BP's safety procedures at
its US oil refineries. The report said that BP emphasized personal safety but not
process safety, and that the problem existed at all five of the firm's refineries in the
United States. It said: 'BP mistakenly interpreted improving personal injury rates as
an indication of acceptable process safety performance at its US refineries. The panel
found instances of a lack of operating discipline, toleration of serious deviations from
safe operating practices, and apparent complacency toward serious safety risks at
each refinery.'
Prudhoe Bay oil spill, Alaska
The site of BP drilling in Alaska, the North Slope, has been subject to much debate.
The Bush administration has long wished to open up the Arctic National Wildlife
Refuge for drilling, a move which has repeatedly been blocked by Congress.
BP's Alaska troubles started in March 2005 when the Alaska Department of
Environmental Conservation (ADEC) found that BP had failed to follow regulations
requiring it to report the release of drilling fluids in excess of 55 gallons.
On 2 March 2006, a worker for BP Exploration (Alaska) discovered a large oil spill
at Prudhoe Bay. At least 6,350 barrels had spilled (more than 250,000 gallons of
crude oil), making it the largest spill to date on Alaska's North Slope region — an
area predominantly used by caribou herds. The US Department of Transportation
gave authorization for the transit lines to be inspected for corrosion. In July, BP
Alaska workers told the Financial Times that wells were leaking oil or diesel
insulating agent at the Prudhoe Bay oilfield. Consequently, BP shut down 12 wells
indefinitely while the allegations were investigated. In August, BP confirmed
corrosion that required 16 to 22 miles of replacement pipes.
In June 2006, it was revealed that BP would be under investigation from the grand
jury after the oil spill, which could lead to criminal charges. BP responded by saying
that it would provide information showing that it had acted properly.
To add to BP's woes, in August 2006 some of its shareholders took legal action
against the company for knowingly allowing one of the company's 'prized assets' to
decay.
Then, in September 2006, a congressmen accused BP of 'unacceptable' neglect of
pipelines in Alaska at a congressional hearing. Joe Barton, the Republican chairman
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of the House Energy and Commerce Committee, said: 'Years of neglecting to inspect
two of the most vital oil pipelines in this country is simply unacceptable.'
It was also during September that BP was blamed for a much smaller spill of refined
products in Long Beach, California. Local government officials criticized BP for not
announcing the spill quickly enough.
The Financial Times proved to be problematic for BP again in September when it
reported that BP investors had requested meetings with the firm's directors, seeking
to establish if the Texas City and North Slope incidents were part of a systematic
problem.
To compound BP's reputation crisis, it emerged that the company had launched an
investigation into allegations of bullying and worker intimidation at its North Slope
operations since 2000. And in October 2006 the governor of Alaska questioned
whether BP had misled him over the condition of its pipelines.
Press coverage
The day after the Texas City Refinery explosion, The Times said: 'So far, BP has
handled the emergency openly and well. It will need to show that it does not
compromise safety to save investment and that Texas City is not the company's true
face.' It also said: 'The loss of so many lives at a facility that only a year ago was
fined for breaking safety rules after a (non-lethal) explosion will not be good for BP's
reputation.'
The Financial Times said that BP 'will need more than sympathetic words and free
meals for the families hit by the blast to repair its tarnished reputation'. But it was
complimentary to Lord Browne: 'In moving swiftly, Lord Browne has avoided the
negative fall-out that hit ExxonMobil when its tanker ran aground in Alaska, creating
the largest oil spill in the US. Many bristled at the perceived arrogant tone of
ExxonMobil, whose chairman left subordinates to deal with the crisis. In contrast,
Lord Browne has been suitably humble.'
The Wall Street Journal also speculated on the potential reputation damage for BP:
'In a sign of how seriously the company was taking the incident, Lord Browne flew to
Texas City yesterday and pledged to "leave nothing undone in our effort to determine
the cause of the tragedy." The ultimate toll on BP's reputation could depend on the
findings of continuing investigations.'
Several papers were swift to highlight previous health and safety discrepancies at the
Texas City Refinery. The Houston Chronicle pointed out: 'The explosion Wednesday
at the BP oil refinery in Texas City and another in March 2004 are among a long
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history of incendiary incidents, some deadly, that have cost the facility's owners
millions of dollars in fines and lawsuits.' The Houston Chronicle also reported that
federal health and safety regulators frequently 'caved in' by reducing fines and
downgrading their findings.
After the successive incidents, the Financial Times questioned if BP's reputation of
the 'responsible corporation' was warranted.
Over the Prudhoe Bay facilities, the company failed to take pre-emptive action, but
since its problems became public, has taken some of the right steps by acting
decisively.
According to John Elkington, author of The Chrysalis Economy: How citizen CEOs
and corporations can fuse values and value creation (2001), sustainable business
success in this century will depend on stewardship of the following six values:
 Ultra-transparency — assuming everything is public through to the ethics of
privacy.
 Open governance — to bridge the gap between global capitalism and global
governance systems.
 Equal opportunity — between today's generations and tomorrow's.
 Multiple capitals — human, social and natural.
 Real diversity — as reflected in the immense variety of our present
ecosystems.
 Shared learning — invention and innovation.
Effective environmental and social stewardship makes business sense. In a rapidly
changing world where issues are readily highlighted but solutions are sometimes
harder to discern, it is difficult to know where to go and how far to travel. Good
stewardship isn't just about adhering to policies.
Shell highlights the importance of greater engagement and transparency, exploring
new ways to assure performance, focusing on reliability of health, safety and
environmental data management systems, and providing a clearer indication of what
is verified and how.
So a combination of legal, regulatory and moral pressure is leading to a changed
perception of the goals of business, and growing acceptance of the idea that
responsible business entails social and environmental performance and reporting.
Some corporations have found opportunities within this changing landscape: to
develop reputations as leaders of best practice in product stewardship and
environmental reporting; to overcome, as BP, Ford, DuPont and Toyota are
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attempting to do, the legacy of damaging reputational crises through improved
stakeholder communication and engagement; and, like Ikea, the world's largest
furniture store, to seize competitive advantage by offering alternatives to questioned
practices which are helping to position the company as a credible socially responsible
investment. But the jury is likely to be out for some time. Nike's admission in its first
corporate responsibility report that it 'blew it' by employing children in Third World
countries certainly isn't convincing Oxfam's NikeWatch or the Clean Clothes
Campaign.
Case Study: Applebee’s SM Crisis
What happened: A pastor
who had eaten at an
Applebee‘s
restaurant
crossed out the automatic
18% tip charged for parties
of more than eight and wrote
―I give God 10% why do you
get 18‖ above her signature.
A waitress at the restaurant took a photo of this and posted it on Reddit. She was
subsequently fired for ―violating customer privacy‖ which would have been
understandable if Applebee‘s had not posted a similar receipt that was complimenting
them just 2 weeks prior.
As news of this incident spread like wildfire and infuriated people across all social
media platforms, Applebee‘s responded with a short post defending their actions on
their Facebook page. This quickly drew over 10,000 mostly negative comments, to
which Applebee‘s started responding by posting the same comment over and over
again. They were also accused of deleting negative comments and blocking users.
The downward spiral continued as Applebee‘s persisted to defend their actions and
argue with users that criticised them. By the following day, after the original post had
generated over 19,000 comments, Applebee‘s decided to hide the post which only
created more anger.
Task 1: Suggest your plan of actions in this situation.
What we can learn: Applebee‘s defensive and even argumentative approach
amplified the whole situation and blocking users, tagging users in repetitive posts and
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hiding criticism only make things worse. The bottom line? Arguing with Facebook
users is always a bad idea.
Case Study: The Story of Bernard Matthews, His Turkeys and Avian Flu
Bernard Matthews is a name famous in the UK as much for his Suffolk pronunciation
in television commercials of the word 'beautiful' ('bootiful') as for his vast turkey
products empire.
While headline writers must have been rubbing their hands with glee during the 2007
Bernard Matthews bird flu crisis, the company itself was probably fearing the worst.
Headlines including 'Not so bootiful' and '500 Bernard staff to get the bootiful' came
thick and fast during February as Bernard Matthews attempted to address public
concern about the safety of its products after a strain of the H5N1 virus was
discovered at one if its farms in Suffolk.
On 1 February 2007, British vets were called to a Bernard Matthews farm in Suffolk
where it was suspected that bird flu was responsible for the deaths of 2,600 turkeys.
On 3 February the European Commission confirmed that the H5N1 strain of bird flu
was responsible, and a day later the culling of birds on the farm began.
In operational terms, the company, working with the various government agencies,
acted swiftly to contain the outbreak: 160,000 turkeys were culled and the site was
completely disinfected within 72 hours. However, it is the way in which it handled
the communications during this time that may lead to longer-term damage to its
reputation.
Rather than work to immediately reassure the public about the safety of its products,
the company appeared as if it were fighting to show that it was not to blame. It
emphasized the problems were caused by an outbreak of the virus in Hungary and
that this had nothing to do with its factory in Suffolk. It seemingly failed to grasp the
scale of the panic that surrounds a still unknown subject like bird flu, and the media
were fuelled by a perceived unwillingness to cooperate and to disseminate
information quickly.
The negative press that surfaced suggests that the company failed to convince either
the media or its customers that it was being completely forthcoming with the whole
truth, and the media started digging further as a result, prolonging the story.
Supermarket sales of branded Bernard Matthews products halved.
There were also mixed messages about staff lay-offs and the effect on company sales.
This led to confusion and reinforced the perception that the company was trying to
hide the facts.
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Matters were compounded further by the fact that Bernard Matthews himself — a
familiar face in UK advertising campaigns — wasn't put forward to speak to the
media until 15 February, two weeks after the initial outbreak. When Matthews did
speak out, he rightly apologized, but insisted that it was not the company's fault.
Critics pointed out though that, for a brand that relies so heavily on Bernard
Matthews's personal touch, his silence up to this point had been deafening.
The case was ultimately damaging for the company because it failed to convince its
customers that it was doing all it could to protect them. Despite the fact that it
managed to shut down its operation and cull its birds quickly, hesitation in its
communications proved costly.
Also, whether the company had been lax in safety procedures or not (Bernard
Matthews denied this strongly at the time and continued to do so), headlines such as
the Guardian's 'String of flaws found at Bernard Matthews plant — firm was twice
warned of lapses by meat inspectors' left a nasty taste in the consumer's mouth.
Although reputation can be won back over time, it is much more difficult to do so if
consumers feel that the company in question didn't do everything it could to ensure
their safety.
The fact that Bernard Matthews was already emerging from a difficult couple of
years didn't help matters. Jamie Oliver (a UK 'celebrity chef') had declared war on the
company's 'turkey twizzlers', and the product became a symbol of derision for those
campaigning for healthier food in schools. Also, two Bernard Matthews employees
were convicted in 2006 after cases of ill treatment of turkeys at one of its sites. The
two events on their own were not significant enough to cause long-term damage to
the company's reputation (although profits did decline in 2006). However, they
probably worked to compound the bird flu issue further. YouGov's Brand Index
Survey, which measures consumers' attitudes to over a thousand brands in the UK, at
one point during the crisis had Bernard Matthews at its lowest ever approval rating —
second from bottom on its list.
The consequences for Bernard Matthews were significant. Sales reportedly dropped
40 per cent in the period following the scare, and just over 200 staff were ultimately
laid off. The scare also had implications for the industry as a whole, and
supermarkets reported declining sales of all poultry during the period.
Task 1. Answer the following questions:
1. What is Bernard Matthews famous for?
2. What kind of crisis did he face?
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3. What mistakes did the company make?
Task 2. Work out a crisis management plan for the company.
The wider picture
It will generally be understood by the public that a company suffering from the
effects of bird flu may have had little to do with it themselves and sometimes
accidents happen or bad luck strikes. However, on such emotive issues like health,
consumers will always be extra cautious and extremely sensitive. The company in
question needs to be seen to be doing everything it can to protect its customers and
put safety before profits.
The Bernard Matthews case came at a time when bird flu in the UK was on the radar
for consumers and businesses alike. Most businesses have taken at least tentative
steps to look at the possible scenarios surrounding bird flu. Some have invested more
time and resources than others (most obviously those who stand to lose more in
financial terms). The UK pharmaceutical, bioscience and food sectors have run largescale simulations and established task forces to look at potential impacts and response
options associated with a pandemic. The Bank of England, alongside the Financial
Services Authority and the Treasury, also ran the largest ever industry-wide crisis
simulation for the financial services sector, focusing on the potential effects of the
virus hitting the financial heart of London.
All companies, however, no matter what sector they operate in, should be prepared
for a potential crisis such as bird flu affecting their business. They also need to look
at the bigger picture, testing every possible scenario — including their
communications. The Bernard Matthews example shows that, even if a company does
get it right and deals with the immediate threat in operational terms, if it does not do
enough to allay the fears of its consumers it has ultimately failed and its reputation
may suffer. Faced with similar situations companies should strive to be up front and
quick in their media response and particularly responsive in demonstrating care and
concern with staff and customers — in essence, to tell it all, tell it fast and tell it
truthfully.
Also, as an aside, if a company whose sole business is dealing with poultry, and
which would therefore have looked at the issue of bird flu in depth, can be caught off
guard, it illustrates just how much preparation needs to be done by others to manage
the issue effectively.
Conclusion
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There is nothing to say that Bernard Matthews cannot win back its hard-earned
reputation. Its loyal customer base will always be attracted to the company's offering
of affordable and accessible products and will still buy into the concept that it is a
family-run, British institution. The company has since taken out full-page adverts
declaring that its turkeys are absolutely safe. However, the case proved, once again,
that companies need to have their reputation risk radars constantly tuned in readiness
for the requirement to manage change — positive and negative — and to ensure a
state of readiness to communicate the right messages at the right time to the right
audiences.
Case Study: Business Response to Climate Change — Wal Mart, Exxon, Virgin
Climate change and business
Climate change truly is a global issue. It is complex even for the most discerning
climatologists. Climate data show that Earth is experiencing a warming period, which
is linked to the release of carbon dioxide (CO2). It is widely accepted that
CO2 released by humans is the cause of global warming.
Although it has become the perception that people are the problem, recent consumer
surveys tend to highlight high degrees of personal apathy in terms of changing
behaviours to reduce carbon footprints. And so, much like the food industry is being
made scapegoat for the obesity issue, big business is carrying the burden of blame for
climate change.
When the Kyoto Protocol was opened for signature in 1997, industry in participant
countries became worried by the cost implications associated with implementing
mandatory emissions limitations, compounded by three of the four biggest global
polluters — the United States, China and India — declining to sign the treaty.
Companies in the public eye, however, are working to meet public expectations,
while less receptive organizations are beginning to come under some pressure from
investors and financial markets to change aspects of the way they operate.
Many big businesses are embarking on a number of schemes designed to meet public
expectation. For example, WWF has joined forces with 12 corporations to create
'Climate Savers', which requires them to meet tough greenhouse gas reduction
targets. Another high-profile climate conglomeration is the UK's Corporate Leaders
Group on Climate Change, which aims to lobby the government to show 'stronger
leadership' on climate change. Members, including Shell, Standard Chartered Bank,
Unilever and Vodafone, meet regularly to urge the government to adopt stronger
policies. Other companies are vying for climate leadership on their own: M&S aims
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to become carbon neutral; B&Q offers 'climate-friendly' products; Land Rover has
promised to offset emissions associated with making its vehicles; BP offers a 'target
neutral' initiative for customers; and BSkyB claims to have become the world's first
carbon neutral media company.
In the United States, leading energy and utility companies told the Energy and
Natural Resources Committee in 2006 that they would welcome or accept mandatory
caps on their greenhouse gas emissions. General Electric and Shell were among the
companies that called for federal regulations amid concerns that inconsistent rules
were being developed throughout the country.
Although there has been a wave of businesses embracing environment and climate
change concerns, some companies traditionally refused to embrace the issue of
climate change. Two of these are Wal-Mart and ExxonMobil. This case study focuses
on these two companies and how profit concern reluctantly appears to have driven
climate action — while also looking at Virgin, which quickly seized a leadership
opportunity.
Wal-Mart
Wal-Mart is the largest retailer in the world. It is the largest grocery seller and toy
retailer in the United States. It is also the largest private employer in the United States
and Mexico. Wal-Mart has more than 1.8 million employees worldwide, 7,000 stores
and wholesale clubs across 14 countries, and a net income of US$12.178 billion.
However, its growth and success have been accompanied by criticism from a number
of groups, particularly regarding its treatment of employees and its anti-union stance.
Other criticisms have been directed at its foreign product sourcing, its treatment of
suppliers, the use of public subsidies and its environmental practices. These criticisms
found an outlet in November 2005, when a critical documentary film was released
called Wal-Mart: The High Cost of Low Price.
Since Wal-Mart's conception in 1962, the company has relentlessly pursued profit
and become a rampant success. For the most part, caring for the environment has not
been an important business concern, and Wal-Mart has kept out of the sustainability
debate. Any impact on its bottom line due to negative perception and reputation
deficit has been offset by the company's tangible financial results. However, WalMart's share price has not always been commensurate with its high profits. It was
perhaps with this in mind that Lee Scott, CEO of Wal-Mart, announced at the end of
2005 a series of startling plans for the business to become more sustainable and
environmentally friendly. In 2007 it embarked on these initiatives:
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Investing approximately US$500 million annually in technologies and
innovation to reduce greenhouse gases at its stores worldwide by 20 per cent
over seven years.
 Designing and opening a retail outlet that is 30 per cent more efficient and will
produce 30 per cent fewer greenhouse gas emissions within four years. WalMart says it will favour suppliers who do the same.
 Reducing solid waste from US stores by 25 per cent within three years.
 Increasing truck fleet efficiency by 25 per cent over three years, doubling to 50
per cent within three years.
Lee Scott also has aims to turn the company into one that runs on 100 per cent
renewable energy and produces zero waste. He estimates that the above initiatives
will lead to savings of US$310 million per year. In an interview with environmental
news website Grist, Mr Scott said the company's new stance was due to a
combination of personal and business motives: 'It just became obvious that
sustainability was an issue that was going to be more important than it was last year
and the years before… we recognized that Wal-Mart had such a footprint in this
world, and that we had a corresponding part to play in sustainability.' He also said
that he wished to be a good environmental steward for his granddaughter's sake.
Whatever its motives, Wal-Mart has received wide recognition for its new stance. But
it inevitably still draws criticism. For example, its plans for greenhouse gas emission
reduction are on a per-store basis and are not countrywide. And of course, as long as
the corporation expands, the more greenhouse gases it will emit. Wake Up Wal-Mart,
a group backed by the United Food and Commercial Workers Union, called it 'a
publicity stunt meant to repair a faltering public image'. The editorial and comment
columns of newspapers in the UK and the United States seemed to be reasonably
quiet on the issue, but in a comment piece about the sustainability of capitalism
the Guardian said rather sarcastically: 'All hail Wal-Mart for imposing a 20 per cent
reduction in its own carbon emissions.'
Analysts say the praise the company has received is not so much down to Wal-Mart
finally succumbing to pressure, but the potentially huge knock-on effect its initiatives
will create. Wal-Mart has a massive supply chain and is in a unique position of being
able to give the clean technologies market a considerable boost. 'Our size enables us
to help create markets for clean technologies that exist today, but don't yet have fully
established markets', said Mr Scott.

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He also believes that Wal-Mart can blaze the trail of democratizing sustainability,
explaining: 'In some ways the shift toward sustainable lifestyles has thus far been
stratified based on income or education levels.' In February 2007, Wal-Mart
announced Sustainability 360, an initiative that moves beyond Wal-Mart's direct
environmental impact and engages the company's employees, suppliers, communities
and customers.
In 2007 Lee Scott told the Guardian: 'This is not an advertising campaign. This is not
a publicity campaign. We are not sophisticated enough to greenwash. I mean, we
have a hard time getting our true story out. This is about being a better company.'
Whatever the motives, Wal-Mart's U-turn has stunned the corporate world and quite
possibly galvanized it too.
ExxonMobil
ExxonMobil is the largest publicly traded oil and gas company in the world, and the
seventh-largest company in the world. Much like Wal-Mart, ExxonMobil is
considered by many as a juggernaut of capitalism, aggressively consuming resources
and getting rich from the fat of the land. As with many large multinational
companies, ExxonMobil has been subject to criticism for several parts of its business
practice. It has been accused of illegal trading in Sudan, bribery in Angola and
Kazakhstan, aiding human rights abuses in Indonesia and suppressing gay rights. The
company has traditionally been seen as a foe to the environment, particularly in 1989
when the Exxon Valdez tanker spilled 10.8 million gallons of oil in Prince William
Sound, Alaska.
In the hydrocarbon industry, ExxonMobil has been the least receptive to the notion
that climate change is being caused by human activity.
The company set out its stall early, just as the climate debate was gaining pace.
Exxon was firmly against the UN's Kyoto Protocol, with former Chairman Lee
Raymond saying as recently as 2005 that Europe needed a 'reality check' over its
commitment to the treaty. It has particularly courted controversy by allegedly funding
organizations that cast doubt on the mainstream science of climate change. The
allegations of the groups involved have varied, but ExxonMobil confirmed recently
that it had funded the Competitive Enterprise Initiative (CEI), a free market advocacy
group. The group were responsible for an infamous series of advertisements in the
United States that challenged orthodox climate change theory. The advertisements
themselves made some valid points, but they lost credibility with their end slogan:
'Carbon dioxide: They call it pollution. We call it life.'
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In the UK, the Guardian has been particularly active in attempting to establish
connections between ExxonMobil and what the newspaper views as immoral funding
activities. In September 2006, it published a letter from the Royal Society, Britain's
prestigious scientific academy, to ExxonMobil asking it to cease its funding to groups
that 'misrepresented the science of climate change by outright denial of the evidence'.
And again in February 2007 the newspaper alleged that scientists were offered money
by a think-tank funded by ExxonMobil to emphasize the shortcomings in the recent
report from the UN's Intergovernmental Panel on Climate Change (IPCC). In
January, the Union of Concerned Scientists, a US advocacy group, alleged that
ExxonMobil had given nearly US$16 million between 1998 and 2005 to 43 advocacy
organizations that 'seek to confuse the public on global warming science'.
Public concern with the company's attitude is prevalent. Several monitoring groups
have been set up, including Expose Exxon, Campaign ExxonMobil and Exxon
Secrets. The latter was set up by Greenpeace and lists well over 100 organizations
that it claims have been given money by the oil company. Additionally, a minor film
production was released entitled Out of Balance: ExxonMobil's Impact on Climate
Change, which sought to document the company's influence on governments and the
media. In December 2006, ExxonMobil came top of the list in the Worst EU Lobby
Awards 2006, organized by Corporate Europe Observatory, Friends of the Earth
Europe, LobbyControl and Spinwatch.
And so ExxonMobil's stance on climate change was, or is, never likely to gain
mainstream support. This may be part of the reason why the company discreetly
indicated a softening of its views. Wal-Mart's entrance to the climate change debate
was accompanied by fireworks and astonishment; ExxonMobil nipped in the back
door, hoping not to be noticed. The announcement didn't come from chairman and
CEO Rex Tillerson, but from the vice-president of public affairs, Kenneth Cohen. In
January 2007 he was widely reported as saying: 'We know enough now — or society
knows now — that the risk is serious and action should be taken.' He confirmed that
ExxonMobil had 'quietly' started meeting with leaders of various environmental
groups. Regarding the company's position on climate change, Cohen
told Fortune magazine: 'We should be putting ourselves on a path, as a society, to
reduce emissions in ways that are cost-effective and sustainable.' He also said that
government policy had a role to play in emissions legislation, saying that his
company wanted to be part of the discussion.
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In February 2007, Rex Tillerson confirmed ExxonMobil's shift by saying that nations
should work towards having a global policy on climate change. He said: 'It is prudent
to develop and implement sensible strategies that address these risks while not
reducing our ability to progress other global priorities, such as economic
development, poverty eradication and public health.' However, in the same speech he
offered a robust defence of the oil industry, saying that there is no clear alternative to
oil and gas in the near future. He said: 'I'm no expert on biofuels. I don't know much
about farming and I don't know much about moonshine. There is really nothing
[Exxon] can bring to that whole [biofuels] issue. We don't see a direct role for
ourselves with today's technology.'
But ExxonMobil has always been criticized for its perceived contempt for the
environment. Much like Wal-Mart's change of stance, ExxonMobil's softer attitude is
most likely due to economic imperatives. While Wal-Mart overtly said that it stands
to make more money if it is more environmentally efficient, ExxonMobil has said its
new empathy comes from an acknowledgement that the scientific data on climate
change is now acceptable. It is likely that the company would prefer to be central to
any future — and likely — federal legislation on greenhouse gas emissions. It is also
possible that ExxonMobil is simply fed up with continuously struggling with its
image. Rex Tillerson told Wall Street fund managers in January 2007: 'We recognize
that we need to soften our public image. It is something we are working on.' He also
said that ExxonMobil was 'inaccurately and unfairly' depicted as a climate change
sceptic and reportedly told the Guardian that it was determined not to change its
position. It is suggested that another reason for Exxon's change of heart is that it is
fed up not being able to communicate the good things it is doing, which include:
 working with the manufacturers of automobiles and commercial industrial
engines on research and development;
 supporting the Global Climate and Energy Project (GCEP) at Stanford
University, with a charge to accelerate the development of commercially viable
energy technologies that can lower greenhouse gas emissions on a global scale;
 mitigating greenhouse gas emissions through efficiency and best practices,
with steps taken to improve energy efficiency at ExxonMobil facilities since
1999;
 partnering with the US Environmental Protection Agency and Department of
Energy to reduce greenhouse gas emissions in its aim to save more than 6
billion gallons of fuel annually in the US freight transport system;
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partnering with the European Commission to study carbon capture and storage
(CCS).
ExxonMobil's recent talk on climate change does not represent a U-turn in its beliefs,
but more of a gradual acceptance that the issue of climate change could ultimately
damage the company's profitability. This is perhaps why the UK and US media
reported the story rather than commenting on it as being an environmental epiphany.
While ExxonMobil's move has been welcomed, there seem to be few expectations
that the company will take a more positive or pioneering role in averting climate
change.
The examples of Wal-Mart and ExxonMobil highlight how two juggernauts of world
business are dealing with the issue of climate change — by looking to protect and
enhance their bottom line.

Virgin
Sir Richard Branson was a global warming sceptic until around 2005. But after an
apparently dramatic conversion, Virgin made tentative moves into the debate, which
signalled its acknowledgement of the need for action. The company had a rough ride
when, in March 2006, environmentalists accused Virgin Atlantic of double standards
for 'offsetting' carbon emissions from its limousines by planting trees. Environmental
pressure group Transport 2000 said that such offsetting would be insignificant given
the large fleet of Virgin aircraft.
However, in late September 2006 at the Clinton Global Initiative (an annual
conference hosted by Bill Clinton), Branson said that Virgin would be investing
US$3 billion (£1.6 billion) to fight global warming over the next 10 years. The
money used to fund this will come from the profits of his travel companies, such as
Virgin Atlantic and Virgin Trains. It will be invested in renewable energy
technologies via his investment unit Virgin Fuels. One confirmed recipient is
Californian company Cilion, which plans to make bioethanol from corn. Branson
said: 'We must rapidly wean ourselves off our dependence on coal and fossil fuels.'
He added that transport and energy companies should be at the forefront of
developing 'environmentally friendly business strategies'. He also announced the
investment during a US television appearance with former vice-president and
environment campaigner Al Gore.
A week later, Branson called on the aviation industry to work together to beat climate
change. He claimed that a quarter of the 2 per cent of carbon dioxide that aeroplanes
emit could be cut if the industry took simple steps. Branson wrote to airlines, airport
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operators and engine manufacturers to urge swifter action. He suggested a 'starting
grid' system at airports that would require aeroplanes to only switch their engines on
much closer to take-off. Additionally, he said that a slower and smoother landing
would reduce fuel consumption. Branson also suggested that a single European air
traffic control system would optimize the use of airspace. And perhaps most
surprisingly he insisted on government intervention should the industry not get its act
together.
However, Virgin faced opposition from parts of the airline industry. British Airways
refused to join the initiative, saying the global airline trade association IATA should
take the lead in addressing climate change. Ryanair's Michael O'Leary dismissed it as
a 'PR stunt', saying that Virgin's profits from its transport businesses would not match
the £1.6 billion offered. EasyJet gave its backing to Branson, saying he was the right
man to lead action on emissions. Friends of the Earth said that growth of emissions
resulting from airport expansion would outweigh Virgin's suggestions.
In February 2007, Branson again appeared with Al Gore to announce a $25 million
(£12.8 million) prize for the scientists who could invent a way of extracting
greenhouse gases from the atmosphere. He claimed it to be the largest prize ever
offered and compared it to the competition to devise a way of measuring latitude.
Branson denied that being in charge of an airline excluded him from the climate
change debate, saying that if he closed the airline another would just take its place.
He went on to express his admiration for the Gaia theory that suggests the world is a
single organism. The theory was developed by scientist and long-term
environmentalist James Lovelock, one of the people who will judge Virgin's prize.
He added: 'Today we have a threat. Still we have to convince many people that the
threat is urgent and real and there is no super-hero. We have only our own ingenuity
and we have no hope of a meaningful solution unless we find a way to work together.'
On the whole, Virgin's initiatives have been reasonably well received. Michael
Dempsey, business reporter for BBC News, said that Virgin's planned investment of
$3 billion was 'much more than green philanthropy', saying: 'It seems there is a
compelling commercial logic behind Sir Richard's drive for new fuels.' Dempsey said
that Branson was looking beyond the short-term perspective of oil and gas and was
setting up a prominent role for Virgin long after his own retirement.
The Guardian said that Virgin's moves were 'commendable' but said that greater
corporate cooperation was necessary to beat climate change. The Times made
reference to Virgin's planned investments when it said that investing money on clean
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technologies was where the 'smart money' was going. The Independent commended
parts of Virgin's initiatives but criticized Virgin's plans for space tourism, which the
newspaper said would create carbon footprints much larger than those produced by
aviation. It said:
Sir Richard says that he wants to make a difference. He says he wants to use his
influence and wealth to leave a better world for our children and our children's
children. The prize he is announcing today to capture and store man-made CO2 is a
commendable gesture in that direction. But how does he square that with his desire to
turn us all into an army of carbon-crazed space cadets?
As with Wal-Mart and ExxonMobil, the public profile of Virgin as a business means
that any action it takes on climate change will have an impact in the business world.
Once again Virgin has demonstrated an ability to capture the headlines and project its
brand. It remains to be seen where and when the real impact of any of these
companies will be felt.
Case Study: A social media crisis handled with honesty and speed: Kitchenaid
What happened: An insensitive tweet about President Obama‘s grandmother
was posted to the Kitchenaid Twitter account, instead of the personal account of a
KitchenAid staff member. The tweet was quickly deleted, but many people had
already seen it. The head of the Kitchenaid brand, Cynthia Soledad, took to the
Twitter account just 15 minutes later and explained what had happened. She
apologised to President Obama and the public and pointed out that the person who
posted this will no longer be tweeting for them.
What we can learn: First of all, this emphasises the importance of keeping personal
and company accounts separate, but if a mistake does happen it should be addressed
immediately. Time moves very quickly on social media, so companies need to take
decisive action as quickly as Cynthia Soledad did. Her honest explanation and
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personal apology was well received and the damage to the brand reputation was
limited as a result.
HMV: HMV (a UK entertainment retailer) recently laid off a large number of staff
without considering the fact that some still had access to the corporate Twitter
account. One member of staff took advantage of this by live tweeting the ―mass
execution of loyal employees who love the brand‖. It seems that no one in senior
management knew the Twitter password and they were powerless to stop it.
Other notable examples
Burger King: The Burger King Twitter account was recently hacked and the person
who gained access to the account changed the name to McDonald‘s and began
promoting McDonald‘s in their tweets. By the time Burger King had regained control
of their account and issued an apology, they had gained 30,000 new followers. This
led some to suggest it wasn‘t a crisis at all, but actually wielded positive results.
Either way, it taught us all a lesson in the importance of password security.
Justin Bieber. Oh, baby, what a mess this could have been. When the teen pop star
was hit with a paternity suit from a fan who claimed Justin fathered her child, he
recognized the risk to his squeaky-clean brand image. Guided by PR rep Matthew
Hiltzik, Bieber delivered an unequivocal denial (see TMZ clip) on The Today Show.
Team Bieber then went one better by filing a countersuit and taking a paternity test to
prove he was no baby daddy. His comment? ―I know that I‘m going to be a target,
but I‘m never going to be a victim,‖ hit the right notes. Case closed.
O2: During a massive network outage, O2‘s Twitter account became inundated with
tweets by frustrated customers. Instead of issuing standard corporate responses, O2
responded directly to these tweetswith an honest and light-hearted demeanor. Their
human approach was extremely refreshing and sentiment changed dramatically as a
result
Planned Parenthood (PP). No matter how you feel about the Susan G. Komen /
Planned Parenthood debacle, it‘s clear that Planned Parenthood mounted a first class
response to being dropped by SGK‘s grants program. After offering an exclusive
interview to the AP, it let loose a barrage of news releases and launched a social
media campaign to mobilize fans. Its core strategy was simple; as spokesperson Tait
Sye explained, ―we gave people things to do.‖ PP circulated online petitions, shared
tweets, posted comments, and launched a no-holds-barred media tour by telegenic
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CEO Cecile Richards. The public pressure forced SGK to backpedal within the
week.
Case Study: Monsanto Wrecked Brand and Lost Opportunity
Monsanto's plans for the introduction of genetically modified (GM) crops in the UK
and more widely in Europe in the mid-1990s met a strong backlash from consumers,
environmentalists, regulators and retailers.
Concerns about insufficient testing of GM organisms rapidly became a subject of
national media debate. Despite refutations by senior scientists of health risk claims,
the issue made front-page news in most national papers. The issue was picked up by
the European media — particularly in France, Germany and Italy.
Monsanto continued to roll out its promotional plan, including a $1.5 million
advertising campaign, and did not acknowledge stakeholders' concerns about GM
products. It left the UK government, European Commission and retailers to respond
to rising pressure, intensifying protests, boycotts and regulatory demands.
This resulted in a plummeting share price, and led to its merger with Pharmacia &
Upjohn. Hostility to GM foods and Monsanto's attitude also led to the ruination of the
UK and wider European markets for other GM producers: 24 of the top 30 European
food manufacturers are now 'GM free'.
Oxfam Attacks Starbucks
US coffee chain Starbucks has built a reputation for being a socially responsible
company that pays higher prices for its coffee to ensure fair trade with 'third world'
producers. It is also widely acknowledged that the company has created trickle-down
benefits for other businesses.
In October 2006, Oxfam UK accused Starbucks of attempting to block a move by the
Ethiopian government to trademark the names of three of its most famous coffee
beans in the United States. The charity said that Starbucks asked the National Coffee
Association (NCA), the trade association of US coffee companies, to block the
country's bid. Oxfam claimed that, by blocking the trademarks, Starbucks was
denying Ethiopia earnings of £47 million per year. Should Ethiopia gain the
trademarks, it would allow the country to negotiate purchasing conditions with
roasters or retailers that want to use the names. The Ethiopian government filed its
applications to trademark the three bean names — Sidamo, Harar and Yirgacheffe —
in the European Union, Canada, Japan and the United States in 2005. Coffee is
Ethiopia's largest export.
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Dub Hay, Starbucks senior vice-president, denied that Starbucks approached the
NCA and claimed that the trade body actually contacted Starbucks over the issue.
Robert Nelson, head of the NCA, confirmed this, saying that the trade association
was against the move because it would damage Ethiopian farmers economically. He
said that the Ethiopian government had been badly advised and the move could result
in the government setting coffee bean prices unreasonably high, resulting in fewer
exports. In a press release, the NCA said that trademarking a geographical area was
not consistent with US law. It added that, even if other intellectual property methods
were used to trademark the coffee beans, no value would be added to Ethiopian
coffees.
The Ethiopian government offered Starbucks a loyalty-free licensing agreement,
which the company refused to sign, but which was signed by its rivalGreen
Mountain. Oxfam maintained that coffee bean pricing should be left to the Ethiopian
government to decide for itself. The charity seemed to turn the problem into an
industry-wide issue by saying that it was an opportunity for Starbucks to 'show
leadership'.
In December 2006, Oxfam posted a clip on video-sharing website YouTube that
criticized the company's policies in Ethiopia. The video has received almost 50,000
hits. Starbucks also released a short clip on the site of Dub Hay saying that
trademarking a geographical area was 'against the law'. This received more than
30,000 hits, but caused anger from various quarters, resulting in Dub Hay apologizing
for accusing the Ethiopian government of doing something illegal. Starbucks said:
'Since this video was posted, a lot has happened. When we posted this video, we felt
the information was correct and since we've learnt a lot and realized the information
about the legality of the trademark was not accurate.'
On 16 December 2006, Oxfam organized the 'Starbucks Day of Action', which
encouraged people to protest at branches of Starbucks around the world. And in
January a representative of an Ethiopian cooperative coffee union met with Tony
Blair to kick-start a fair-price campaign that included a film called Black Gold that
sought to 'expose' the global coffee industry.
In a business analysis article, the Sunday Times said that Starbucks' image has
suffered: 'The spat has landed Starbucks in a public-relations nightmare, with the
ethically minded company accused of acting tough with one of the world's poorest
countries.' In a news report, the Independentdescribed the incident as a 'public
relations disaster'.
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Result
The issue of whether Starbucks actively attempted to veto Ethiopia's trademark via
the NCA is now looking irrelevant. From an Oxfam/Ethiopia perspective the result so
far has been favourable. Oxfam has successfully forced the issue into the public
domain and has forced Starbucks into admitting and explaining to the public why it
opposes the trademark initiative.
Oxfam also hinted that the problem was an industry-wide issue and appeared to offer
Starbucks the opportunity to take the lead in tackling the problem.
Perhaps Starbucks could have coordinated an industry-wide response, because there
seem to have been subsequent accusations against the industry. And this issue will
almost certainly spread to other coffee companies because, if the ethical Starbucks
cannot be trusted to give third-world farmers a fair deal, who can?
However, the company had built up considerable reputation capital, which perhaps
led its stakeholders to believe that it would not behave in such a way towards one of
the poorest nations in the world. Importantly, the company realized it wasn't going to
win the perception battle by sticking to its argument of Ethiopian farmers being
wealthier without the intellectual property rights. And so it conceded that it shouldn't
have been seen to take on a foreign government, thereby halting further reputation
damage.
The story of Frankenstein food
Monsanto's biotechnology division had been very successful in the United States. The
company had met little resistance from farmers or food producers to the concept of
genetically modified food and its stock was high on Wall Street.
However, throughout the early 1990s, international environmental campaign groups
Greenpeace and Friends of the Earth had been campaigning against the introduction
of GM crops. In the United States, these campaigns remained marginal and were not
viewed by Monsanto as a material threat. The dominant news story was Monsanto's
commercial success and imminent expansion into Europe. In 1996, the European
Commission approved imports of GM foods and the development of research and
supply sites for GM foods.
In spite of growing concern among environmentalists and consumer groups following
the EU's approval, it was not until early 1998 that Monsanto's strategy received
sustained, hostile media and public attention.
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Growing pressure on supermarket chains from environmental groups and consumer
associations to label GM products were dismissed by Monsanto. Of key importance
was the fact that the company did not acknowledge the different concerns held by
European consumers and proceeded with the same strategy it had used in the United
States.
Monsanto's attitude contributed to the decision by the frozen-food chain Iceland to
announce the removal of GM products from its own-brand goods. Iceland's decision
immediately raised questions about the policy of other retailers and increased
political pressure in Europe to regulate the sale of GM products and give consumers
choice.
Monsanto responded to concerns in the European media with a misguided $1.5
million advertising campaign, including television advertising in the UK. It failed to
address growing concerns about the long-term implications of GM and was seen by
campaigners and consumers to be aggressive and dismissive.
The growing public and media perception of Monsanto as a company unwilling to
address important questions about GM was compounded by its announcement at the
beginning of 1998 that it planned to introduce a genetically modified potato. The
announcement triggered a wave of critical media coverage.
In a World in Action programme screened in April 1998, one of the scientific
researchers, Dr Arpad Pusztai, gave an unauthorized comment on the preliminary,
unpublished results of tests in which modified potato had been fed to rats. He
suggested that immune system damage was possible. Despite refutations of Dr
Pusztai's claims by senior scientists at the Rowett Institute Laboratory where he
worked, fears about the health effects of genetically modified organisms became the
front-page story in many national newspapers.
In October of that year, a summit of international consumer groups accused
Monsanto of 'bio-colonialism' and dismissed its claims that biotechnology could help
the developing world. By now, the growing concern had reached investors and led to
a fall in its share price of 11 per cent. This, allied to the mounting criticism of GM
products in Europe, led to the collapse of Monsanto's planned merger with American
Home Products. As a result, Monsanto came under increasing pressure from Wall
Street to separate off its biotechnology function as the scale of opposition caused
panic among shareholders. A report from financial specialists J P Morgan advised
Monsanto to restructure.
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Early in 1999, Monsanto's chairman, Bob Shapiro, confidently predicted that Europe
was ready for the introduction of biotechnology and would provide a gateway for the
company to markets in the developing world and the British Commonwealth.
This statement appeared to be at odds with the increasing resistance from European
consumers and regulators. In February 1999, the UK's Health and Safety Executive
successfully prosecuted Monsanto for its release of GM oilseed rape into the British
countryside and the company was fined £17,000.
Oblivious to all, the company continued to roll out its plan and take an aggressive and
uncompromising line with any opposition. In April, it failed to win its High Court
action against the direct action group Genetix Snowball for destroying the company's
crops.
Monsanto left the British government and European ministers to respond to public
concerns, despite the fact that pro-GM politicians, including the British Prime
Minister Tony Blair, were blatantly failing to stem the tide of negative perceptions
towards GM food.
Throughout the summer of 1999, environmental activists kept the issue of GM fears
in the news with high-profile direct action tactics. The head of Greenpeace, Lord
Melchett, was arrested for uprooting GM crops and the subsequent court hearing was
widely covered by the media. In other European countries, particularly Italy, protest
centred on retailers that stocked GM products. The media debate intensified when
Prince Charles aired his highly critical views on genetically modified organisms in an
exclusive interview with the Daily Mail newspaper.
The situation in Europe resulted in further falls in Monsanto's share price, and
increasing pressure from investors contributed to its merger in July 1999 with
Pharmacia & Upjohn. Hostility towards GM foods and Monsanto's attitude also led to
the ruination of the UK and wider European markets for other GM producers: 24 of
30 top European food manufacturers pledged that their own products would become
'GM free' over the course of the year.
The battle in Europe was undeniably lost for Monsanto. At Greenpeace's 1999 annual
conference, Monsanto's US chairman Bob Shapiro encapsulated the realization of the
mistakes made, 'because we thought it was our job to persuade, too often we have
forgotten to listen'.
The impact of negative sentiment about GM products was captured by a Deutsche
Bank report in August 1999 advising institutional investors to sell their shares in
companies involved in the development of GM organisms. It drew attention to
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Monsanto spending $1.5 million on a wasted advertising campaign and the 11 per
cent fall in the value of its stock over the previous six months. The Deutsche Bank
report to investors also noted that European consumers had been through a number of
food scares and 'hearing from unsophisticated Americans that their fears are
unfounded may not be the best way of proceeding'.
It has proved impossible for the Monsanto brand to shake off its pariah status in
Europe. In the summer of 2000, the Pharmacia Corporation announced proposals to
sell off Monsanto's biotechnology subsidiary.
The outcome
Monsanto's strategy was for Europe to become a major supply and research base for
GM products. The company intended simply to replicate its success in the United
States. But in the United States, limited protest against GM had not impeded the
company's continued expansion. Monsanto had dismissed its opponents as
insignificant because they had inadequate scientific knowledge. It therefore rolled out
its expansion strategy in Europe in the face of growing negative sentiment, confident
that resistance would subside.
The UK government, European Commission, farmers and retailers were left to handle
the public reaction. As a result, the company was seen to ignore the concerns of
European consumers and opposition became entrenched. Commentators, politicians
and even environmentalists who had been willing to support aspects of the GM
programme were isolated and retracted their support. Anti-GM sentiment came to
dominate Monsanto's attempted expansion into Europe
Sources:
http://managementhelp.org/crisismanagement/index.htm
https://en.wikipedia.org/wiki/Crisis_management
https://crisiscomm.wordpress.com
http://www.businessinsider.com/pr-disasters-crisis-management-2011-5?op=1
http://oursocialtimes.com/6-examples-of-social-media-crises-what-can-we-learn/
http://www.business2community.com/public-relations/disaster-averted-six-examplesof-top-pr-crisis-management-0133742
http://sentium.com/a-public-relations-disaster-how-saving-1200-cost-united-airlines10772839-negative-views-on-youtube/
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Учебное издание
Подкаменная Елизавета Васильевна,
Фетисова Светлана Анатольевна
CASE STUDY
IN PR AND ADVERTISING
Учебное пособие
Московский государственный лингвистический университет
Евразийский лингвистический институт
Подписано в печать 07.09.2015.
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