Retailers Sued for Fake Sales

When is a sale not really a sale? Macy's, Kohl's, JCPenney, and Sears are facing lawsuits  for "false reference pricing"-showing prices as "regular," "list," or "original" when they never were. According to the Consumerist:

Under California law, retailers are prohibited from advertising an alleged former price of an item less the alleged former price was the prevailing market price within three months of the advertisement, or unless the date when the former price was in effect is clearly advertised.

To this end, the city [Los Angeles] claims that thousands of "sale" items were advertised at false reference prices.

In other words, items marked on sale were never sold at the so-called "original" price, and that's a misrepresentation.

The Los Angeles attorney who filed the suits said, "Customers have the right to be told the truth about the prices they're paying–and to know if a bargain is really a bargain. My office will fight to hold retailers responsible for their practices and to ensure consumers can make informed choices when spending their hard-earned money."

Checkbook.org brought a similar suit against some of these retailers in 2015.  At that time, Sears made this statement:

"Sears disagrees with any suggestion that its pricing is misleading or deceptive. Sears is focused on providing its members with great prices on a wide variety of products and services," adding that it "complies with applicable pricing and advertising laws." 

"... as a multi-channel, leading integrated retailer we are uniquely positioned to provide discounts to our members and customers in a number of different, legally compliant ways, including things like member pricing, store or online only promotions, clearance offers, and offers from third-party marketplace sellers," the statement said. "It is unfortunate that Checkbook.org did not appear to take these factors into account before making its assumptions."

Macy's issued its own statement, according to an NBC story:

 

Macy's, in a statement, said pricing varies for each item, "based on the nature and seasonality of the merchandise, its family of business and customer response, among other things. Some items rarely go on sale prior to final clearance; others go on sale more frequently as part of promotional events."

Image source.

Discussion Starters:

• How are you influenced by advertised "sales"? 
• How believable do you find the two statements from 2015? What defense will the retailers bring to this suit?

Yahoo Responds to Data Breach (Again)

This is second post with the same title for BizCom in the News; the first was in September-just a few months ago.

For this data breach, the company again used Tumblr to communicate with users. This post has bold headings, but the messages are similar.

Reuters reports this is the biggest data breach in history, affecting 1 billion users. The stock dropped 6%,  and Verizon is renegotiating its terms to buy the company. Verizon has threatened to sue if Yahoo refuses to reduce the purchase price, 

The Reuters article quotes experts with harsh comments about the company:

• "Yahoo has fallen down on security in so many ways I have to recommend that if you have an active Yahoo email account, either direct with Yahoo of via a partner like AT&T, get rid of it." 
• "Considering the repeated cases of data theft, users should look more closely at which services they want to use in the future and security should play a part in that decision."

In addition to its blog post, a Yahoo spokesperson commented, essentially rephrasing part of the Tumblr post: "We're committed to keeping our users secure, both by continuously striving to stay ahead of ever-evolving online threats and to keep our users and platforms secure."

Discussion:

• How do you think this news will affect Yahoo users? Does it change your opinion of the company? Does the fact that Yahoo is a technology company influence your opinion?
• How well does the Tumblr post address users' concerns?
• Should the Yahoo spokesperson have said something different when questioned by the Reuters reporter? What might have worked better?

Is Sears Doomed?

Yahoo Finance sees little hope for Sears. For years, the retailer has been closing stores and now it seems to be on its last leg. Declining sales caused the company to close 80 stores in July and another 64 through December.

CFO Jason Hollar remains optimistic:

We understand the concerns related to our operating performance. We have fallen short on our own timetable for achieving the profitability that we believe the company is capable of generating. With that said, the team remains fully committed to restoring profitability to our company and creating meaningful value.

This next sentence is a lesson in business jargon:

We believe that our liquidity needs will be satisfied through the foreseeable future using the levers available to us through our portfolio of assets.

In other words, they still have stuff to sell off (like brands) to keep the company afloat-perhaps not the best strategy. A failing company that sells its profitable bits is taking a big risk. The CEO of a retail consultancy doubts anything can save the business:

[T]he funds raised are not being used to develop of growth the firm - they are being used to prop up an ailing and failed business.

In our view, it is now too late to turn this around. It is just not financially feasible to reverse it.

How long can this drag on? BizCom in the News posts in 2011 and 2014 also focused on Sears store closings.

Image source.

Discussion Starters:

• What are the Sears' executives communication choices at this point? They can continue to prop up the brand image, or . . . what are some other options? Assess the potential consequences of each
• Am I too harsh about Hollar's comment? If you were advising him to use simple or "plain" language, what would you suggest he say instead? You might consider a little emotional appeal as well.
• Hollar mentioned Kenmore as a potential sales opportunity. What's Sears without Kenmore?

Comms About the Oakland Warehouse Fire

Oakland city officials and others are commenting on the "Ghost Ship" warehouse fire that killed at least 36 people who gathered for a concert party. A refrigerator may have caused the fire, but the building was under investigation for illegal living areas and potentially hazardous garbage on the property. A press release from the City of Oakland gives some history:

The last permitted use of the building was as a warehouse. On November 13, 2016, the City of Oakland received complaints of blight and unpermitted interior construction at the building. On November 17, 2016, a City building inspector visited the property and verified the blight complaint, but could not gain access to the building to confirm the other complaint regarding unpermitted construction. This is an ongoing investigation.

Members of the police department, sheriff's office, and others held a news conference on Sunday: 

Reporting has been painful, as more bodies have been found, most people in their 20s and 30s. We don't yet know whether the warehouse owners or Ghost Ship managers will be charged. One of the managers, Derick Ion Almena, said of the tragedy: "They're my children. They're my friends, they're my family, they're my loves, they're my future. What else do I have to say?" Later, he posted, "Confirmed. Everything I worked so hard for is gone. Blessed that my children and Micah were at a hotel safe and sound ... it's as if I have awoken from a dream filled with opulence and hope ... to be standing now in poverty of self worth."

A New York Times article blames rising housing prices in the Bay Area and in other cities in the United States:

The victims died because they were trapped in a tinderbox. Yet the economic backdrop of the tragedy is also important because it shows how rising rents and fears of eviction can push vulnerable people in a desperate search for housing to unsafe spaces.

For some artists, Ghost Ship offered a rarity: a place to work and sleep. 

Image source.

Discussion Starters:

• Almena was criticized for his first comment, which sounded cold. What else should he have said?
• Assess the news conference speakers. What advice would you give them for improving crisis communications and presentation delivery?

Catchy "Save Our Snowmen" Campaign

The organization Cool Effect has a clever ad campaign, including a full-page in this Sunday's New York Times calling for a "Global Snowman Sanctuary."

 

In a video, Cool Effect takes a fun approach to bringing attention to climate change. The organization is using crowdfunding to support projects that reduce carbon emissions. A summary on the video explains:

More than 4,000 species of snowmen are threatened every year by climate change. In 2016 alone, large Avalanches of snowmen have been seen migrating thousands of miles away from their yards of origin to colder climates. With safe havens like The Global Snowman Sanctuary few and far between, we need your help to provide a cold shelter from the excruciating warmth. The planet can't wait and neither can they.

In an interview with the Yale Climate Connections group, Cool Effect CEO Marisa de Belloy said, "One differentiator from existing climate change conversation is our method of communication."

Discussion Starters:

• What's your reaction to the group's communication? How is it different from other climate change initiatives?
• What are the potential risks of this approach? Consider a few downsides and how the strategy might backfire.

Princess Cruises Admits Dumping

Princess Cruises, a division of Carnival, will pay $40 million in penalties for illegally dumping oil-contaminated waste into the ocean. The Department of Justice announced the news and called the activity "deliberate":

Princess Cruise Lines Ltd. (Princess) has agreed to plead guilty to seven felony charges stemming from its deliberate pollution of the seas and intentional acts to cover it up.  Princess will pay a $40 million penalty-the largest-ever criminal penalty involving deliberate vessel pollution-and plead guilty to charges related to illegal dumping of oil contaminated waste from the Caribbean Princess cruise ship.

Assistant Attorney General Cruden had harsh words for the company:

The pollution in this case was the result of more than just bad actors on one ship. It reflects very poorly on Princess's culture and management.  This is a company that knew better and should have done better.  Hopefully the outcome of this case has the potential not just to chart a new course for this company, but for other companies as well.

Princess Cruises responded extensively in a statement posted on the website, in an FAQ, and in videos from the company executives. The president's video blames a few employees. A comment posted on YouTube under the video sums up one response: "this video needs taking down and a new one with someone who looks sorry is put up. her reading of this is terrible, like watching a 12yr old at a school play."

Discussion Starters:

• Read the company's statement and watch the videos. How well do the executives respond to the crisis? What could they have done differently?
• Does this news affect your decision to take a Princess Cruise? Why or why not?

Olive Oil Companies Sue Dr. Oz

Dr. Oz is in trouble again for possible false claims. The TV personality is featured in the textbook in Chapter 9 for promoting products without evidence that they work. Now, an olive oil trade association, North American Olive Oil Association (NAOOA), is suing him for attacking the industry.

On his show, Dr. Oz said, "[A] shocking 80% of the extra virgin olive oil that you buy every day in your supermarket isn't the real deal," and "It may even be fake. Most of the olive oil in your pantry might be a scam." But Dr. Oz used taste tests, which Eryn Balch, a NAOOA representative said aren't an accurate way to determine product quality and purity.

A Forbes article explains the issue:

The problem with the study and its interpretation is twofold:  1) Sensory taste tests cannot detect purity and 2) The number of samples was small and hardly representative of the marketplace, testing only three specimens each of fourteen imported and five California brands. "It got misinterpreted, and it just spread," Balch said. Even the New York Times got it wrong, with an infographic claiming that 69% of all imported olive oils are "doctored," even though the Olive Center report showed no such thing. The Times eventually corrected its mistake but the damage was already done. "It's been five years now, and it's still spreading," Balch said.

Dr. Oz was most recently in the news because a group of doctors signed a petition to have him removed from his position at Columbia University Department of Surgery. He also made headlines for promoting a weight loss program without proven evidence. His impact is sometimes called the "Dr. Oz Effect" because his claims sell a lot of product.

Image source.

Discussion Starters:

• Dr. Oz will fight the suit, of course. What claims and evidence will he use to make his case?
• What does it take to convince you to buy a new product or stop buying a product you have been using? Consider principles from Chapter 7 on persuasion: logical argument, emotional appeal, and credibility. To which do you most respond?

South Korean President Mired in Scandal

With a dismal 4% approval rating, South Korea President Park Geun-hy is facing possible impeachment. The country is outraged, and people are calling for her resignation. The trouble involves the president's long-time friend, Choi Soon-sil, who was just indicted for fraud and abuses of power.

The Washington Post describes Park's relationship with Choi:

A famously aloof person, Park is accused of relying on Choi for everything from policy advice to wardrobe choices, instead of seeking counsel from her aides. Choi, the daughter of a shamanistic cult leader, is accused of exploiting those ties to raise money and win favors for herself and her family.

Choi used her influence to get companies to "donate" $70 millions; business leaders felt if they didn't contribute, they would be subjected to audits or other actions taken by the government. The prosecution for Choi determined that Park was heavily involved.

According to The Washington Post, the protests are the largest the country has seen since 1987, when South Korea democratized.

Image source.

Discussion Starters:

• What parallels do you see between this story and recent company scandals?
• How should we decide when it's time for a country or a company president to resign? Is it Park's time?

JPMorgan Found Guilty of Hiring Chinese Execs' Children

JPMorgan Chase will pay settlements worth $264 million for hiring the children of Chinese executives in exchange for business. A three-year investigation found that the hires constitute bribery, and five more banks are under investigation.

An SEC press release describes the findings:

According to an SEC order issued today, investment bankers at JPMorgan's subsidiary in Asia created a client referral hiring program that bypassed the firm's normal hiring process and rewarded job candidates referred by client executives and influential government officials with well-paying, career-building JPMorgan employment.  During a seven-year period, JPMorgan hired approximately 100 interns and full-time employees at the request of foreign government officials, enabling the firm to win or retain business resulting in more than $100 million in revenues to JPMorgan.

"JPMorgan engaged in a systematic bribery scheme by hiring children of government officials and other favored referrals who were typically unqualified for the positions on their own merit," said Andrew J. Ceresney, Director of the SEC Enforcement Division.  "JPMorgan employees knew the firm was potentially violating the FCPA yet persisted with the improper hiring program because the business rewards and new deals were deemed too lucrative."

A company statement is nowhere to be found. The major news articles don't include a company quotation, and neither the Press Releases or News and Announcements sections of the JPMorgan website list a response. 

According to a statement by the U.S. Department of Justice, the company has taken some internal action:

JPMorgan APAC also took significant employment action against six employees who participated in the misconduct resulting in their departure from the bank, and it disciplined an additional 23 employees who, although not involved in the misconduct, failed to effectively detect the misconduct or supervise those engaged in it. 

Discussion Starters:

• How does this happen inside an organization? Consider who is involved in hiring decisions-sometimes a lot of people.
• Should JPMorgan make a statement about the settlement? Complete an audience analysis before you decide, and consider why the company leaders might choose to stay silent.

Marriott CEO's Letter to Trump

Marriott CEO Arne Sorenson is the latest company executive to write about the election results. In an open letter on LinkedIn, Sorenson offers some leadership advice.

The letter starts with Sorenson's views about government's role:

"The government has no business in our bedrooms – or our bathrooms. Everyone, no matter their sexual orientation or identity, has a right to live without interference in their private lives. Similarly, everyone, no matter their sexual orientation or identity, gender, race, religion disability or ethnicity should have an equal opportunity to get a job, start a business or be served by a business. Use your leadership to minimize divisiveness around these areas by letting people live their lives and by ensuring that they are treated equally in the public square."

Sorenson then focuses on three areas: "infrastructure, immigration reform and tax reform." As a hotel manager, Sorenson clearly is concerned about potential reductions in global travel and talent. He also encourages a more realistic approach for immigrants who are already in the U.S.  

Discussion Starters:

• Why do you think Sorenson chose an open letter on LinkedIn as the medium for his message? What are some alternatives?
• What principles of persuasion, discussed in Chapter 7 of the book, does Sorenson use? Try to find examples of logos, pathos, and ethos.
• How does Sorenson's role as the CEO of Marriott influence his positions? Which of his suggestions would benefit hotel companies?
• Should Trump respond? If so, how, and what should he say?

Grubhub CEO: Agree or Resign?

The CEO of Grubhub had a tough message for employees who disagree with his anti-Trump sentiment: "you have no place here." After the election, Matt Maloney wrote an email about tolerance and inclusion. He expressed his disappointment in Trump's election, particularly his "demeaning, insulting and ridiculing minorities, immigrants and the physically/mentally disabled" and his "nationalist, anti-immigrant and hateful politics."

He went a step further at the end of the email:

"If you do not agree with this statement then please reply to this email with your resignation because you have no place here. We do not tolerate hateful attitudes on our team. I want to repeat what Hillary said this morning, that the new administration deserves our open minds and a chance to lead, but never stop believing that the fight for what's right is worth it."

Media reports and social media responses interpreted Maloney's message as a threat: anyone who voted for Trump should resign.

Maloney has responded that his email was misinterpreted:

"I want to clarify that I did not ask for anyone to resign if they voted for Trump. I would never make such a demand. To the contrary, the message of the email is that we do not tolerate discriminatory activity or hateful commentary in the workplace, and that we will stand up for our employees."

This distinction is important; otherwise, the company may be discriminating against people based on political views.

Discussion Starters:

• Read Maloney's full message to employees and his statement. How do you interpret his original message and the explanation?
• Should Maloney have sent the email to employees? What are the benefits and risks to the company and to him personally?
• Could Maloney have revised the email to avoid the controversy? How so?

Wells Fargo's New Commercial

Wells Fargo is trying to rebuild its image after facing the scandal that it opened accounts for people who didn't request them and weren't aware they had them. Until now, we heard little from the company, except an email to some customers and a full-page ad with plans that seemed quite basic.

A new, short commercial focuses on three points: fully refunding those impacted, proactively sending new account confirmations, and eliminating product sales goals. 

These actions are a bit more specific than what has been communicated in the past. However, a skeptic like me might say these steps are still the bare minimum that the company can do for customers. Also eliminating product sales goals, which arguably caused the trouble because they were overly aggressive, should have been done years ago, particularly now that we know employees had reported issues but were ignored or retaliated against.

Discussion Starters:

• Assess this commercial. Who are the primary and secondary audiences? What are the communication objectives? How well does the company achieve them?
• Consider the language choices. The three actions aren't quite parallel. What other changes could be made?
• What else should Wells Fargo do at this point to rebuild its image?

Christie Associates Found Guilty

Two former associates of NJ Governor Chris Christie were found guilty of causing traffic problems for political gain. In what has been called "Bridgegate," Bridget Anne Kelly and Bill Baroni conspired to close lanes on the George Washington Bridge in 2013 as retaliation against the mayor of Fort Lee. At the time, Kelly was Christie's deputy chief of staff, and Baroni was the deputy director of Port Authority. Previously, two other aides admitted guilt in relation to the scandal.

The most incriminating piece of evidence was an email exchange between Kelly and David Wildstein, who leaked the plan. The message is clear: "Time for some traffic problems in Fort Lee."

In a statement released after the verdicts, Christie says he's "saddened," but he continues to maintain his innocence.

Christie reiterated this point during an interview with CBS News.

But the verdict is bad news for Christie-and possibly for Donald Trump. On the stand during her trial, Kelly said that Christie knew about the plan, and text messages from another aide said he "flat out lied." Trump had named Christie to lead a transition team should he become president, and Christie is actively campaigning for Trump in these last days before the election.

Discussion Starters:

• Does this verdict hurt Christie's chance of maintaining his innocence? Why or why not?
• Assess his statement to the press. How effectively does he stay clear of the case and verdicts?
• What, if anything, should Trump do at this point? He didn't choose Christie as his vice presidential running mate, but he's clearly a Christie fan.

Giving Feedback to Someone Who Doesn't React Well

A new Harvard Business Review article offers tips for giving feedback to "people who cry, yell, or get defensive." No one likes to be on the receiving end of that behavior, but most managers will be at some point.

The author certainly doesn't suggest shying away from the feedback, which may be some managers' tendency. Instead, she asks managers to remind themselves to focus on the value of the feedback to the employee. Presumably the feedback will be useful to the employee's career. Being prepared also helps, as can staying calm in the moment and stopping the meeting to continue another time if things get too tense.

For emotional people, you might hold meetings at the end of the day and offer tissues. But hold your ground. If someone is yelling, you have every right to address it. The author suggests the following:

• "I need to have a conversation with you. I need you to lower your voice."
• "I need you to take a deep breath or we will have to reschedule this. This is not constructive."

More good advice in the article is for managers to, separately, address the employee's reaction, for example, "I notice every time we sit down to discuss feedback, you get [upset, angry, defensive]. I have your best interests at heart. What can I do to help you receive feedback with more openness? And here's what I need in these interactions." 

Emotions in the workplace aren't necessarily bad, and they are inevitable. Dealing with them in a humane, professional way may help build trust in an otherwise shaky relationship.

Image source.

Discussion Starters:

• Have you tried to give feedback to someone who gets emotional? What strategies worked for you?
• Have you been emotional when on the receiving end of feedback? What would help you maintain your composure?
• The image is from an article about positive anger in the workplace. What's your view of the researcher's perspective?

AT&T Defends Time Warner Deal

AT&T is planning to acquire Time Warner, and it's already facing skepticism. Critics say the deal will increase prices and reduce consumer choice. But AT&T CEO Randall Stephenson argues that they are trying to reduce prices, increase quality content, and increase innovation, for example, by creating new ad models. He promises to be a "head-to-head, nationwide competitor with the cable ecosystem."

In a press release, Time Warner CEO Jeff Bewkes' quote starts with enthusiasm about shareholders: "This is a great day for Time Warner and its shareholders." He goes on to discuss innovation:

"This is a natural fit between two companies with great legacies of innovation that have shaped the modern media and communications landscape, and my senior management team and I are looking forward to working closely with Randall and our new colleagues as we begin to capture the tremendous opportunities this creates to make our content even more powerful, engaging and valuable for global audiences."

Whether the deal would stifle competition concerns both Republicans and Democrats. Donald Trump said, "As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few." And Bernie Sanders tweeted, "The administration should kill the Time Warner/AT&T merger. This deal would mean higher prices and fewer choices for the American people."

Discussion Starters:

• How well did the AT&T CEO address concerns about the acquisition? What principles of persuasion did he use in the interview?
• Read Time Warner's press release. How consistently are the two companies speaking about the deal?
• What's your view? Do you think the acquisition would be bad for consumers as some people fear?

Wells Fargo Failing Damage Control

Wells Fargo has been embroiled in a scandal for weeks and is finally communicating directly with customers. In an email, the company didn't quite apologize, but it did acknowledge mistakes. An FAQ on the company's website says little more.

                         

An update on what we're doing to make things right   Dear [name omitted],   Over the last several weeks, you may have heard about the settlements we've made involving some of our customers receiving products or services that they did not want or request. We are deeply committed to serving you and your financial needs, and in those instances, we did not live up to our commitment. This is inconsistent with our values and with the culture we work hard to maintain. It's not who we are as a company. It's important for you to know that making things right and restoring the faith you have in us is the very top priority for our entire Wells Fargo leadership team. There is nothing more important than for you to experience the very best from us. Here's what we're already doing:   Putting your interests first: We have eliminated product sales goals for our Retail Banking team members who serve customers in our bank branches and call centers.   Proactively communicating with you: We send a confirmation after you open a new consumer or small business checking, savings, or credit card account so that you know what is happening and can tell us if anything we've confirmed is different than what you expected.   Full transparency: You can always see your eligible accounts any time when enrolled in Wells Fargo Online®.   Fixing what went wrong: We have provided full refunds to customers we have already identified and we're broadening our scope of work to find customers we may have missed. If we have any doubt about whether one of your accounts was authorized, and any fees were incurred on that account, we will contact you and refund fees.   If you have any concerns about your accounts or any aspect of your relationship with Wells Fargo, please come into a branch and speak with our team in person, or call us on our dedicated hotline 24/7 at 1-877-924-8697. We will continue to update wellsfargo.com/commitment to keep you informed. The trust you place in us means everything and we will work hard every day to earn your trust back.

The message may be too little, too late. Oddly, the email was sent within a day of CEO John Stumpf's resignation, but we see no mention of leadership changes. This may be a missed opportunity. In addition, these types of messages typically take a more personal approach: we would expect to see a signature at the bottom-an indication of someone taking responsibility for making things better, as the company promises. In addition, Wells Fargo has taken out full-page newspaper ads with the same four points as in the customer email.

In the meantime, the news is getting worse. More employees are coming forward saying they had complained about company practices but were ignored. Employees report extreme pressure to sell, and more news is surfacing about which customers were targeted, for example, immigrants with little English and older people.

A New Republic article, "Corporations Ignore Whistleblowers at Their Peril," includes the subtitle, "Wells Fargo could have saved itself some trouble by listening to employees." Employees report worse than being ignored: they suffered retaliation.

Discussion Starters:

• Assess the email to customers. How could the message be improved?
• What hope do you see for Wells Fargo? If you were the new CEO, what would you do now?

NFL's Image Problem

The NFL's image is further damaged by a New York Times article today titled, "N.F.L. Shows It Doesn't Really Care About Domestic Violence." The piece starts by highlighting declining viewership, for which the league blames the current election. Certainly, people are sensitized to sexual assault incidents, but the NFL isn't helping itself:

"Yet again, in the case of Giants kicker Josh Brown, the league has shown that it could not care less about women and really, really doesn't want to call out its players for doing bad things to them."

Tough words. But the Times explains that Brown "was charged with assaulting his wife" "more than two dozen times." After investigating the case for 10 months, the NFL decided to suspend Brown for only one game.

The Times also said the league blamed the victim: "Brown's wife had failed to cooperate, the league said, and that's why its investigators couldn't get to the bottom of what he had done."

People are voicing their dismay on Twitter, with the second tweet here retweeted almost 2,000 times.

Image source.

Discussion Starters:

• What's your view of the Times' headline: overstated, unfair, spot-on, or something else?
• To what extent do you think these assault issues are causing declining viewership?
• What should the NFL do to restore its image?

Communications About the Outage

The latest cyberattack left Netflix, Spotify, Amazon, Etsy, and other sites spinning and apparently deciding how much and what to communicate to users. Issues at Dyn, a host company, affected the others, and Dyn was communicating regularly during the outage.

Amazon, for example, seemed to communicate nothing at all in its press releases, on its blog or on its Twitter feed: all highlight company activities and products for Halloween.

Discussion Starters:

• Why would Amazon not communicate about the outage? Do you think this was a good decision? Consider the technology impact and responsibilities.
• Assess Dyn's communication. This isn't the traditional apology. How well does it work? Consider the audience and communication objectives in your response.

Samsung Trying to Control the Damage

Samsung is dealing with a tough situation: batteries in the Galaxy Note7 have been causing fires. Warnings to turn off Samsung phones are heard on many flights, including mine to Denver this weekend. As the BBC reports, "that sends out a negative message about your products beyond even your own customers."

The company handled the initial reports well but lost favor when its replacements overheated or burned. The BBC article explains the growing issue for Samsung:

"The trouble is that even one phone which catches fire makes for startling pictures and a whole heap of consumer anxiety. Samsung may soon have to decide whether to cut its losses and abandon the Note 7 before it does more damage to its brand."

The New York Times also reported on Samsung's poor crisis communication:

"But for people to see those words, they had to click a link at the top of Samsung's home page with the not-so-urgent label 'Updated Consumer Guidance for the Galaxy Note 7.' As of Tuesday afternoon, the instructions had not been posted to Samsung's Facebook page or the company's Twitter account.

"For some who work in crisis management, it was a baffling and overly passive way for the South Korean electronics giant to deal with a prominent problem that has worsened in the last month."

On its website, Samsung posted this message: 

Samsung Will Ask All Global Partners to Stop Sales and Exchanges of Galaxy Note7 While Further Investigation Takes Place

on October 11, 2016

 

We are working with relevant regulatory bodies to investigate the recently reported cases involving the Galaxy Note7. Because consumers' safety remains our top priority, Samsung will ask all carrier and retail partners globally to stop sales and exchanges of the Galaxy Note7 while the investigation is taking place.

We remain committed to working diligently with appropriate regulatory authorities to take all necessary steps to resolve the situation. Consumers with either an original Galaxy Note7 or replacement Galaxy Note7 device should power down and stop using the device and take advantage of the remedies available.

Discussion Starters:

• Look at Samsung's recent news statements about this situation. How well has the company handled communication on its website?
• How, if at all, do you see this issue potentially reflecting poorly on the mobile industry? What should other phone manufacturers do?

Nestle Recalls Ice Cream Cones

Nestle is recalling Drumstick ice cream cones because of Listeria concerns. The company posted a recall notice on its website:

After the introductory paragraph and explanation of product types recalled, the press release provides a Q&A. Questions include where Listeria was found (on equipment, not on the product itself), symptoms of Listeria, how the problem will be prevented in the future, etc.

The list includes two bold questions:

• "Why did it take so long for you to find this?"
• "This sounds like another Blue Bell situation with listeria in ice cream. Is your situation the same as theirs was?"

In response to the first question, the company wrote, "Unfortunately, an error occurred in logging receipt of the test result. We discovered the error during a subsequent review of records. As soon as we identified the error, we notified FDA and initiated the recall."

To the second question, the response is, "No. Each recall has its own unique facts. Except for the coincidence that our recall involved both ice cream and listeria, our situation is much different from Blue Bell's in a number of significant ways, including: (1) we have no listeria findings in the ice cream itself (just the equipment); (2) we have only one product line affected; (3) we have only one facility affected; and (4) we self-identified this event and took precautionary steps to recall product."

Discussion Starters:

• The two questions identified here are risky. Explain the risks and why the company may have chosen to include the questions.
• How do you assess the question about Blue Bell? How does the response help, instead of hurt, Nestle's image?