Starboard Letter to Yahoo

Having finished lambasting Olive Garden, Starboard is onto Yahoo. A managing member of the hedge fund wrote a letter to Yahoo CEO Marissa Mayer with this stated purpose: "to highlight several opportunities to unlock tremendous value for the benefit of all Yahoo shareholders." He summarizes the opportunities as follows:

1. Unlocking the substantial value from Yahoo's non-core minority equity stakes in Alibaba Group Holding Limited ("Alibaba") and Yahoo Japan in a structure that delivers value directly to Yahoo shareholders in a tax-efficient manner;
2. Realizing substantial cost efficiencies by reducing expenses throughout the Company, specifically with a goal of reducing losses in the Display business by between $250 and $500 million;
3. Halting Yahoo's aggressive acquisition strategy which has resulted in $1.3 billion of capital spent since Q2 2012 while consolidated revenues have remained stagnant and EBITDA has materially decreased; and
4. Exploring a strategic combination with AOL, Inc. – a company we know well – which could improve Yahoo's competitive position, deliver cost synergies of up to $1 billion, and potentially facilitate the realization of value from Yahoo's non-core equity stakes with minimal tax leakage.

The recommendation to partner with AOL is perhaps the most dramatic. Mayer responded in a statement:

"Going forward, we have great confidence in the strength of our business. The management team and the board of directors remain committed to building value for all shareholders through the continued execution of our strategy, investing in products that will drive sustainable growth: search, communications, digital magazines and video.

"We will continue to focus on evaluating various capital allocation initiatives, an update to which we plan to provide on our third-quarter earnings call."

Discussion Starters:

• Read the letter for tone. It's a jargon- and cliche-filled masterpiece, but is it appropriate for the context and audience?
• Read the letter for content. What are the most and least persuasive arguments? How does Starboard position itself? 

Bad Timing for Headless Halloween Displays

What's fun one year isn't fun the next. Severed heads have been part of many Halloween decorations, but recent beheadings by the terrorist group ISIS make these displays seem insensitive. Several Westerners have been murdered by ISIS, which has distributed graphic videos.

Fox was the first organization to apologize for joking about a severed head. Two weeks ago, to promote the DVD series "Sleepy Hollow," 20th Century Fox created e-cards and encouraged journalists to promote "Headless Day." 

As Fox says in its apology, the timing was unfortunate:

We apologize for the unfortunate timing of our Sleepy Hollow Headless Day announcement. The tragic news of Steven Sotloff's death hit the web as the email was being sent.

Our deepest sympathies are with him and his family, and we don't take the news lightly.

Had we have known this information prior, we would have never released the alert and realize it's in poor taste.

Please accept our sincerest apologies.

Busch Gardens also has an excuse: It's Halloween. Still, the severed head props aren't being received well. The company issued this statement:

The props in this year's event were designed and purchased several months ago. In light of recent events, some of these props have the unintended consequence of appearing insensitive and are being removed. Busch Gardens apologizes for any offense they may have caused.

Discussion Starters:

• Should organizations refrain from headless displays for Halloween, or are people just too sensitive?
• Assess both apologies. What differences and similarities do you notice? 

Urban Outfitters Offends Again

What could be wrong with selling a blood-splatter-patterned sweatshirt? Urban Outfitters has apologized for putting up for a sale a "vintage" shirt with the Kent State logo. If you missed the history lesson, four students were shot in 1970 at Kent State during a political protest.

Urban Outfitters issued this apology:

"Urban Outfitters sincerely apologizes for any offense our Vintage Kent State Sweatshirt may have caused. It was never our intention to allude to the tragic events that took place at Kent State in 1970 and we are extremely saddened that this item was perceived as such. The one-of-a-kind item was purchased as part of our sun-faded vintage collection. There is no blood on this shirt nor has this item been altered in any way. The red stains are discoloration from the original shade of the shirt and the holes are from natural wear and fray. Again, we deeply regret that this item was perceived negatively and we have removed it immediately from our website to avoid further upset."

Kent State weighed into the controversy as well:

This isn't the first time Urban Outfitters introduced an offensive product. The Week chronicled 12 more. 

Discussion Starters:

• Is Urban Outfitters intentionally offending? What are the advantages and disadvantages of this advertising strategy?
  
• Assess the company's response. Does it meet criteria for an effective apology?
• Discuss Kent State's response. Do you think it was wise for the university to weigh in? Why would administrators issue a statement, and what could be the consequences?

DiGiorno Apologizes for Misused Hashtag

DiGiorno's Twitter manager posted too quickly and apologized profusely. Like many Twitter users, the manager didn't check the meaning behind a hashtag and used it to promote the frozen pizza. #WhyIStayed and #WhyILeft were trending about domestic violence-a topic related to the Ray Rice incident.

After a predictable onslaught of criticism, DiGiorno's rep did an admiral job of apologizing. The rep sent individual, customized emails to critics.

The response strategy is a great contrast to Progressive Insurance's approach a couple of years ago. In that situation, the company repeated tweets, inspiring the "robo-tweet" criticism.

Discussion Starters:

• Find other examples of misused hashtags. (You'll see plenty of them.) In each case, what was the failing, and how well did the company recover?
• Evaluate each DiGiorno tweet. Why were these considered successful by AdAge and others?

Racist Email Causes Hawks Owner to Sell

An email from Atlanta Hawks owner Bruce Levenson surfaced after a related investigation, causing him to sell his controlling stake in the team. The email is an assessment of operations written to General Manager Danny Ferry, and it includes pointed comments about the numbers of black people at games:

"Before we bought the hawks and for those couple years immediately after in an effort to make the arena look full (at the nba's urging) thousands and thousands of tickets were being giving away, predominantly in the black community, adding to the overwhelming black audience.

"My theory is that the black crowd scared away the whites and there are simply not enough affluent black fans to build a signficant season ticket base. Please dont get me wrong. There was nothing threatening going on in the arean back then. i never felt uncomfortable, but i think southern whites simply were not comfortable being in an arena or at a bar where they were in the minority. On fan sites i would read comments about how dangerous it is around philips yet in our 9 years, i don't know of a mugging or even a pick pocket incident. This was just racist garbage. When I hear some people saying the arena is in the wrong place I think it is code for there are too many blacks at the games.

"I have been open with our executive team about these concerns. I have told them I want some white cheerleaders and while i don't care what the color of the artist is, i want the music to be music familiar to a 40 year old white guy if that's our season tixs demo. i have also balked when every fan picked out of crowd to shoot shots in some time out contest is black. . . ."

Levenson is particularly criticized because he was so adamant that Donald Sterling should sell his stake in the team after he made racial comments, which were audio taped by his girlfriend. At the time, Levenson said, "I think I speak for all of my partners when I say we were all deeply offended. We all quickly spoke out against the words we heard on that tape."

Levenson apologized in a statement posted on the Hawks' website: 

"I trivialized our fans by making clichéd assumptions about their interests (i.e. hip hop vs. country, white vs. black cheerleaders, etc.) and by stereotyping their perceptions of one another (i.e. that white fans might be afraid of our black fans). By focusing on race, I also sent the unintentional and hurtful message that our white fans are more valuable than our black fans."

Additional statements were posted from CEO Steve Koonin and NBA Commissioner Adam Silver. Read Silver's full statement.

Download Bruce Levenson's email.

Discussion Starters:

• Why would Levenson make such comments in an email? What assumptions did he make? 
• Should Levenson have sold his stake when Donald Sterling sold his, back in May?

CEO Kicks Dog and Then Resigns

Video cameras are everywhere, so watch what you do in an elevator. The CEO of sports catering company Centerplate learned this lesson when a video of him kicking his friend's dog went viral. At one point, we see him pulling the dog up by the leash.

Desmond Hague apologized and promised to do 100 hours of community service:

"I take full responsibility for my actions, this incident is completely and utterly out of character and I am ashamed and deeply embarrassed.  Under the circumstances of the evening in question, a minor frustration with a friend's pet caused me to lose control of my emotional response. Unfortunately, I acted inappropriately, and I am deeply sorry for that and am very grateful that no harm was caused to the animal. I have reached out to the SPCA and have personally apologized to the dog's owner. At this time, I would like to extend my apology to my family, company and clients, as I understand that this has also reflected negatively on them."

The apology didn't stop criticism of Centerplate, and Hague decided to resign (or was asked for his resignation). In a statement on its website, Centerplate announced Hague's resignation and temporary replacement:

Chris Verros Named Acting President and CEO Following Resignation of Desmond Hague

Centerplate's board of directors announced today that Chris Verros has been appointed to the role of acting president and chief executive officer, effective immediately, following the resignation of Desmond Hague from the company. The decision comes as a result of Hague's personal misconduct involving the mistreatment of an animal in his care.

"We want to reiterate that we do not condone nor would we ever overlook the abuse of animals," said Joe O'Donnell, chairman of the board of directors for Centerplate. "Following an extended review of the incident involving Mr. Hague, I'd like to apologize for the distress that this situation has caused to so many; but also thank our employees, clients and guests who expressed their feelings about this incident. Their voices helped us to frame our deliberations during this very unusual and unfortunate set of circumstances."

Chris Verros assumes the new role with more than 35 years of experience and a reputation as one of the industry's most respected leaders. Chief Operating Officer for Centerplate since 2010, he helped the company to achieve unprecedented growth. Prior to joining Centerplate, Verros was Executive Vice President of Boston Culinary Group and previously served as a Group President of Fine Host Corporation, following the 1993 acquisition of FanFare, Inc., a company he co-founded in 1986.

"I have been proud to work with Chris for more than 20 years, and feel that Centerplate is incredibly fortunate to have such a strong leader who can step into the role immediately," O'Donnell added, "This past week has been very difficult for our company, our employees and our clients in particular, and I have no doubt that Chris' experience, vision, integrity, and commitment to our values and mission will help us all move forward together."

Discussion Starters:

• Why would Hague resign from Centerplate? What does this incident have to do with his job performance?
• Assess Centerplate's statement: word choice, tone, organization, and so on. Comment, particularly, on how quotations are used.

Malaysia Airlines' "Bucket List" Promotion

Twitter users were out in force, criticizing Malaysia Airlines' poorly named "My Ultimate Bucket List Campaign." The promotion asks people, "What and where would you to tick off your to-do list, and explain why?" [sic]

A bucket list is commonly known as the activities people want to accomplish before they die or "kick the bucket." Within one year, Malaysia Airlines lost two planes and 537 lives.

In response to criticism, the company changed the name of the promotion to "Win an iPad or Malaysia Airlines flight to Malaysia."

The company also issued this statement:

"Malaysia Airlines has withdrawn the title of a competition running in Australia and New Zealand, as it is found to be inappropriate at this point in time. The competition had been earlier approved as it was themed around a common phrase used in both countries. The airline appreciates and respects the sentiments of the public and in no way did it intend to offend any parties."

Discussion Starters: 

• Did the airline do the right thing by changing the name, or are people just too sensitive?
• What does "sic" mean, which I wrote in the first paragraph?
• Assess the airlines' apology. What rules of social media and apologies does it follow, and what could be improved?

Zara Apologizes for Concentration Camp Shirt

Retailer Zara has pulled a shirt that many said looked like Holocaust attire. Promoted as a "striped 'sheriff' t-shirt," the product reminded people of the Star of David and stripes (although they were vertical) worn by Jewish prisoners in concentration camps.

The company apologized in a tweet: "We honestly apologize, it was inspired by the sheriff's stars from the Classic Western films and is no longer in our stores."

Inditex, Zara's parent company, also posted a news article to provide background and apologize:

Zara Kids has removed a children's t-shirt from its stores and website. The t-shirt withdrawn was inspired by the classic American Westerns and has been taken out of circulation due to the potential similarity with the Star of David that has been used as a yellow star patch. Zara has issued a heartfelt apology on its social network profiles.

The garment was available only for just a few hours and sales of the t-shirt have been marginal. The items will be reliably destroyed.

Inditex would like to reiterate its utmost respect for all cultures and religions. The Group is a Company where people from 180 nationalities work together representing all the cultures, races and religions of the modern world. Inditex is proud of its cultural diversity. In addition, respect and dignity feature among the principles which guide and define its corporate values. The Group condemns and rejects any form of discrimination.

This isn't the first time Zara used Nazi-reminiscent images. In 2007, Zara pulled a handbag with swastikas, which the company says were made in Asia, where the image has a different cultural significance.

Discussion Starters:

• Do you believe that the shirt was an innocent mistake? Why or why not?
• Assess the parent company's message. How well does it rebuild the brand image?
• Does this news affect your decision to shop at Zara?

Time Warner's Response to the Outage

Time Warner Cable had a major service outage on Wednesday morning, but the response was slow and questionable. As people throughout the country took to Twitter to report loss of Internet service, the company was quiet, and calls went unanswered.

Customers joked about how to solve the problem:

After about an hour of reported complaints, TWC tweeted about the outage:

Another hour later, TWC issued this statement:

"At 4:30 a.m. ET today, during routine network maintenance, an issue with our Internet backbone created disruption with our Internet and On Demand serices. At of 6 a.m. ET services were largely restored, as updates continue to bring all affected customers back online."

Although TWC claims the outage was caused by an Internet backbone problem, some suspect the company's system was hacked. Reports say that the outage seems more like a DDoS attack (distributed denial of service).

Discussion Starters:

• Assess TWC's response. Is it fair to say that the response was slow? Someone did tweet at 7 a.m., and maybe employees were busy working on fixing the problem?
• Analyze TWC's statement. If the outage was caused by a DDoS attack, why won't the company admit it, as so many others have?

Best Buy Executives Explain Quarterly Results

Although sales continue to decline, Best Buy executives are sticking with the plan to turn the business around primarily through cost-cutting. The company has been successful in reducing expenses, but sales continue to lag.

In Best Buy's second quarter results report, CEO and President Hubert Joly said,

"Like other retailers and as reflected in this quarter's performance, we continued to see a shift in consumer behavior: consumers are increasingly researching and buying online. As a result, traffic to our brick and mortar stores continued to decline, yet our in-store conversion and online traffic continued to increase due to the execution of our Renew Blue strategy which is in direct alignment with this shift. Our Renew Blue strategy is designed to (1) grow our online business; (2) enhance our in-store customer experience; and (3) leverage our multi-channel capabilities; all to deliver to our customers great advice, service and convenience at competitive prices in the channel they want to be served.

"During the quarter, we continued to make progress against this strategy, including (1) increasing our Net Promoter Score across channels by 400 basis points year-over-year; (2) improving our in-store experience by rolling out over 800 new Samsung and Sony home theater, 18 Pacific Kitchen and Home and 7 Magnolia Design Center stores-within-a-store; and (3) leveraging our new ship-from-store and digital marketing capabilities to drive a 22% increase in Domestic comparable online sales."

CFO Sharon McCollam reinforced Joly's message: "Industrywide sales are continuing to decline in many of the consumer electronics categories in which we compete."

Discussion Starters:

• Read Best Buy's entire second-quarter report. What are the key messages?
• What's your reaction to the executives' statements? Overly positive, blame-shifting, realistic, optimistic, or something else?

Ferguson PR Firm Speaks Out

The situation in Ferguson, MO, following the police shooting of Michael Brown is so tenuous that the city hired a PR firm to help. As you might expect in any emotionally charged situation, the firm has been criticized. Most of the focus has been on Common Grounds Public Relations as an all-white firm.

CEO Denise Benetele defended her firm's role, calling diversity an "industry-wide challenge" and explaining the involvement of The Devin James Group, a minority-owned firm.

Ferguson clearly needs help. In the middle of a dispute that's getting international attention, Mayor James Knowles said, "There's not a racial divide in the city of Ferguson. That is the perspective of all residents in our city. Absolutely."

Aug. 20, 2014

PR Firm Aiding Ferguson Responds to Industry Critics

By Denise Bentele

Just as an EMT would respond to a 911 call, Common Ground PR was asked to provide immediate, emergency help in the form of fielding the overwhelming number of media inquiries the city was receiving until it assembled a long-term team to handle this crisis. Our short-term agreement to assist had nothing to do with the preceding tragic events. Rather, as we watched the news of ongoing turmoil, it was apparent that the negative images could forever impact our region's economic development efforts and the lives of our neighbors. And so we went to field calls from media around the world, trying to connect them to the appropriate sources while city leadership tended to an incredibly challenging, unfolding situation. The pace of queries was profound – like catching raindrops in a hurricane. It's not every day that a city of 21,000 residents gets more than 500 media calls in a day. It's not every day that the alphabet soup of news networks and stations ALL converge in one of the more than 90 municipalities in St. Louis County. But when all of the cameras are gone, we as St. Louisans will be left to rebuild. We will deal with companies who leave town and others who decide not to invest in St. Louis. I was dismayed at the negative reaction online and on social media, especially among fellow communications professionals, who pointed at the lack of diversity on our staff as a sign of the "greater problem." Increasing the diversity of communications professionals is an industry-wide challenge that we all need to tackle. But as a local St. Louisan who watched this tragedy unfold, I offered our assistance because it was clear that this community was overwhelmed and needed immediate help fielding media inquiries.  The color of our skin reflected nothing of our concern to help our broader community respond to the watchful world. In my first conversation with Ferguson city officials, I advised that any solution to strife and development of long-term reconciliation would have to come with the assistance of a member of the black community skilled at community engagement with these key constituents.  To that end, The Devin James Group, a nationally certified Minority-owned firm, has been working with St. Louis County and the City of Ferguson as an independent liaison to handle the public relations and long-term needs, work with community leaders and seek regional support in a grassroots effort to build true engagement. With the long-term coalition and communications help of CEO Devin James, local residents and businesses can focus on determining what's best for this community. Devin is currently identifying and recruiting communities and leaders to participate and assessing potential for collaborative capacity which could result in the forming of or partnering of community coalitions, creating an outreach plan for improving awareness as well as developing a platform that gives the local community an outlet to address the issues and media perceptions. We thank the many people who have shared their support and advice and we hope this helps answer questions our peers have, and hope more importantly that you send your prayers to the long-term healing of St. Louis. Denise Bentele, APR President & CEO, Common Ground Public Relations

Discussion Starters:

• What advice would you give Mayor James Knowles?
• Did Ferguson do the right thing in hiring Common Ground?
• Assess Denise Bentele's statement. What works well, and what could be improved?

SeaWorld Tries New Approach

After denying impact on park attendance, SeaWorld is finally admitting that negative publicity about its killer whales is affecting business: 

"The company believes attendance in the quarter was impacted by demand pressures related to recent media attention surrounding proposed legislation in the state of California." 

The media attention began with the film Blackfish, which criticized how SeaWorld treated its orcas. Musical performers had cancelled their scheduled shows, and attendance had dropped, but revenue held steady for a while, partly because the park increased prices. Now, shares are down 30% for the year (almost 50% for the past 12 months).

After ignoring the negative publicity, SeaWorld's approach was to contradict Blackfish and other animal rights activists. Then, SeaWorld seemed to take a more proactive approach, highlighting on its Facebook page and Twitter account animals it was saving and protecting.

Now, the company has taken a new approach, spending hundreds of millions of dollars to enlarge tanks and provide exercise treadmills. SeaWorld is also committing $10 million to match funds for killer whale research. 

With the headline, "Announcing BIG NEWS on the exciting future of killer whales at SeaWorld parks," an email was sent to SeaWorld customers (entire message):

Discussion Starters:

• Read SeaWorld's email to customers. Assess the design, message strategy, and organization. What works well, and what could be improved?
• What do you think about SeaWorld's viability going forward? Will the parks spring back, or are they doomed?

Read a case study about SeaWorld's Response to Blackfish. If you would like an assignment (a recommendation report) about the case, send me email (https://www.hotelschool.cornell.edu/app/facultydb/instructors/an97).

United Airlines' Apology Form Letter

Form letters are a great way for companies to ensure consistency and save time, but they have to be customized. United Airlines forgot this important step.

A spokesperson for the airline said, "I cannot confirm if it is authentic based on the picture, but it appears to be an unfinished customer response letter. If I knew who the customer was we would reach out to the customer and apologize for the response." The letter was posted on Reddit.

A week before this letter was written, the Wall Street Journal ran an article about airline apologies. According to the article, Southwest employs 200 people just to handle complaints, and Delta employs 150 to answer complaint and compliment letters. Delta no longer uses form letters.

United told the WSJ reporter, "Generally we tell the customer we are sorry they did not have the experience they expected on United. We try to be empathetic to the customer but not sound insincere." The article confirms that United has some work to do:

"United Airlines, which had the highest rate of complaints filed at the DOT among major airlines the past three years, has a team of about 450 customer-care agents handling general issues and refunds. Add to that 400 people handing frequent-flier program issues and about 100 answering baggage-related letters and emails."

United apologies dating back to 1996 were form letters. Here's a comparison on Untied.com.

Discussion Starters:

• In addition to the obvious missing information, the letter has some other problems. What are they?
• The WSJ article mentions a 2009 study showing that an apology may be more valued by customers than compensation. What works best for you? Think about a time when service didn't meet your expectations, and you told the company. How did it respond, and what was your reaction?

Real Estate Company Apologizes for Inappropriate Email

Real estate website ListedBy.com sent an email to alert its customers that Robin Williams died. Several people thought the announcement was inappropriate and told the firm so.

The situation reminds me of small business advisor who used Amy Winehouse's death to promote her services. Although ListedBy.com was a bit more subtle, the email still feels like an opportunity to connect with prospective customers. Using a death for this purpose just seems wrong.

To its credit, the company sent a nice apology:

Members,

I wanted to run in to the office even at this late hour and make sure we issue a prompt apology. Earlier tonight we sent out our wkly newsletter including the news of Robin Williams death. We used our same newsletter template we always use for sending out breaking news and while it was potentially a vocal minority we did receive a couple dozen emails that felt it was simply not tasteful and not our place to send out an email like this.

In hindsight we completely agree and understand why this was not a good idea to send and we want to issue our most sincere apology to all our members and anyone who was in any way offended by this.

It was simply an issue of us ourselves as human beings receiving the news about half an hour before we were trying to select the "news of the day" to send out to our members, and being that we were sincerely extreme Robin Williams fans it seemed like there was no news we could think of that was more important than this. In hindsight again though we realize we actually could have negatively represented the man we intended to honor and for that we are very sorry. It again was a very fast paced decision from someone that really was shocked by the news and we hope you as members forgive us if this was in bad taste. As an extra part of our apology and to try to accomplish our initial goal of honoring a great person who was such a big part of American culture for so long we will be making a donation this week to his charitable foundation. Thanks again for your understanding our human flaw on this send and from now on we'll just stick to real estate when it comes to reporting the news!

Sincerely,

The ListedBy.com Team

Discussion Starters:

• Assess the apology: What works well, and what could be improved?
• Edit the apology: Help the CEO (or whoever wrote it) punctuate properly.

Again, Starbucks Denies Giving Support to Israel

Starbucks just updated a statement on its website denying giving support to Israel. This isn't the first time the company is responding to similar claims. 

Starbucks' Jim Olson told CNN Money that the decision to close Israeli stores in 2003 "was not related to political issues" but was for "operational challenges." This month, Olson said that the statement, written in 2010, was updated because of an "uptick in false rumors out there about Starbucks and the Middle East."

Some of the rumors were about the possibility of Starbucks investing in SodaStream. The Palestinian BDS National Committee (BNC) threatened boycotts if this were true because SodaStream is manufactured in, according to the group, an illegal Israeli settlement in the West Bank. 

 Facts about Starbucks in the Middle East

Facts about Starbucks in the Middle East (UPDATED August 2014)

Though our roots are in the United States, we are a global company with stores in 65 countries, including nearly 600 stores in 12 Middle Eastern and North African countries employing more than 10,000 partners (employees). In countries where we do business, we are proud to be a part of the fabric of the local community – working directly with local business partners who operate our stores, employing thousands of local citizens, serving millions of customers and positively impacting many others through our support of local neighborhoods and cities.

Our 300,000 partners around the globe have diverse views about a wide range of topics. Regardless of that spectrum of beliefs, Starbucks has been and remains a non-political organization. We do not support any political or religious cause. Additionally, neither Starbucks nor the company's chairman, president and ceo Howard Schultz provide financial support to the Israeli government and/or the Israeli Army in any way.

What we do believe in, and remain focused on, is staying true to our company's long-standing heritage – simply connecting with our partners and customers over a cup of high quality coffee and offering the best experience possible to them – regardless of geographical location.

Questions and Answers:

Is it true that Starbucks or Howard Schultz provides financial support to Israel?

No. This is absolutely untrue. Rumors that Starbucks or Howard provides financial support to the Israeli government and/or the Israeli Army are unequivocally false. Starbucks is a publicly held company and as such, is required to disclose any corporate giving each year through a proxy statement.

Has Starbucks ever sent any of its profits to the Israeli government and/or Israeli army?

No. This is absolutely untrue.

Is it true that Starbucks closed its stores in Israel for political reasons?

No. We do not make business decisions based on political issues. We decided to dissolve our partnership in Israel in 2003 due to the on-going operational challenges that we experienced in that market. After many months of discussion with our partner we came to this amicable decision. While this was a difficult decision for both companies, we believe it remains the right decision for our businesses.

Do you have plans to re-open should the opportunity arise?

We decided to dissolve our partnership in Israel in 2003 due to the on-going operational challenges that we experienced in that market.

When and where the business case makes sense and we see a fit for the Starbucks brand in a market we will work closely with a local partner to assess the feasibility of offering our brand to that community. We will therefore continue to assess all opportunities on this basis. At present, we will continue to grow our business in the Middle East as we have been very gratified by the strong reception of the brand in the region. We continue to work closely with our business partner, the Alshaya Group, in developing our plans for the region.

Do you work with a Middle East partner to operate Starbucks stores?

Through a licensing agreement with trading partner and licensee MH Alshaya WLL, a private Kuwait family business, Starbucks has operated in the Middle East since 1999. Today Alshaya Group, recognized as one of the leading and most influential retailing franchisees in the region, operates nearly 600 Starbucks stores in the Middle East and Levant region. In addition to its Starbucks stores, the Alshaya Group operates more than 2,600 retail stores in the Middle East, Russia and North Africa, providing jobs for more than 40,000 employees of more than 110 nationalities.

We are extremely fortunate and proud to have forged a successful partnership for the past fifteen years and look forward to building on this success.

In which Middle Eastern and North African countries do you operate?

We partner with Alshaya Group to operate Starbucks stores in Bahrain, Cyprus, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Turkey and United Arab Emirates in the Middle East and North Africa region. We are fortunate to have the opportunity to work with so many communities, and we are committed to providing the Starbucks Experience while respecting the local customs and cultures of each country we are a part of. We are also committed to hiring locally, providing jobs to thousands of local citizens in the countries where we operate.

This updates a statement originally posted to the Starbucks Newsroom in 2010.

Discussion Starters: 

• Do you believe that Starbucks invests in Israel? If not, why would these rumors get started?
• Assess Starbucks' statement: the messaging, organization, tone, and so one. What works well, and what could be improved?
• What are the most and least convincing claims in the statement?

How (Not) to Avoid Reporters' Questions

Technical glitch or avoiding the question? Pundits are debating whether former Israeli Ambassador to the United States Michael Oren really couldn't hear Andrea Mitchell's question.

Mitchell (MSNBC): "And I just have to ask you very briefly, in ten seconds, were you aware any of eavesdropping on John Kerry by Israeli intelligence?" 

Oren: "Andrea, I cannot hear you. I'm sorry." [ear piece touch] "[utterances] I'm in Tel Aviv. I cannot hear you. I'm sorry."

Oren was still the Israeli ambassador at the time of the alleged eavesdropping.

Huffington Post compiled a video of embarrassing question evasions. And this reminds me of the woman who hid under her desk to avoid a reporter. Not the best option.

Discussion Starters: 

• Do you believe that Oren couldn't hear? Explain your response with evidence from the video.
• If Oren was simply evading the question, what would have been a better strategy for managing the question?

Hotel Fines Guests for Negative Reviews

So much for embracing feedback. The Union Street Guest House in Hudson, NY, implemented a policy of fining wedding bookers $500 for negative reviews. 

The Guest House seems to miss the point about social media, and the policy itself is silly: couples are responsible for each negative review posted by their guests. Imagine a wedding gone bad, which could, theoretically, inspire hundreds of guests to post to TripAdvisor or Yelp. There goes the new house fund. 

The policy was as follows: 

"If you have booked the Inn for a wedding or other type of event anywhere in the region and given us a deposit of any kind for guests to stay at USGH there will be a $500 fine that will be deducted from your deposit for every negative review of USGH placed on any internet site by anyone in your party and/or attending your wedding or event. If you stay here to attend a wedding anywhere in the area and leave us a negative review on any internet site you agree to a $500. fine for each negative review."

A scan of the Guest House's Yelp reviews indicates a service issue, with an average of 2 stars out of 5.

The owners haven't handled these reviews very well, on one occasion replying, "I know you guys wanted to hang out and get drunk for 2 days and that is fine. I was really really sorry that you showed up in the summer when it was 105 degrees . . . I was so so so sorry that our ice maker and fridge were not working and not accessible."

The Guest House fares better on TripAdvisor (4 out of 5), but the reviews are still spotty.

After some backlash about the policy, the owners posted on Facebook (since removed) that the policy was a "tongue-in-cheek response to a wedding many years ago." This is almost as good as Amy's Baking Company claiming that its Facebook page was hacked and was being investigated by the FBI.  

Discussion Starters: 

• What advice would you give the owners of the Guest House about managing social media and, specifically, about responding to negative online reviews? (See Chapter 7 for tips.) 
• Practice responding to reviews on behalf of the owner. Choose two or three on Yelp and draft responses.

Airbnb Sells Sustainability

In its latest advertising campaign, Airbnb is pushing its role in sustainability. Taking lessons from Chapters 5 and 7 in the textbook, Airbnb boasts saving the planet in concrete terms.

According to a recent report, published with the Cleantech Group, "In one year alone, Airbnb guests in North America saved the equivalent of 270 Olympic-sized pools of water while avoiding the greenhouse gas emissions equivalent to 33,000 cars on North American roads." The company also says that North American Airbnb guests use 63% less energy than do hotel guests, while European guests use 78% less.

The report results are summarized in an infographic on Airbnb's blog.

Discussion Starters:

• Read Airbnb's report summary. Which statistics make sense to you, and which are perhaps overstated or irrelevant?
• What do you think of Airbnb's marketing approach? Do you find it effective? Why or why not?
• Asses the company's infographic. What principles from Chapter 9 are followed effectively?  

SeaWorld and Southwest End 26-Year Partnership

In a joint statement, SeaWorld and Southwest Airlines announced the end of a promotional partnership started in 1988. The companies aren't answering questions beyond the scant (and dare I say, loose) explanation in the release: 

Joint Statement on Southwest and SeaWorld Partnership

Southwest and SeaWorld have mutually decided not to renew their partnership when the contract expires at the end of the year. Our promotional marketing relationship began in 1988 and was one of the first of its kind – focused on co-marketing opportunities between Southwest passengers and SeaWorld visitors.

The companies decided not to renew the contract based on shifting priorities. Southwest is spreading its wings with new international service, and increased focus on local market efforts. With an increasing international visitor base, SeaWorld is looking to focus on new and growing markets in Latin America and Asia, among others.

The companies will continue to work together through Southwest Vacations. Southwest's three specialty airplanes will return to the company's traditional livery.

Southwest and SeaWorld have enjoyed their long relationship, and wish each other continued success.

The more obvious reason, which The Wall Street Journal, Los Angeles Times, and others point to, is backlash from "Blackfish." The movie questioned SeaWorld's treatment of killer whales at theme parks and blamed several trainers' deaths on how the animals are held in captivity. 

In the statement, the companies mention "shifting priorities." Although both have an increasingly international focus, Southwest is looking towards more local marketing. Huh?  

Discussion Starters: 

• Another option for the companies is to announce the decision without giving a reason at all. What do you think of this strategy? 
• The companies aren't giving statements beyond this joint message. Is that a wise decision? Why or why not?

Malaysia Airlines Representative Speaks Out

Hugh Dunleavy, commercial director of Malaysia Airlines, wrote an editorial in The Telegraph to defend the airline's flight path for MH17 and ponder the future of the company. Twice this year, Malaysia Airlines flights have crashed. MH17 was struck down over Ukraine, and earlier this year, MH370 was lost between Kuala Lumpur and Beijing.

Now, the airline is in jeopardy. Cancellations are up to 20 % in some regions, and the company seems to be running out of cash.

In his editorial, Dunleavy says that was happened to MH17 could have happened to any airline and defers responsibility for flight paths away from the industry:

"For too long, airlines have been shouldering the responsibility for making decisions about what constitutes a safe flight path, over areas in political turmoil around the world.

"We are not intelligence agencies, but airlines, charged with carrying passengers in comfort between destinations.

"Against the backdrop of areas with increasingly volatile political situations, such as Ukraine and Gaza, we as an industry must act now to create a system of approval that guarantees safe air passage for all commercial airlines."

Dunleavy admits that the Malaysian government, which owns a majority stake in the company, was already in "a process of assessing the future shape of our business" before the more recent MH17 loss. PR Daily wonders whether a name change and repositioning of the brand would help save the airline.

Image source.

Discussion Starters:

• If you had a scheduled flight on Malaysia Airlines, would you cancel it? Discuss your rationale.
• What do you think would help the struggling airline at this point?
• When PR Daily proposes a name change and a "radical brand overhaul," what do you think they mean? What would this look like? What other companies have done something similar?