Managing Online Crises: Nestle's Experience and Strategies

Communication, accelerated by the Internet and social media, functions as a platform for interaction, forums, and information dissemination. Nearly 500 million people globally use the Internet, with approximately 155 million Americans accessing it at home or work. The increase in Internet usage is significant in countries such as Japan, the United Kingdom, Germany, Brazil, and France. This growth highlights the importance of companies effectively managing online crises. Nestle's experience in 2010 illustrates the necessity of proactively addressing social media attacks like Greenpeace's to avoid potential chaos for Nestle.

Greenpeace advocates for environmental protection by influencing attitudes and behaviors on an international scale (Ferrell, Thorne & Ferrell, 2012; About Greenpeace).

Greenpeace criticized Nestle for its weak relationships with stakeholders and customers, essential aspects of marketing. The failure to review supplier contracts early on, like the one with Sinar Mas Group, worsened the situation regarding social responsibility standards. Management could have mitigated the crisis by promptly addressing complaints on social media. Despite these challenges, Nestle excels in various business areas as shown in their 2010 Annual Report which indicates growth in group sales and earnings before income tax (EBIT), along with a significant decrease in net financial debt from 37 percent of equity in 2009 to just 6.

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2 percent in 2010. As a globally recognized brand and leader in the food industry, Nestle offers a wide range of products supported by effective operations, research and development, and information systems.

The firm's strategies focus on seizing opportunities and reducing threats from external factors. Despite concerns about rising transportation costs affecting consumer spending, the food and beverage sector proved resilient during the 2008 global economic crisis.

This resilience is attributed to the consistent demand for food products even in economic downturns. The performance of the Dow Jones US Food and Beverage Index compared to the S&P 500 in 2008 illustrates this industry's ability to withstand economic challenges. Additionally, a shift towards health-consciousness among consumers presents opportunities for companies like Nestle that offer nutritious products. However, there is a potential risk from reputational attacks such as those from Greenpeace, which could harm Nestle's brand value and consumer trust.

Repentance is the most effective strategy for Nestle to maintain a positive relationship with stakeholders in response to the paracrisis. The damage caused by the crisis is greater than the cost of implementing necessary changes to comply with Greenpeace's demands. Criticism from various sources could negatively impact Nestle's reputation and business if not promptly addressed. Denying or disregarding the crisis will only exacerbate the situation, making repentance the most practical choice. The crisis management team should prioritize key issues for both the Board of Directors and Senior Management, communicate through social media, and focus on finding solutions. This approach is considered the most appropriate response across all levels of the organization.

It is crucial to communicate to the public that the company is actively addressing customer and stakeholder concerns. To tackle the central issue, it is advisable to implement medium to long-term action plans. This includes enhancing the stakeholder relations program and regularly reviewing the company's commitment to its mission, vision, strategies, and business principles. Strengthening the stakeholder relations program involves maintaining positive community relationships, boosting customer satisfaction, and improving the company's public image. Adhering to the "Be redundant and sprawl" rule can help prevent crises like Nestle faced. Publishing articles about the company's dedication to social responsibility on various platforms can also safeguard its reputation. Additionally, Nestle should focus on developing a comprehensive communication and marketing strategy. Regularly reviewing adherence to mission, vision, strategies, and business principles will further protect its reputation globally while considering local laws, cultural practices, and supplier/customer relationships. Nestle upholds honesty, integrity, and fairness from suppliers, agents, subcontractors as well as their employees as per their Corporate Business Principles.

Nestle emphasizes the importance of continuously reviewing business principles, especially in supplier and customer relations. Their objective is to lead in nutrition, health, and wellness while also achieving financial success (Nestle Annual Report, 2010). Despite their position as a top player in the food industry and focus on meeting customer needs and generating profits, Nestle faced criticism on social media for their palm oil sourcing practices. This incident exposed a gap between their commitment to social responsibility and their actual behavior. Nestle should have a capable management team ready to manage crises and protect their reputation. Even though an established organization like Nestle may appear secure, they must recognize the influence stakeholders can have in causing harm to their reputation.

Bibliography

1. (2010). Nestle Annual Report.
   Ferrell, O. C., Thorne, D. M., & Ferrell, L. (2012). Social Responsibility and Business. Singapore: Cengage Learning. IMAP. (2010).
2. Food and Beverage Industry Global Report.
   About Greenpeace. (n.d.). Retrieved from Greenpeace International: http://www.greenpeace.org/international/en/about/ Nestle's Corporate Business Principles. (n.d.). Retrieved from Nestle: http://www.nestle.com/aboutus/businessprinciples