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GREENPEACE VS KIT-KAT

In 2010, Greenpeace uploaded a video to Youtube that shows an office worker opening a chocolate package Kit-Kat, from which comes an orangutan finger and begins to eat while blood stains. Its purpose was to generate awareness in the consumer about the death of orangutans caused by the felling of trees for the extraction of palm oil, one of the necessary ingredients for the manufacture of chocolate bars. As part of the campaign, the NGO also denounced Sinar Mas, the then-leading supplier of Nestlé palm oil.
The campaign went viral and Nestlé opted to ask Youtube to withdraw the video, arguing copyright infringement for the use of the chocolate logo, but by the time the video was removed, it had already gone viral. At the same time, they issued a statement denying their relationship with Sinar Mas. Both actions caused Greenpeace to start another campaign, but this time requesting a boycott against all Nestlé products. Thus, Greenpeace began to circulate the video again, but now on alternative platforms to YouTube, in addition to publishing Kit-Kat logos rewritten with the word “Killer” and images of orangutans.
Despite the fact that the censorship strategy against Greenpeace was not well received by consumers, Nestlé continued with the same strategy, threatening – for example – to block Facebook users who continued to make negative publications towards the brand. Afterwards, he asked that users who did not agree with it stop following the Kit-Kat page on Facebook and began to eliminate negative comments. Being social networks a means that can give companies the opportunity to create a more personal link with consumers, it also means a risk since it allows users to maintain greater vigilance over the actions of a company and that they can not simply censor.
Due to the elimination of comments, many users created accounts with the sole purpose of continuing to disparage Kit-Kat. In response, Kit-Kat took a confrontational attitude with users, raising a lot of controversy about how the company answered its consumers. The damage to the reputation of Kit-Kat was greater since the users evidenced the inattentive answers of the company, in addition to the environmental issue that caused the crisis initially.
Eventually, Kit-Kat gave in to the pressure. That is why, in 2013, Nestlé released a statement in which it set a series of environmental objectives to meet before 2020, among which was the use of sustainable palm oil. It is not the first time that a company is affected by GreenPeace activism, for example, in 2014 when Greenpeace launched a campaign against Lego for the trade agreements it had with Shell. Brands should not forget that social networks have made companies more vulnerable by becoming the means by which users ask them to be held accountable for their actions in an organized manner.

Do you think your company may be vulnerable to social media activism? Contact us to make a damage control and containment plan, you can write us at info@riesgospoliticos.com.mx.

 

Photo by Abi Schreider on Unsplash

AIR EUROPE, A DISCRIMINATION CRISIS?

In 2013, a Spanish airline known as Air Europa had an incident with a wheelchair passenger after denying access for not carrying a passenger. The passenger Mara Zabala, of Spanish origin, complained to the employees of the airline for not allowing her to board the plane. The employees of the airline argued that, due to security policy, it was necessary for the passenger to have a companion who could assist her in case of an emergency.
Zabala, who by the way is an expert in social communication, used Twitter to denounce the company that forbade her to travel unaccompanied when other companies do. Under the hashtags “#denuncia #discapacidad #denuncia”, in a short time reached thousands of retweets, so the message of denunciation quickly gained popularity.
The tweet generated many criticisms of the company not only for denying the service to Zabala – when she had previously traveled alone with Air Europa – but also for not having facilities for people with reduced mobility that other airlines offered. The mistake of Air Europa was to ignore the damage to its image that comments on social networks were causing. The company chose to ignore the incident. The most he did was to reiterate to Zabala what his internal policy stipulated about passengers in need of additional assistance. In the absence of a communication strategy focused on mitigating the crisis, comments on social networks continued to escalate. Eventually, a problem in customer service escalated to touch a much larger issue: that of discrimination.
The problem escalated to attract the attention of Spanish legislators and, eventually, the European Commission. The Popular Party of Spain asked Air Europa to hold a meeting to discuss the incident. Given the refusal of Air Europa, the Spanish Popular Party presented the case to the European Commission through the Group of the European People’s Party.
Soon, the European Commission published a report on current legislation that allows airlines to request a passenger in a wheelchair to travel with a companion. The report stated that the legislation helps airlines benefit from forcing users with disabilities to buy another plane ticket. Based on this report, Zabala appealed to various organizations for the protection of persons with disabilities, stating that the legislation is clearly discriminatory. One of these bodies, the Spanish Committee of Representatives of Persons with Disabilities, demanded that Air Europa change its internal policy on its own initiative, since the current regulation does not guarantee them. For its part, the European Commission announced that the regulation of airlines in terms of security would be reviewed in order to address problems such as Zabala, but to date there have been no changes.
The case of Air Europa demonstrates that the omission of a problem is a problem in itself, sometimes just as damaging to reputation as making an equivocal decision about it. Starting with a tweet, the magnitude of the crisis escalated to reach the halls of national and supranational governmental instances. A strategy of silence before the problem contributed to increase the crisis since, for many users, it seemed that the company was not doing anything to solve the problem.

Do you have doubts about how to handle reputation crises? Write to info@riesgospoliticos.com.mx to provide you with the advice you need.

 

 

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EXXONMOBIL, LESSONS TO TAKE ADVANTAGE OF THE CRISIS

Since the Energy Reform of 2013, the oil sector in Mexico has been opened to private investment, both domestic and foreign. One advantage that this reform presents to investors is that of logistics. Companies can sublease Mexican pipelines – which saves them considerable transportation costs – and Pemex, in turn, gets a steady stream of revenue.

Thanks to this scheme, the large foreign oil companies have managed to occupy 30% of the hydrocarbon market in Mexico. However, according to a Forbes report, 95% of them directly buy Pemex oil products that, once processed, trade and sell directly to users. However, if a company depends on Pemex’s infrastructure for its own operations, it also absorbs its risks. Anticipating this situation, ExxonMobil decided to invest in its own logistics network, hire independent carriers and import fuel extracted from the United States. Thus, it is clear that a central part of ExxonMobil’s strategy in Mexico is not to depend on Pemex’s infrastructure, which adds value to its services.

ExxonMobil transports fuel via train from Texas to El Bajío. In this region the fuel is stored since that is where most of its gas stations are located. Subsequently, it is distributed to each locality through independent transporters. In addition, Exxon plans to diversify its supply network by sea instead of increasing ground transportation.

It is worth noting that a fundamental part of ExxonMobil’s business strategy in Mexico is the Demand Response Team, whose mission is to manage risks in the country and mitigate problems arising from Pemex’s operations. Thus, the Demand Response Team was created to deal mediately and operationally with the damages of a crisis, but strategies were also proposed to mitigate the damage in anticipation of a crisis. This team is part of the risk unit of the oil company called Operations Integrity Management System and was essential to overcome the crisis that caused the closing of pipelines of Pemex for the combat the ” huachicoleo “.

This risk management group is made up of 40 people, with operations in both Mexico and the United States and, in this case, had the task of addressing the interruption in the supply of fuel in Mexico as quickly as possible. Thanks to crisis mitigation strategies and the fuel logistics network sold by ExxonMobil stations in Mexico, the oil company increased its sales in the Bajío, a region in which most Pemex-dependent gas stations ran out of fuel.
Before the shortage, ExxonMobil moved to its Bajío storage centers enough inventory to continue operations for 20 days. In the same region, Pemex only had inventory for less than three days.

During the shortage, one of the gas stations of ExxonMobil published a tweet that said the following: “Shortage? In Mobil stations we do not have that problem, “with an image of a pipe filling the gas station. Given the sense of panic in the general population, this type of communication favored that various media presented to ExxonMobil under headlines such as: “The company that is saving Guanajuato from cases of shortage” or “Keeps Exxon constant supply”, which positioned the mark remaining in the mind of the users who did not find fuel in the stations of the competition.

Do you need help to organize a risk unit in your company? We help you, write to info@riesgospoliticos.com.mx .

IS THE HOTEL SECTOR PREPARED FOR CLIMATE CHANGE?

The impact of climate change on the operations of organizations and companies is one of the main risks to be considered. The hotel industry, however, is particularly vulnerable to the effects of global warming. Recently, the University of Notre Dame, in EE. UU., Published a study in which it concludes that Mexico is one of the countries most vulnerable to climate change.

Since 2015, the coasts of the Mexican Caribbean began to suffer some of the consequences of climate change. An atypical amount of brown marine macroalgae from the Bahamas began arriving at Mexican beaches, preventing tourists from entering the sea. The presence of these algae, known as sargassum, has increased by 40%, with 2018 being the year of greatest accumulation and negative effects for tourism.

The consequences it has had on the hotel industry go beyond the effects on the landscape or the bad smell caused by the accumulation of sargassum, but there have been millionaire losses for the sector. During 2018 these economic effects amounted to:

  • 80 million pesos, for the state government of Quintana Roo and for the federal government.
  • It is estimated that hotels in Quintana Roo spend one million pesos a month to remove sargassum from beaches, practically manually.
  • During the season of December 2018, only 55% of the expected reservations were reached .
  • Losses in the aquatic activities industry, since it is impossible to perform activities such as wave runners   or   flyboards for the amount of sargassum found in the area and for the damage it causes to the teams.

Climate change is a current risk that companies must consider because it represents challenges in their business model, which translates into obstacles to meet their business and investment goals. Thus, the decision makers of companies, particularly those in the hotel sector, must adapt to the new reality caused by global warming.

It is important that the hotel sector can have action plans, as it can be the implementation of a containment project involving fences at sea to divert the sargassum and prevent it from reaching the beaches. This project would mitigate the impact that sargasso can have on the hotel industry. Inclusively, sargasso could be used in the production of cosmetics, as a feed for livestock, in the production of fertilizers, in biofuel, or in construction material.

However, it is essential that actions to mitigate crises caused by climate change involve individuals, local organizations, the three levels of government and the business sector, who must consider that climate change is a multiplier of risks.

Riesgos Políticos, SC, can support that your company is better prepared for crises caused by environmental risks by accompanying the resolution of issues such as can you reduce this risk? How can you limit the damage? Are they adequate? Are research mechanisms being developed to mitigate the damage? Contact us at info@riesgospoliticos.com.mx . 

 

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GOOD PRACTICES IN RISK MANAGEMENT: SHELL SCENARIO PLANNING

A useful tool in risk analysis is scenario planning. More and more organizations are incorporating this tool into their strategic planning. The planning of scenarios, or scenario planning , is used to map the possible outcomes of a decision and, of course, the risks and opportunities inherent in the outcome. It is a tool that, given the impossibility of predicting events, can generate adaptability to the uncertainty of the future.

In the 1960s, Shell initiated the creation of a team responsible for scenario planning, which has developed a methodology that has allowed them to anticipate major changes and disruptions in the energy industry. The postwar period of the Second World War seemed to guarantee the stability of oil prices. However, in 1965, the team that would later be known as Shell Scenario Planning , was asked to think about reasons that would cause volatility in the energy market.

Thus, they began an analysis that led them to consider events in Israel, Iran and other countries in the Middle East, which they identified as a risk factor. They did not predict the explicit creation of OPEC, but they did manage to determine that a stable oil price scenario was more unlikely than it appeared. As a result of this work, Shell was prepared to face the energy crisis of 1973 and decided to incorporate scenario planning permanently into its decision-making strategy. Different media have attributed to this methodology the anticipation of events, the reappearance of Russia as an emerging power, the liberalization of global markets in the eighties and the emergence of China as the largest consumer of energy worldwide.

Far from assuming the ability to predict events, Shell explains that it is just this inability that makes the Scenario Planning office necessary . Geraldine Wessing , Shell analyst, explains that we can only imagine the future based on past experiences. This sometimes leads decision makers to assume that the current course of action is the one that will remain, just as many oil companies assumed that the price of oil would remain stable after the Second World War.

The scenarios do not predict events, but help to understand the technological, social, demographic and political forces that affect companies and the way they evolve. Understanding these forces, in turn, stimulates the analysis of problems from multiple perspectives. This helps to contemplate trends that could impact the interests of organizations.

 

 

Approach Political Risks to provide you with the necessary advice in the implementation of scenario planning strategies to understand the trends that will impact your organization. Write to info@riesgospoliticos.com.mx .

 

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