Week 8: Case Study -- Nestle
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Free Market economics vs consumer
protection
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Who acts on the consumers’ behalf?
Who should?
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The buyer/seller relationship
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What can cause breaches?
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Broken trust
Competitive pressures
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Substandard materials
Inadequate research, testing or quality control
Improper packaging
Overstated claims of product benedits or capabilities
Faulty instructions
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Baby formula issues
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Contributed to malnutrition in 3rd world
Increased in mortality rate
Why / how?
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Hygiene / unclean water
Inadequate training
High cost of powered formula
Use of “milk nurses”
Record profits for both Nestle and Bristol-Myers
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Escalation
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Protein Calorie Group of the United Nations
27th World Health Assembly
In the US…
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Four years later!
Interfaith Center for Corporate Responsibility
(ICCR) filed shareholder resolutions
Ford Foundation & Rockefeller Foundation
supported them
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Bristol-Myers responds
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The Infant Formula Marketing Practices of
Bristol-Myers Company in Countries Outside
the United States
Proxy statement – “… totally responsive to
[ICCR] concerns.”
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Further escalation
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Sisters of the Precious Blood sue
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Congressional resolutions
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Security & Exchange Commission supports them
Support responsible behavior by companies
selling overseas
Nestle forms International Council on Infant
Food Industries (ICIFI)
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Bristol-Myers doesn’t join
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INFACT (Infant Formula Action Coalition)
initiates nationwide boycott of Nestle
products
Beech-Nut execs get one year in jail and
$100,000 fine
Assorted word bombs and initiatives from
both sides
Boycott is still going on today
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Analysis
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What caused the crisis?
What did Nestle and Bristol-Myers do wrong?
What did they do right?
What is the real issue?
How do they fix it now?
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Corporate Communications
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Involves aspects of interpersonal, organizational
and mass communication
Still about communicating effectively with your
target audiences
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Customers
Shareholders
Employees
Vendors and suppliers
The community
The media (local, national and business)
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Typical corporate organization
Board of
Directors
Product
Division #1
Product
Marketing
Product
Development
President / CEO
Human
Resources
Worldwide
Marketing & Sales
Corporate
Communications
Product
Manufacturing
Corporate / Brand
Advertising
Corporate
Finance
Corporate
Legal
Community
Affairs
Product
Advertising
Distribution /
Supply Chain
Product
Sales
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Outside counsel
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Outside agencies can provide PR and
advertising support
Compensation can be
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Flat fee
Monthly retainer with fixed hours
Minimum retainer plus actual hours
Straight hourly charge, based on position or expertise
Covers service hours, fees (like media) and outof-pocket expenses (like travel)
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Working with management
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Commitment to and participation in PR
Retention of competent PR counsel
Incorporation of PR perspectives in policy
making
Two-way communication with both internal and
external publics
Coordination of what is done with what is said
Clearly defined goals and objectives
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Public Relations staff
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Loyalty
Counsel on the PR aspects of decisions
Skill in articulating principles and in enhancing
public understanding of the organization
Inspiration to help all members do their best
Influence in restraining other members from
saying or doing anything detrimental to the
organization’s welfare
Character – honesty, trustworthiness, discretion
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Internal PR department
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Advantages:
 Team knowledge
 Knowledge of the organization
 Economy to the organization of many
ongoing programs
 Availability to associates
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Internal PR department
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Disadvantages:
 Loss of objectivity
 Domination and subservience
 Burnout
 Confused mission and roles
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Advantages of outside counsel
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Lack of management experience in PR
HQ far from financial and communication
centers
The firm has wide-ranging up-do-date contacts
Access to experienced executives and creative
specialists from distant lands
Need for specialized or infrequently used
services
Need for independent judgment of an outsider
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Career opportunities
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Corporate Communications
Media Relations
Employee / Internal Communications
Financial Communications
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For next week:
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Read:
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JC -- 10.2 (Nestle case study)
JC -- 3.4 (Kodak case study)
CCB – Chap 3
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