Who won the Danone boycott?

"A boycott is the last remaining form of political action in a society where money has profoundly perverted the democratic system."- Website supporting the 2001 Danone boycott.

by Henri-Claude de Bettignies, Marc Le Menestrel and Mark Hunter
Last Updated: 23 Jul 2013

In late 2000, Groupe Danone, one of Europe's biggest food and beverage conglomerates, enjoyed one of the best popular images of any company in France. Its exceptional reputation had originated with the late Antoine Riboud, the group's founder and one of a rare breed of French "leftwing bosses".

Riboud had created a company ethic of deep concern for employees. His son and successor, Franck Riboud, maintained that tradition in the late 1990s, as Danone expanded internationally while rationalising operations. Throughout this process, Danone was well recognised by stakeholders as a model of labour relations.

That reputation was threatened in 2001, as Adjunct Professor Mark Hunter, Visiting Professor Marc Le Menestrel and the Aviva Chaired Professor of Leadership and Responsibility Henri-Claude de Bettignies recount. That January, a management study of the possibility for cutting back capacity in Danone's European biscuit operations was leaked to the press, where it was described as an ineluctable reality.

In line with French law, which required the firm to discuss any plans with unions before addressing the public, Danone remained silent as a consensus hostile to the firm took shape. Like Michelin, another major French firm that had rationalised its plants while earning significant profits, Danone was accused of sacrificing workers to the demands of the financial markets.

When Danone was finally ready to announce its plans in March, including severance package proposals going well beyond what was mandatory under French law (as was typical at Danone), it nonetheless found itself facing a nationwide boycott and labour unrest, fuelled by unrelenting media coverage and political opportunism in an election season. Instead of a 'social conflict', as strikes are often called in France, Danone confronted an unprecedented societal clash.

Hunter, Le Menestrel and de Bettignies consider the dynamics and outcomes of what one French daily newspaper aptly called the country's first 'political boycott'. The 'A' case finishes as CEO Franck Riboud prepares himself to address worried shareholders and avid reporters, at a moment when rumours credit the boycott with serious impact on Danone's sales in France.

The 'B' case demonstrates the initial successful results of Riboud's communication efforts. However, as illustrated in the 'C' case, the crisis had persistent and measurable effects, as key stakeholders questioned management's strategy.

Taken together, these cases are an exploration of ethical crisis communication that goes well beyond the classic issues of transparency and disclosure. They reconstitute an environment where perceptions are as meaningful as facts, and management's every decision is subjected to immediate response from a wide spectrum of powerful actors.

The study thus opens ground for discussion of how managers can use ethics as an effective means to understand the risks and costs of their options and decisions.

INSEAD 2006

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