1. JPG, PUB475, Spring 2008 1 Week 8: Case Study -- Nestle Free Market economics vs consumer protection  Who acts on the consumers’ behalf?  Who should?

2. The buyer/seller relationship What can cause breaches?  Broken trust  Competitive pressures Substandard materials Inadequate research, testing or quality control Improper packaging Overstated claims of product benedits or capabilities Faulty instructions JPG, PUB475, Spring 2008 2

3. Baby formula issues Contributed to malnutrition in 3 rd world Increased in mortality rate Why / how?  Hygiene / unclean water  Inadequate training  High cost of powered formula  Use of “milk nurses”  Record profits for both Nestle and Bristol-Myers JPG, PUB475, Spring 2008 3

4. Escalation Protein Calorie Group of the United Nations 27 th World Health Assembly In the US…  Four years later!  Interfaith Center for Corporate Responsibility (ICCR) filed shareholder resolutions  Ford Foundation & Rockefeller Foundation supported them JPG, PUB475, Spring 2008 4

5. Bristol-Myers responds The Infant Formula Marketing Practices of Bristol-Myers Company in Countries Outside the United States Proxy statement – “… totally responsive to [ICCR] concerns.” JPG, PUB475, Spring 2008 5

6. Further escalation Sisters of the Precious Blood sue  Security & Exchange Commission supports them Congressional resolutions  Support responsible behavior by companies selling overseas Nestle forms International Council on Infant Food Industries (ICIFI)  Bristol-Myers doesn’t join JPG, PUB475, Spring 2008 6

7. 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 JPG, PUB475, Spring 2008 7

8. Analysis 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? JPG, PUB475, Spring 2008 8

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13. Corporate Communications Involves aspects of interpersonal, organizational and mass communication Still about communicating effectively with your target audiences  Customers  Shareholders  Employees  Vendors and suppliers  The community  The media (local, national and business) JPG, PUB475, Spring 2008 13

14. JPG, PUB475, Spring 2008 14 Typical corporate organization President / CEOBoard of Directors Product Division #1 Product Manufacturing Corporate Finance Distribution / Supply Chain Human Resources Community Affairs Corporate Communications Corporate / Brand Advertising Product Development Product Marketing Product Advertising Worldwide Marketing & Sales Product Sales Corporate Legal

15. Outside counsel JPG, PUB475, Spring 2008 15 Outside agencies can provide PR and advertising support Compensation can be 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 out- of-pocket expenses (like travel)

16. Working with management JPG, PUB475, Spring 2008 16 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

17. Public Relations staff JPG, PUB475, Spring 2008 17 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

18. Internal PR department JPG, PUB475, Spring 2008 18 Advantages: Team knowledge Knowledge of the organization Economy to the organization of many ongoing programs Availability to associates

19. Internal PR department JPG, PUB475, Spring 2008 19 Disadvantages: Loss of objectivity Domination and subservience Burnout Confused mission and roles

20. Advantages of outside counsel JPG, PUB475, Spring 2008 20 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

21. Career opportunities JPG, PUB475, Spring 2008 21 Corporate Communications Media Relations Employee / Internal Communications Financial Communications

22. For next week: Read:  JC -- 10.2 (Nestle case study)  JC -- 3.4 (Kodak case study)  CCB – Chap 3 JPG, PUB475, Spring 2008 22