Memo from: Larry Smith, CFO

To: Charles Todd, CEO

Dear CT, on Monday, I sent you invitation letter to the corporate conference, and now I look forward to our soonest meeting. The initial idea of the conference lies in the discussion of the revival strategy of Nestlé Company and the prevention of all the negative aspects, which it can cause. The Greenpeace environmental group published a video about Nestlé’s forests clearing for palm oil production in such a way causing remarkable damage to our brand reputation. Therefore, it is necessary to discuss the necessary actions for reducing negative publicity in the time of our recovery.

The problem appeared when Greenpeace published the social campaign against our unsustainable forest cutting for palm oil. Though we had never faced such issue before, we reacted instantaneously. According to the copyright, we withdrew the video from YouTube. Unfortunately, this action caused a wave of criticism among our consumers, and was followed by another campaign placed by Greenpeace on Vimeo that in a few hours had 78,500 views. Consequently, the aim of the conference is to search for the substitutes of the palm oil for our production as well as transform this reputational risk into an opportunity.

You will receive more detailed information at the personal meeting, but it is important for me now to share with you some elements of our strategic concept. First, we will suspend our energy supply from Sinar Mas and have a negotiation with Greenpeace activists on finding a compromise. Then, Nestlé will orient efforts to the sustainability of the palm oil suppliers and make contracts with the most reliable providers. Instead of controlling the discussions in the social networks, we will take part in the environmentally friendly project, such as the International Roundtable of Sustainable Palm Oil, where we expect to find new partners. I sincerely hope you will admit that this approach is suitable for the general strategy of our company.

1. Nestle will eliminate the initial causes of the problem as well as set the strategic partnership with the environmental groups.

2. A new tendency for the environmental sustainability will assist in promoting the company’s brand name towards better reputation among customers.

3. The participation in the international events will positively influence the investment attractiveness of and partially refund the losses from the Greenpeace’s campaign.

On the other hand, I am concerned with the possible difficulties that may appear in the process of implementation of these concepts. We have to break the current agreement with Sinar Mas and pay appropriate compensation for it. Another concern is that not all of the senior managers will support the changes in the company’s long-term plans. As a result, there will be a high risk of the conflicts of interests within our company. The customers may be suspicious about renewed production strategy of Nestlé, and may further delay purchasing of the brand’s foods.

1. There is a high risk of losing one provider and the possibility of retention in energy supplies of another.

2. The challenges in the corporate strategy can lead to misunderstanding between the senior executive officers of the company.

3. Damaged trustworthiness is hard to regain in the short period of time. Therefore, Nestlé has to use its financial reserve to increase the total expenditures and avoid the rapid decrease in its profits.

To conclude, I expect this set of strategies to improve our brand reputation and help us to return to the previous sales level. Obviously, it is important to change the concept of Nestlé’s production into environmentally sustainable one and establish contacts with the new partners in our green business. Regards, Larry Smith.

References

Ionescu-Somers, A., Hitlin A., E., & Tan, S. (2012, December). How Nestlé dealt with a social media campaign against it. Financial Times.