The paracrisis: The challenges created by publicly managing crisis prevention A Case Analysis
Communication is faster than ever due to the advent of the Internet and social media which are venues for forum, interaction and information/issue dissemination, Today, nearly half a billion people around the world utilize the Internet. In the United States alone, about 155 million Americans access the Internet at home, with some citizens accessing the Internet only at work. Internet use by consumers in other countries, especially Japan (49 million users), the United Kingdom (29 million), Germany (36 million), Brazil (25 million) and France (31 million), has escalated rapidly. (Ferrell, Thorne, & Ferrell, 2012). The increasing number of Internet users warrant firms’ closer attention to and effective management of paracrises. In particular, Nestle’s case in 2010 exemplifies the need to respond pro-actively to social media attack initiated by Greenpeace rather than by not acknowledging the challenge or fighting back against the challenge. If not properly and timely addressed, this may result to a web of chaos for Nestle. Greenpeace is a global campaigning organisation that enhances to change attitudes and behaviour of people in order to protect and conserve the environment. (About Greenpeace, n.d.) The reputational threat instigated by Greenpeace stemmed from Nestle’s weak stakeholder/customer relations which is a factor in selling products/services, one of the seven basic functions of marketing. Though it is true that supplier contracts including one with Sinar Mas Group should have been reviewed at the onset to check if these are aligned to the company’s social responsibility mandate, the paracrisis could have been immediately addressed should management responded to every single complaint in its social media. Based on my analysis, in general, Nestle’s performance in individual functional areas of business is strong. Financial performance is outstanding as group sales and earnings before income tax (EBIT) per its 2010 Annual Report are increasing from CHF 107,618 million to CHF 109,722 million and CHF 15,699 million to CHF 16,194 million in 2009 to 2010. It was also able to manage company’s debt as net financial debt was reduced to CHF 18,085 million to CHF 3,854 million which now only comprised 6.2 percent of equity from the staggering 37 percent in 2009. On the marketing side, Nestle is a well-known brand all over the world, in fact, number 1 in the food industry offering diverse products. Other functional areas of Nestle including operations, research and development, information systems per my research and analysis, are performing effectively. My analysis of the company’s major strengths and weaknesses is presented in tabular form below: Table 1. Internal Strategic Factor Evaluation
Key Internal Factors
Stellar operating/financial performance
Global presence and leadership in the food industry
Weak customer/stakeholder relations
Failure to uphold its doctrine of social responsibility by contracting with suppliers like Sinar Mas Group, alleged to be destroying the rain forests and orangutan habitats.
Firm’s internal position is strong.
> 2.5 - strong internal position
2.5 – average internal position
< 2.5 – weak internal position
On the external factor aspect, based on my analysis, firm’s strategies take advantage of the existing opportunities and minimize potential adverse effects of threats. First, food (and beverage) industry is observed to be resilient vis-à-vis other industries during and immediately after the global economic crisis in 2008. The economic value has had an opposite...
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