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Beyond Control: Crisis Strategies and Stakeholder Media in the Danone Boycott of 2001

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Abstract

Parallel streams of theory hold that intangible factors such as reputation may account for a major share of a firm's market valuation, and that a dialogic relationship with a firm's environment in general and direct stakeholders in particular is increasingly essential. A consumer boycott of unprecedented scope which confronted Danone SA in 2001 as the firm sought to rationalize its biscuit division suggests that under certain conditions these streams are convergent: a firm's refusal to engage in dialog with adversaries and stakeholders may negatively impact management's reputation, and with it market valuation. The case further suggests that strategies of crisis communication aimed at controlling opinion carry growing risks in terms of conflict and credibility loss with key stakeholders. A further finding is that news media may be of less importance to the outcome of a crisis and to corporate reputation than stakeholder-controlled media. We conclude that crisis communication strategies must give greater attention to establishing and maintaining dialog both with direct stakeholders and adversaries, whose ability to inflict damage may paradoxically be amplified by a firm's attempts to establish control over public opinion.

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Notes

  1. In an interview with ITworld.com, 15 March, 2001, Baruch Lev noted: ‘The market value of S&P 500 companies is more than six times what's on their books. This means that for every $6.50 or so of market value, only $1 appears on the books. It's extraordinary that the balance sheet number reflects only 15 percent or so of the value of these companies. And since this is the S&P 500, it includes about 80 percent of corporate America, a lot of financial institutions, low-tech, all the oil companies and retailers. This is not the new economy. And even if those who think that this market value is inflated are right, if you take 50 percent off the market capitalization, there is still a huge gap.’

  2. The record used for this article includes a comprehensive survey of newspaper articles in French and English available through the Lexis–Nexis and Factiva databases, as well as Danone annual reports and communiqués and analyst reports drawn from the Investext Plus database, for the years 2001 and 2002. For a more complete record of the crisis events described in this article, see Mark Hunter, Marc Le Menestrel and Henri-Claude de Bettignies, ‘Who Won the Danone Boycott? (A,B,C).’ Fontainebleau: INSEAD 2006. Danone SA was invited to review and comment on the above cases before their publication; no prior approval of the authors' work was solicited or granted.

  3. Groupe Danone, ‘Document de référence [annual report] 2000,’ p. 23.

  4. Anonymous, ‘New Formula Danone Back on the Attack.’ ING Barings European Company Report, 1 December, 2000.

  5. See anonymous, ‘Danone s'estime victime d'une campagne de destabilisation.’ Les Echos, 18 January, 2001, p. 18.

  6. Jean-François Arnaud, ‘L'Affaire LU, Douze Mois dans les Coulisses d'un Plan Social.’ Le Figaro, 7 January, 2002, p. 1+. The reporter obtained extraordinary access to both Danone management and unions.

  7. See ABN-Amro, Food Producers & Processors Sector Research, ‘Danone: Getting Back on Track,’ 18 January, 2001.

  8. Op. cit., Arnaud.

  9. See Groupe Danone, ‘Document de référence 2001,’ pp. 35–36.

  10. These data were mentioned in op. cit., ‘Danone s'estime victime d'une campagne de destabilisation,’ and ‘No regrets for Danone's determined Riboud: The food group's chief is standing firm on the factory closures.’

  11. Sophie Roquelle, ‘Face aux hesitations du gouvernement, les élus de la majorite et le conseil régional d’Ile-de-France font monter la pression; Le boycott anti-Danone mobilise la gauche.’ Le Figaro, 6 April, 2001.

  12. Hungarian News Agency (MTI), ‘Government and Danone Negotiate On Closure Of Gyor Factory.’ 21 April, 2001.

  13. Anonymous, ‘Le Boycott de Danone ne prend pas.’ Le Figaro, 18 April, 2001.

  14. See Benoit Heilbrunn, ‘On se leve tous pour. Danone; Tant que ne se developpera pas en France un puissant lobby consumeriste, les actions de boycott echoueront, car l’attachement aux marques reste le plus fort.’ 19 April, 2001.

  15. See Frédéric Pons, ‘Le boycott de Danone proche de la peremption.’ Libération, 3 May, 2001.

  16. According to studies by, respectively, the national statistics institute INSEE and the private BVA survey firm.

  17. The parody is visble at: http://reseauvoltaire/jbd/.

  18. These facts are quoted in Tribunal de Grande Instance de Paris, Ordonnance de référé du 23 avril 2001. Via Internet, http://www.legalis.net/cgi-iddn/french/affiche-jnet.cgi?droite=decisions/marques/ord_tgi_paris_230401.htm.

  19. Anonymous, Danone demande la fermeture du site jeboycottedanone.com. Le Tribune, 19 April, 2001.

  20. Marie-Joëlle Gros, ‘Le Claque de Danone à ses détracteurs.’ Libération, 31 mai 2001.

  21. See, for example, Estelle Dumont, ‘Danone fait interdire la contrefaçon, pas la critique,’ published by www.zdnet.fr on 24 April, 2001 and archived at: http://www.zdnet.fr/actualites/internet/0,39020774,2062909,00.htm.

  22. Anonymous, ‘Condamné, Jeboycottedanone boit du petit lait.’ Transfert.net, 23 April, 2004, at: http://www.transfert.net/Condamne-Jeboycottedanone-boit-du.

  23. Cathy Leitus, ‘Droit des marques: Le détournement de logos est un droit.’ Stratégies, 9 May, 2003.

  24. Op. cit., Dumont.

  25. Anonymous, ‘Danone touché par le boycott,’ Le Nouvel économiste, 18 May, 2001.

  26. Anonymous, ‘L’orage est passé,’ La Vie Financiere, 16 June, 2001.

  27. The survey appeared in Le Nouvel économiste of 20 April, 2001, cited in Belot, Laure, ‘Comment le Groupe Danone a abimé son image,’ Le Monde, 23 April, 2001.

  28. Anonymous, ‘Danone: le boycott n’a pas ralenti la croissance du chiffre d’affaires.’ Les Echos, 30 May, 2001.

  29. Ibid.

  30. Op. cit., ‘L’orage est passé.’

  31. Anonymous, ‘Danone: Shareholder's meeting comment.’ Deutsches Bank, 31 May, 2001.

  32. Belot, Laure, ‘Nous ne fermerons pas d’autres usines en France dans les annees qui viennent.’ Le Monde, 24 October, 2001.

  33. We personally posed the question ‘Who won the Danone boycott?’ to several dozen reporters from France 3 Television during training seminars over a two-year period; the uniform response was, Danone.

  34. Op. cit., Arnaud. See also Mas, Isabelle, ‘Idée reçue: “le boycott n’est pas efficace”’: insignifiantes les mises à l’index économiques? Pas si sûr. Des cas précis démontrent même le contraire.’ (‘Received idea: boycotts don’t work. Are economic accusations insignificant? Not certain. Precise cases show the contrary.’ L’Expansion, No. 675, May 2003, p. 120. In this article, the author lists a number of successful boycotts in France; Danone is not included.

  35. James Edwards Jones et al., ‘Is it all eau-ver?’ Credit Suisse First Boston equity research, 2 August, 2001.

  36. See ‘Danone: Une croissance sous tension,’ Société de Bourse Wargny, October 2001.

  37. François Digard, ‘Danone.’ ING Barings, 9 and 11 October and 16 November, 2001.

  38. See, for example, Joseline Gaudino and Sandrine Le Guennec, ‘A Good Q1,’ April 2001, and ‘Une machine légèrement enrayée à court terme,’ 11 October, 2001, Société Générale.

  39. Sylvain Massot and Eva Quiroga, ‘Danone: No Surprises in 2001, But It Is 2002 That Really Counts.’ Morgan Stanley Dean Witter, 19 February, 2002.

  40. Charlie Mills et al., ‘A Plea for Clarity.’ Credit Suisse First Boston, 18 February, 2002.

  41. Muriel Fontugne (Ernst & Young), Presentation for Round Table, AFPLANE Colloquium, Paris, October 2001.

  42. Danone announced in October 2001 that it would keep the Gyorki plant open and invest 3m euros to modernize it.

  43. For an astonishing first impression of the case and its impact, in particular empowerment of protestors, see http://www.mcspotlight.org/case/index.html.

  44. The correspondent is ‘jbg34’ at: http://groups.google.fr/group/fr.misc.automoto.mecanique/browse_thread/thread/69dbdfd46d4f4c17/96edecfaebd4160d?hl=fr&lnk=st&q=danone+boycott+malnuit#96edecfaebd4160d.

  45. The latter became a highly visible force in 1999 during protests against the Seattle World Trade Organisation meeting, and took institutional form in France with the founding of the nongovernmental organization ATTAC in 1998.

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Authors and Affiliations

  1. INSEAD , Bd de Constance, Fontainebleau Cedex, France

    Mark Lee Hunter

  2. Universitat Pompeu Fabra , Ramon Trias Fargas, Barcelona, Spain

    Marc Le Menestrel

  3. INSEAD , Bd de Constance, Fontainebleau Cedex, France

    Henri-Claude de Bettignies

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  1. Mark Lee Hunter
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  2. Marc Le Menestrel
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  3. Henri-Claude de Bettignies
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Hunter, M., Le Menestrel, M. & de Bettignies, HC. Beyond Control: Crisis Strategies and Stakeholder Media in the Danone Boycott of 2001. Corp Reputation Rev 11, 335–350 (2008). https://doi.org/10.1057/crr.2008.30

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