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Crisis management of maggie ban in india

Nestle Maggie Noodles Ban in India 2015 – An insight to the Crisis Management strategies

Introduction and background

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Maggie is a well-known brand when it comes to instant noodles. Maggie became a product of Nestle in 1947, originally it was founded by Julius Maggi in 1872 in Switzerland. Maggie reached India in 1983 and was an instant success as it was completely a new food category- instant noodles, for Indian consumers. Maggie contributes a big proportion in the profits of Nestle India Ltd, a subsidiary of Nestle, the Swiss Company.

Nestle has been a victim of several controversies like, child slavery in its cocoa suppliers’ premises, water crisis in California and the one which is part of discussion here is , the presence of Monosodium Glutamate (MSG) in Maggie noodles and presence of lead beyond permissible levels. This controversy started in India when the food inspectors were looking for adulterated food in small town in north India and this resulted in complete ban and removal of all 35″,000 tons of product off the retail shelves in June 2015.

Facts of the matter

The labelling on Maggie packs- ‘ No added MSG’ stood false and violating Indian standards as MSG was found to be there in the test. Nestle appealed that it was due to the natural process and it was not added. After that the sample were sent to central Food Laboratory which confirmed the violation of labelling rules as well as the presence of high lead content of 17.2 ppm(parts per million) against the permissible limit of 2.5 ppm. So the issue of wrong labelling turned into a major crisis for Nestle questioning its credibility for its other food products as well.

Managing the situation

What was done?

As a first attempt Nestle held a press conference explaining their stance to FSSAI (Food safety and standards Authority of India). They claimed that the high lead content was due to the fact that sample packets were kept open for a long time. This argument was refuted because they failed to elaborate on this as to how this could have happened.

The company went to Bombay High Court for relief. At the same time, samples were sent for testing to FDA, in US. It was then the Bombay High Court struck down the ban from Maggie when the reports from FDA showed no dangerous levels of lead in it. The court also put into question the ban and the credibility of tests. It ordered to test it again in NABL (National Accreditation Board for Testing and Calibration Laboratories). 90 sample were tested and all were clear.

Nestle started campaigning to get back the trust of its customers which was shaken and in most cases lost.

What went wrong?

As the theory provided by Coombs (2007), the process of crisis management can be divided into three phases namely, pre-crisis, crisis response and post-crisis. The company definitely failed on the front of pre-crisis preparation and prevention. As there was;

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Inadequacy in prompt action: The company did not have a plan of action to face this crisis. Not only this, the company landed in a grave situation by denying the presence of lead and MSG. Because it was then the customers relented when the results of various tests turned out to be unfavorable for Maggie.

Also the crisis response was inappropriate and it failed to weigh different options as regards to response, which further aggravated the situation;

Inefficient PR Crisis Management: Crisis is an unexpected event that threatens to disrupt an organization’s operations and poses both a financial and a reputational threat (Coombs, 2007 p. 164). Crisis communication is an important part of crisis management.

Inadequate communication: The company took an egoistic stance instead of addressing the consumers and trying to persuade them.

Though, post-crisis when APCO worldwide was hired, campaigning was started to win back the trust of customers. And by far the company has been able to do so as the current market share of Maggie in the instant noodles market is above 60% as against the 75% pre-crisis.

“We are little over 60 per cent (market share). In business terms, we are almost back to where we were (in terms of pre-crisis). In value terms, we are almost back there”,” said Nestle India Chairman and Managing Director Suresh Narayanan.

(Source: https://www.thehindubusinessline.com/companies/maggi-attains-over-60-market-share-touches-pre-crisis-level/article24613916.ece)

The ideal course of action

The company should have worked on the lines of Image restoration theory which says that there are five response strategies in case of crisis: denying charges, evading responsibility, reducing the severity of offensiveness of a wrongful act, taking corrective actions and admitting and asking for forgiveness (Coombs, 2007). Though in this case, the company had not committed the offence so there was no point hiding it but the clear denial at the initial stage only aggravated the matter for Nestle as the samples were sent for further testing and results were much worse than expected. But at the very first instance when the issue of wrong labelling came up, it should have paid a nominal fine and amend the labels.

Perceptual strategy: India is a country where it has high power distance, low indulgence, low uncertainty avoidance, a balanced individualistic- collectivistic orientation and a moderate long term orientation as major cultural attributes (Hofstede, n.d.). Low uncertainty avoidance was the main attribute which played its part over here and some people supported Maggie throughout the course and eventually it paid off. Also, in its communication with public at large, the company focused on clearing its position rather than focusing on consumer point of view. It failed to tailor its communication as per the needs of the consumers as regards the collectivism trait. The people were using social media as a major source for sharing and getting information and really relied on the content. The company should have taken that into mind and used that medium to persuade its audience. It could have made the manufacturing process viral because it’s not that everyone can go and visit the manufacturing units of the company. But the company missed out on this front as it failed to understand and identify the platform on which this communication could take place.

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Persuasion:

The following video is about the press conference held by Nestle and shows the reaction of the Nestle’s Global CEO Mr. Paul Bulcke, after they got clear test results from other labs. In this communication, there is a confidence to persuade, which can be seen but at the same time, the tone of voice shows signs of doubt and fear.

https://www.youtube.com/watch?v=47FheMP3g1o&t=71s

The stimulation of existing beliefs must have happened in the first press conference where the company could have come up with an instant plan of convincing its audience. Of course this happened, but at a later stage. The company directed its communication to persuade the audience for continuance after the removal of ban orders from the High Court. But at this stage it was a difficult task. So the company took the help of a US based PR agency APCO Worldwide.

Toulmin’s three part rhetorical strategy:

The statements passed in a speech depend so much on the external factors and the audience as well. The arguments made by the company were valid enough, but it did not put much attention to the timing. As those statements were made when the consumers were in shock and awe of the fact that the trust of almost 30 years was at stake and the lame statements were not soothing enough. The claims were there, data followed, but it lacked the component of warrant during the crisis.

The company could have worked upon emotional aspect of its relationship with consumers, working on the lines of Aristotle’s ethos, logos and pathos strategy. By that time the company had around 80% of instant noodles market share in India, before the happening of such an unfortunate event. That means the consumers were tied up emotionally as well with the company as with the entrance of various other brands, the company had such loyal customers that they did not shift. The communication must have been directed towards the emotional front rather than the argumentative one.

Strategy of argument by authority:

Though the company did right in going to Bombay High court for a testimonial of its statements. But the time had a major role to play. The bad news spread more easily and that is exactly what happened in case of Nestle. Much of harm had been done before the High Court cleared the charges and blames against the company.

Clearing out rumors

Coombs (2014) suggests that managers have to come up with solutions for handling rumors or misinformation. As in case of Maggie, the rumor may be spread by an evil employee or a competitor, one cannot say. But there must have been a plan in place for such unfortunate events. As the due to the lack of evidence and proper communication with the consumers, the company had to put its stock on fire and also had to pay fines. Mohan Limaye says that an explanation is vital for any negative news or message as it is an ethical and moral requirement. And also the communication should be directed towards the solution to the problem.

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Role of Media

Lerbinger (1997) and Feran-Banks (2001) put emphasis on the relations with media at the time of crisis. As it is clear that company was not prepared for it. But it could have handled media in a better way. Media relations constitute a big part of Public Relations. The message was clear, but very blunt. The lack of support from media was a major contributor in this management failure. Social media took a toll to make matters worse. For this the company could have created a website to put all the live content and other proof of transparency. This could have really helped it holding the customers.

Conclusion

The aforementioned discussion certainly points out that mere denial of the charges does not solve the purpose, sometimes the acceptance at an initial stage may save. Though the court questioned the credibility of initial test results, but the harm which was done was beyond repair. The company lacked both on the communication and management part. The communication was not aimed at persuasion and the company was unable to manage the situation in a prompt way. By the time, allegations got clear, it had lost almost all of its market share and the confidence of consumers as well.

Bibliography

Dr. Gomathi D. and Muruganantham S. (2016).An overview of Maggie Noodles on and off the shelves in India, India Journal of Research, 5(1) pp 143-144

Dhanesh, Ganga & Sriramesh, Krishnamurthy (2017). Culture and Crisis Communication: Nestle India’s Maggi Noodles Case. Journal of International Management. 10.1016/j.intman.2017.12.004.

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Rev. 10, 163–176. http://dx.doi.org/10.1057/palgrave.crr.1550049.

Coombs, W.T., 2014. State of crisis communication: evidence and the bleeding edge. Res. J. Inst. Public Relat. 1 Retrieved from. http://www.instituteforpr.org/state-

crisis-communication-evidence-bleeding-edge/, Accessed date: 8 December 2017

Coombs, W.T., 2007. Protecting organization reputations during a crisis: the development and application of situational crisis communication theory. Corp. Reput.

Rev. 10, 163–176. http://dx.doi.org/10.1057/palgrave.crr.1550049.

Coombs, W.T., 2014. State of crisis communication: evidence and the bleeding edge. Res. J. Inst. Public Relat. 1 Retrieved from. http://www.instituteforpr.org/state-

crisis-communication-evidence-bleeding-edge/, Accessed date: 8 December 2017

Coombs, W.T., 2007. Protecting organization reputations during a crisis: the development and application of situational crisis communication theory. Corp. Reput.

Rev. 10, 163–176. http://dx.doi.org/10.1057/palgrave.crr.1550049.

Coombs, W.T., 2014. State of crisis communication: evidence and the bleeding edge. Res. J. Inst. Public Relat. 1 Retrieved from. http://www.instituteforpr.org/state-

crisis-communication-evidence-bleeding-edge/, Accessed date: 8 December 2017

Coombs, W.T.(2007). Protecting organization reputations during a crisis: the development and application of situational crisis communication theory. Rev. 10, pp.163–176. http://dx.doi.org/10.1057/palgrave.crr.1550049.

Coombs, W.T., 2014. State of crisis communication: evidence and the bleeding edge. Res. J. Inst. Public Relat. 1 (Retrieved from. http://www.instituteforpr.org/state-crisis-communication-evidence-bleeding-edge/, Accessed date: 8 December 2017)

Hofstede, G. (n.d.) What about India. Retrieved from. https://geert-hofstede.com/india.html

Fearn-Banks, K. (2001). Crisis communications: A casebook approach. (2nd ed.). Mahwah, NJ:

Lawrence Erlbaum. (pp 63-71)

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http://indianexpress.com/article/india/india-others/ban-on-maggi-lifted-bombay-hc-orders-fresh-test-of-noodle-samples/

http://indiatoday.intoday.in/story/bombayhigh-court-removes-ban-on-maggi/1/458266.html

https://www.thehindubusinessline.com/companies/maggi-attains-over-60-market-share-touches-pre-crisis-level/article24613916.ece

http://indianexpress.com/article/business/companies/maggi-noodles-back-in-market-nestle-india-ties-up-with-snapdeal-for-online-rollout

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