Kraft Heinz Withdraws Unilever Bid

Kraft Heinz won't acquire Unilever, after all, the two companies announced in a joint press release. The news sent ripples through Unilever's stock, which fell 7% after rising 13% on the initial news. 13%.

The original bid was for $143 million, but Unilever's response wasn't enthusiastic, claiming the price "fundamentally undervalues" the company. Ken Shea, a Bloomberg analyst questioned the whole deal: "The strange episode suggests that Kraft Heinz acted a bit hastily with its takeover plan, and evidently did not think it fully through. Also, the timing and size of the bid-coming just after its earnings conference call on Wednesday last week, in which it downplayed the need for acquisitions-likely leaves their Wall Street credibility diminished."

Image source.

Discussion:

• How does the withdrawal reflect on Unilever? Kraft Heinz?
• What's your view of the joint statement? Why would the two companies take this approach?

Ralph Lauren Loses CEO and Value

Ralph Lauren CEO Stefan Larsson resigned over what the Chicago Tribune calls a "creative clash" with the company founder. The company is struggling to maintain sales as its preppy style appeals to an older crowd, and the brand hasn't found a way to attract new customers.

In a statement, founder Ralph Lauren said, "We both recognize the need to evolve. However, we have found that we have different views on how to evolve the creative and consumer-facing parts of the business. After many conversations with one another, and our board of directors, we have agreed to part ways."

In retrospect, perhaps Larsson was a tough fit: he came from Old Navy, which is a budget brand. He was quoted in the company's press release: "In June, we announced a plan to refocus the Company on what made it iconic, evolve that for today and build our brand to its full potential. That plan is on track—I am proud of the progress the whole team has made and I am committed to ensuring its uninterrupted execution. Ralph will always be an inspiration to me, and I am grateful to have had this experience."

Lauren also said, "The board and I are committed to the execution of the Way Forward Plan and continuing to move our business and iconic brand forward."

The stock fell 12% after the news was announced.

Image source.

Discussion:

• Read Ralph Lauren's press release. How well does the message convey what happened? Does reading the release enhance or diminish the image of the brand in your eyes?
• Assess Larsson's quotation in the release. How well does he explain his own performance while maintaining the company's brand?

Announcement of Retail Store Closings

Several retailers are in the news for store closings: The Limited, Macy's, and now Ten Thousand Villages. Obviously, the latter is a small operation, but this one landed in my email because I've been on our local board of directors for the past four years. Ten Thousand Villages is a non-profit, fair trade organization.

For all of these companies, the news is not surprising. Sales have been declining fairly steadily, with brick-and-mortar stores finding it increasingly difficult to compete with internet sales.

Communication from Carl Lundblad, Interim CEO Ten Thousand Villages

Since our founding in 1946, Ten Thousand Villages has existed to fulfill one important mission: creating opportunities for artisans in developing countries to earn income by bringing their products and stories to our markets through long-term fair trading relationships.

As a fair trade leader, Ten Thousand Villages is committed to the future sustainability of this mission. To that end, we will take a number of actions to simplify our operations in 2017, including closing 12 company-owned stores and reducing staffing at our office headquarters and warehouse by approximately 20 positions.

Though critically necessary, these decisions have been difficult. We are profoundly grateful for the contributions of stores and staff in growing fair trade across the country and changing lives around the world. It is this legacy that we will build on as we move forward, reaffirming ourselves as fair trade pioneers- still committed to business that is ethical at every step, still rooted in our founding principles of selling product and telling stories of social and economic empowerment.

With support refocused on growth opportunities and initiatives to improve core operations, we can be more responsive to the market and ultimately better positioned to help artisans in developing countries in meaningful ways. Thank you for supporting our mission. We look forward to your continued partnership as we evolve into a stronger Ten Thousand Villages.

Chris Oliver
Alliance Manager

The message includes the basics: the bad news, a bit about the decision process, and plans for moving forward.

Discussion:

• Where is the news in the announcement? How well does the organization work?
• After reading this message, how optimistic would you feel about the company's future? Why?
• Assess the announcement against additional principles of bad-news messages in Chapter 8. What works well, and advice would you give to Chris Oliver to improve the message?

Comms About the LIRR Accident

A Long Island Rail Road train derailed at the Atlantic station in Brooklyn, leaving 76 commuters injured. I never expect much from MTA communications: the last few train problems resulted in a flurry of scheduling messages but little in the way of empathy. This time seems no different.

A notice on the LIRR website and one tweet warn us to "anticipate possible delays," but subsequent tweets offer no other information or apology. A news conference, so far, is not to be found, but it's still early.

When the MTA has expressed empathy, it has taken a while, so we may see something later, and I'll update this post.

Discussion:

• As a priority, customers do need to know about delays, but why does the human stuff take so long for the MTA?
• Why is humanity important in these types of situations?
• Draft a few tweets and website updates. What could the organization say at this point?

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?

Communications About Train Derailment in India

More than 140 people died, and dozens more were injured when a train derailed in Uttar Pradesh State, India. Although the cause isn't yet determined, one theory is a crack in the rail, which may be one of dozens on the country's tracks.

Railway Minister Suresh Prabhu visited the site and said, "Right now the immediate priority is rescue people and to bring relief to those injured and that's what we are doing." He later gave a statement to a reactive audience.

According to a CNN report, the train system employs 1.3 million people and serves 23 million passengers every day. The rail system has been criticized for poor maintenance: 

India's sprawling rail system is state-run, and the government is being heavily criticized on the nation's television networks. The rail system is known to be poorly maintained, and upgrades have been long overdue. In its last budget, the government put aside large sums of money to modernize the system, to improve traffic lights and lay more rail tracks.

According to a BBC report, "Train accidents are fairly common in India, where much of the railway equipment is out of date. An accident in Uttar Pradesh in March last year killed 39 people and injured 150." In 2014, 27,581 people died in train-related accidents in India. 

Discussion Starters:

• How would you describe the setting where Railway Minister Suresh Prabhu is speaking? How does this compare to similar situations in the United States?
• What should Prabhu say in his statement?

Layoffs at Twitter

Twitter is laying off about 9% of employees and closing Vine, the short video app it purchased in October 2012 before it launched. When Instagram offered video options, Vine immediately lost much of its user base. About 350 employees are affected.

Layoffs are awkward for Twitter, a site sometimes used for "live tweeting" bad news. In this case, a former employee created a Twitter Moment, "Last Day at Twitter." Exiting employees also used the hashtag #TwitterLayoffs. This could be risky for a company, but the posts are positive. It could be that employees enjoyed their time at Twitter and understand the rationale for layoffs. It could also be that employees are in high demand from other companies, so they won't be out of work too long.

Discussion Starters:

• Why do you think employees tweeted nice messages on their last day? I offered two theories. Any other ideas?
• Should the company have created its own hashtag for the event to pre-empt something worse? Why or why not?

Wells Fargo CEO Steps Down

It was probably just a matter of time. Wells Fargo CEO John Stumpf announced his retirement in the wake of a bank scandal that brought the CEO in front of the federal government  and brought the company millions of dollars in fines. Stumpf will walk away with about $134 million as his retirement package (although no additional severance pay). According to The Wall Street Journal, the board didn't try to convince Stumpf to continue on.

In a news release, the company included quotations from Stumpf and from the new executives. Stumpf quote read, "I am grateful for the opportunity to have led Wells Fargo. I am also very optimistic about its future, because of our talented and caring team members and the goodwill the stagecoach continues to enjoy with tens of millions of customers. While I have been deeply committed and focused on managing the Company through this period, I have decided it is best for the Company that I step aside. I know no better individual to lead this company forward than Tim Sloan."

A Slate writer called the news "a stunning fall for a banking leader who had helped guide Wells Fargo through the financial crisis and lead the company through its acquisition of Charlotte-based Wachovia." A New York Times writer called Stumpf's resignation "abrupt." 

Discussion Starters: 

• Do you agree with the reporters' language? Is this a "stunning fall" and an "abrupt departure"?
• Is Stumpf's retirement the right decision for the company at this time? Why or why not? What did the board of directors likely consider in encouraging-or at least accepting-his retirement?

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?

News Conference About the NJ Train Crash

One person was killed and 108 were injured when a train crashed in Hoboken, NJ. What caused the crash is still unclear, and NJ Governor Chris Christie promised an investigation: "We have no indication that this is anything other than a tragic accident but ... we're going to let the law enforcement professionals pursue the facts."

Christie gave a news conference with NY Governor Andrew Cuomo, calling the incident "obviously an extraordinary tragedy." He said it was too early to guess what happened.

• Analyze Christie's delivery skills at the beginning of the press conference. What principles from Chapter 11 does he use?
• Next analyze Cuomo's delivery skills. What similarities and differences do you notice?
• How well do the governors respond to questions? Which were the most difficult to address?
• This isn't the first train crash in the area. Research other recent events and how officials handled those situations.

More Recalls at Blue Bell

Just when we thought the trouble had passed for Blue Bell Creamery, the company is recalling Cookie Dough ice cream because of Listeria concerns. Last year, Blue Bell recalled several products, which resulted in staff layoffs, a difficult situation for a family-owned company with loyal employees.

This time, the company is clearly blaming external supplier Aspen Hills. The latter company's recall announcement tops Blue Bell's webpage. Then, Blue Bell's press release is titled to deflect responsibility:

"BLUE BELL ICE CREAM RECALLS SELECT PRODUCTS CONTAINING CHOCOLATE CHIP COOKIE DOUGH PIECES PURCHASED FROM OUTSIDE SUPPLIER ASPEN HILLS DUE TO POSSIBLE HEALTH RISK"

Blue Bell uses a similar strategy on its Facebook page, pointing to Aspen Hills as the cause of the problem. To downplay the issue, the company starts the announcement with "Out of an abundance of caution," further putting the bad news in context. 

Discussion Starters:

• Who are the audiences for Blue Bell's announcement? Identify primary and secondary audiences and analyze each.
• How well is Blue Bell announcing the bad news? Consider principles from Chapter 8, Bad-News Messages.
• Analyze word choices in all Blue Bell communications. Which are the most powerful? Which could be improved?

Yahoo Responds to Data Breach

More than 500 million Yahoo users were affected by a security breach, just as the company is being acquired by Verizon. The breach happened in 2014, and information is surfacing now.

In a Tumblr post, Yahoo explained what information was stolen (and what was not), what the company is doing, and what individuals should do to protect themselves:

"The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. The ongoing investigation suggests that stolen information did not include unprotected passwords, payment card data, or bank account information; payment card data and bank account information are not stored in the system that the investigation has found to be affected. Based on the ongoing investigation, Yahoo believes that information associated with at least 500 million user accounts was stolen and the investigation has found no evidence that the state-sponsored actor is currently in Yahoo's network. Yahoo is working closely with law enforcement on this matter."

A Wired article offers this advice: "And for the millionth time: Don't reuse passwords." Wired also discussed the bad timing: "Yahoo's buyout deal is set to become a test case of whether a massive corporate sale can weather an equally massive hacking debacle."

Discussion Starters:

• Read Yahoo's statement. What principles from Chapter 8, Bad-News Messages, are followed?
• How well does Yahoo reassure users? How clearly are the action steps explained?

ITT Closes and Leaves Students in Limbo

The U.S. Education Department has stepped up its regulation of for-profit institutions, and ITT hasn't fared well. The government cut federal aid for new students attending ITT schools, and the organization has decided to close the entire operation-130 campuses across 38 states. More than 35,000 students and 8,000 employees will have to find new a place to study or work.

A non-profit sector research analyst was quoted in the LA Times: "Both Corinthian and ITT made the same bad decision, which was to guarantee third-party private loans while pushing out more students into a weak jobs market after the Great Recession."

The New York Times reported a host of questionable practices at ITT for years:

"[Critics] reported deceptive marketing; strong-arm recruitment tactics; misleading information about costs, courses, graduation and job placement rates; inflated enrollment numbers; bait-and-switch schemes; subpar instruction; and more."

A former dean was troubled by ITT's practices but got fired when he raised issues.

U.S. Education Department Secretary John B. King Jr. said, "The school's decisions have put its students and millions of dollars in taxpayer-funded federal student aid at risk." He explained the Department's perspective and provided resources to students in a blog post, shown here. Students also can participate in a webinar to learn more.

ITT, of course, is blaming the government, calling its actions "unwarranted" and "inappropriate and unconstitutional." 

Discussion Starters:

• Compare ITT's statement and King's message to students. What differences do you notice in audience focus, tone, messaging, organization, and so on? 
• What other information do you think students will need? What about employees?
• How could ITT more convincingly defends its position?

British Airways Apologizes for Delays

Computer issues plagued Delta recently, and now British Airways is feeling the pain. Tens of thousands of customers have been delayed while checking in, dropping off luggage, and waiting to take off. Frequent fliers may remember similar delays in July, when the airline was upgrading its check-in system. This time, an IT issue shut down some systems, causing staff to hand write boarding passes.

The airline apologized for the delays, admitting that processes have been "taking longer than usual": "We are sorry for the delay to their journeys." Although passengers were actively complaining on Twitter, the company had little to say online. The Twitter page has only one reference to the delays-after the issues were resolved.

But some customers did receive a letter, posted in an NBC article.

 

Discussion Starters:

• Assess the letter to customers. What principles of letter writing and bad-news messages does the airline follow in this communication? What would improve the letter?
• What word choices and other aspects of the letter tell you it's British? Why did the airline chose this method of communication?
• What else, if anything, should the airline have communicated on social media?

JetBlue Temporarily Loses a Child

A woman paid $100 for JetBlue to safely escort her five-year-old son from the Dominican Republic to JFK airport in NYC. But her boy was sent to Boston, in exchange for another boy who landed in JFK., according to The New York Times. JetBlue issued a statement:

"On August 17, two unaccompanied children of the same age traveling separately from Santiago, Dominican Republic - one to New York JFK and one to Boston - each boarded a flight to the incorrect destination. Upon learning of the error, our teams in JFK and Boston immediately took steps to assist the children in reaching their correct destinations. While the children were always under the care and supervision of JetBlue crew members, we realize this situation was distressing for their families."

The JetBlue representative also said, "We are also reviewing the incident with our leadership and Santiago airport team to prevent similar situations from occurring in the future." The company refunded the child's ticket and gave the family $2100 is vouchers for future flights.

On a webpage, Families in Flight, JetBlue gives parents tips for traveling with children, including a page with pick-up and drop-off requirements for "kids flying solo."

Image source.

Discussion Starters:

• How did JetBlue handle the situation? Consider the statement and compensation. Should the company have said or done something differently?
• Since this writing, we haven't heard anything about the other boy, which may start a new round of news stories. What, if anything, should JetBlue say at that time? The company should be preparing for it.

Data Breach Affects 20 Hotel Properties

Twenty HEI properties suffered a data breach of payment information. HEI is a hotel owner/operator and has branded hotels under Marriott, InterContinental, Starwood, and Hyatt.

HEI posted a list of the properties, which includes an Equinox, two Le Meridiens, six Westins, and others. The company also posted a notice on its website.

Individual hotels don't seem to be communicating much; for example, the Boca Raton Marriott and Westin Philadelphia websites aren't displaying the typical breach notices. These brands may be smart to leave the trouble with HEI.

Discussion Starters:

• What's your assessment of HEI's message? What principles of business writing are followed? Who is the audience, and how well are their needs met?
• What are the most important messages for customers to hear after a data breach?
• Should individual properties do more? Why or why not?

Huffington Steps Down

After building Huffington Post into a significant brand and news source, CEO and founder Arianna Huffington is leaving the company after 11 years. The company was sold to AOL 2011, and then Verizon acquired AOL in 2015. Huffington stayed on since but has become less visible in the company.

Now, she's starting a venture, Thrive Global, which focuses on employee well-being and is based on two books she's written. She explains the decision:

"As Thrive Global moved from an idea to a reality, with investors, staff, and offices, it became clear to me that I simply couldn't do justice to both companies."

The New York Times reports her position at Verizon as "increasingly precarious." The liberal news site has become a smaller part of a global media company, and perhaps the voice has been shrinking, particularly with Verizon's recent purchase of Yahoo. 

Huffington tried to reassure staff, who have been leaving the company steadily for the past year:

"Great companies always succeed beyond their founder. Even though HuffPost bears my name, it is absolutely about all of you and about this amazing team we've been for over 11 years."

AOL CEO Tim Armstrong also tried to do his part:

"Today, The Huffington Post is a firmly established and celebrated news source, and AOL and Verizon are committed to continuing its growth and the groundbreaking work Arianna pioneered."

Discussion Starters: 

• What else could Arianna Huffington, and perhaps the executives at Verizon, say to reassure HuffPost employees? They are likely concerned about their future without the founder at the helm. 
• In her statement, Huffington talks only about her new wellness company. Should she say more about the company's position within Verizon? Why or why not?