Case study of Arla Foods by Ewelina Brania


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Case study of Arla Foods by Ewelina Brania

  1. 1. 2010-05-19 Ewelina BraniaStudent’s book 79774 1
  2. 2. 2010-05-191. Arla Foods2. Society profile Country profile Cultural profile Communication components3. Case profile4. Campaign • Aims • Strategy • Instruments applied5. The crisis of Arla6. Conclusion 2
  3. 3. 2010-05-19The largest producer of dairy products in ScandinaviaHeadquarter in Aarhus, DenmarkMission: “… to provide modern consumers with natural milk-based products that create inspiration, confidence and well-being”Owned by 7 996 milk producers in Denmark and Sweden73% of shares in Danish, Swedish and British market49, 469 m DKK revenue (2008)15, 927 employeesArla - “early” in archaic Swedish 3
  4. 4. 2010-05-191882 – 1st Dairy in Hjedding in Denmark1970 - Establishment of Mejeriselskabet Danmark (MD)1989 - Formation of MD Foods International to acquire dairies abroad1990 - Launch of butter Lurpak on UK market 1st dairy in Stora Arla Gärd in Sweden -1881 1881 Formation of Mjölkcentralen (MC)- 1945 Mjölkcentralen changes name to Arla – 19752000 - Merger of Danish MD Food and Swedish Arla 4
  5. 5. 2010-05-1913 countries: Algeria, Libya, Egypt, Lebanon, Yemen, Kuwait,Morocco, Jordan, Oman, Saudi Arabia, Qatar, UAE50% of shares in Saudi Arabian butter market, 68% - UAE, 80%- QatarAnnual sales of $550 m in the Middle EastStrong positive “Danish” image“Coming from a small and politically natural country likeDenmark is definitely a plus when you’re selling in the MiddleEast. We are not associated with any kind of imperialism – we feelthat our partners trust us.” H. Niss 5
  6. 6. 2010-05-19Political Republic - 6, constitutional monarchy – 3, absolutestructure monarchy – 3, federation of emirates - 1Legal Mainly Shari‘a law with western influencessystem The independence of judiciary main principle in Shari‘a The Beirut Declaration (1999) for Arab states – procedural guarantees of judicial independence, denouncement of discrimination on the basis of gender etc.Level of “Lack of transparency, a weak media, lack of democracy,activism social dogmas, religious tension – all this makes it almost impossible to make any real change. Arab society provides no encouragement to pursue a life of activism” Weal Hmaidan, co-funder of the League of Independent Activists Theocratic activism - terrorism 6
  7. 7. 2010-05-19Economic GDP (PPP) – 20 782.62$structure very diversified – max. Qatar 86 006$ min. Yemen 2 411$(IMB 2008) Adult literacy – 66% (Syria, Lebanon, Jordan – over 90%)Media Practically lack of press freedom (mostly ranks under 100thsystem place in Reporters Without Boundaries’s ranking 2008 ) Yemen – 167th, KSA – 165th , Syria – 163rd “independent” press owned by member of the ruling family of businessmen close to the ruling family, very few literally independent Usually a government-issued license is needed Harsh defamation law Usually direct censorship for materials from abroad Al-Jazeera (1996) – a revolution on Arab TV market, highly independent in spite of financing by Qatari government, often discusses taboo topics 7
  8. 8. 2010-05-19High-contextAuthoritarian relationshipsHigh power distancePolychronicHigh uncertainty avoidanceNon-linearPresent-orientedBeing-orientedCultural values: collectivism, hospitability, honorSocio-historical influences: Islam, poetry, nationalism 8
  9. 9. 2010-05-19 Language and verbal Non- Non-verbal communication communicationElaborateness Gestures – direct body orientationCodeswitching between different Direct eye contact between theforms of Arabic and French, same sex, lowered gaze submissionEnglishAffectiveness Touching restricted between males and femalesRepetitionIndirectness 9
  10. 10. 2010-05-1917.09.2005 – “Politiken” publishes an article “Profound anxiety17.09. about criticism of Islam” in which the author discusses the problem of self-censorship in relation to Islam in Denmark30.09.2005 – the Danish newspaper “Jyllands-Posten” publishes30.09. article “Muhammeds ansigt” (The face of Muhammad) that refers to terrorism of Islamic organizations with 12 cartoons“They [Muslims] demand a special position, insisting on specialconsideration of their own religious feelings. It is incompatiblewith democracy and freedom of speech.” Flemming Rose, editor of “Jyllands-Posten” 10
  11. 11. 2010-05-1920.10.05 – ambassadors of Muslim countries ask the prime20.10. minister to react“The freedom of expression has a wide scope and the Danishgovernment has no means of influencing the press” Anders Fogh Rasmussen, prime minister of Danmark28.12.05 - “Jyllands-Posten” refuses to apologize for the28.12. publication20.01.06 – religious clerics in KSA advise Muslims not to buy20.01. Danish products (Arla Foods, Lego, Ecco shoes etc.)Most of the shops as a signof solidarity with Muslimscommunity remove Danishproducts from their shelves. 11
  12. 12. 2010-05-19 ”Our challenge is to regain consumer confidence in the Middle East” Managing Director Peder Tuborgh Restore it’s product onthe shelves in Maintain dialogue shops in the Middle East Reintroduce Arla to the market (cut off from an image of a Danish company) 12
  13. 13. 2010-05-19Emphasizing long-lasting relations with Muslim community(long history in the Middle East, many Muslim employees overthe years etc.)Showing interest of Islamic and Arabic cultureAppealing to Islamic values (tolerance, justice, forgivenessetc.)Showing Muslims society understand of their reaction tocartoons - Influencing Muslims hearts not minds, “leaving”them decision about the future of the boycottImproving contact with Islamic religious leaders, asintermediaries to reach Arab Muslim societyLobbying the Danish Prime Minister to apologize for the cartoons 13
  14. 14. 2010-05-19Newspaper’s adverts with Arla’s standpoints and reprints ofopinions of the Danish government and Jyllands-PostenTV commercialsFrequent up-dates about the boycott and undertaken actionson the website“Status report Friday afternoon”, “Arla makes "all resourcesavailable“ etc.Records with confessions of Arla’s Muslims employees fromfeelings about the cartoonsLeaflets with reprints of Jylands-postand standpoint 14
  15. 15. 2010-05-1926.01.06 – the largest grocery26.01.retailer in KSA – Al-Othaim HoldingCompany confirms that it will not beselling Danish products until anapologize for the cartoons will be “The campaign of allpublished in the largest newspaper Muslims to protect the lastin the country prophet Muhammad (saw)”* “In the name of Allah we apologize our dear customers but we don’t sell Danish products because of the boycott campaign. The products are:…”* *Translated by the author 15
  16. 16. 2010-05-1926.01.06 – “We can confirm that our sales have been affected”26.01. says Finn Hansen, Executive Director, Arla FoodsIn one of Arab countries people are throwing stones at Arla’svehicle.Arla tries in press release to emphasize it’s long-lasting goodrelations with Muslim community, cut themselves off from animage of a Danish company – “In fact, we have more Muslim consumers”.than Danish consumers” ED of Arla calls for peaceful dialogue.27.01.06 – Arla ensures that the press release with the27.01. statement of Danish Government will be published in Saudi Arabians newspapers (Arla puts ads in Middle East’s newspapers)In the statement the Danish government ensures that itrespects Islam and that “Jyllands-Posten” have no connectionswith government, it’s private and independent so it can not be perceived as a standpoint of Denmark society. 16
  17. 17. 2010-05-1928.01.06 – Arla places adverts in Middle Eastern newspapers28.01. trying to encourage people to stop the boycott29.01.0629.01. – ”Jyllands-Posten” prints statement in Arabic explaining that cartoons had been a sign of freedom of speech not a campaign against Islam. Islam.Libya closes the Danish embassy in Tripoli, Palestinians burnDanish flag.30.01.06 – “Production for the area seriously threatened”30.01. alarms Arla:KSA – Arla’s importers cancelled all ordersKuwait – wide media coverage about the boycottQatar – the products removed from almost all shopsUAE – within a short time the products will be removed EVERYWHERE SALES STOPPED!!! "I urgently beg the government to enter a positive dialogue with the many millions of Muslims who feel they have been offended by Denmark” says in a statement Peder Tuborg, Arla’s ED 17
  18. 18. 2010-05-1931.01.06 – Arla informs that none of the employees in the31.01. Middle East will be dismissed so that Arla can quickly restart production when the boycott will be overDanish imaans call off the boycott in Denmark. In the pressrelease Arla tries to emphasize it’s openness and good relationswith Muslims society by citing Kasim Amat, a spokesperson for theDanish Islamic Community, who suggests undertaking a jointventure (DIC, Ministry of Foreign Affairs, Dansk Industri and Arla)to Saudi Arabia to “correct the misunderstandings The situation misunderstandings”.abroad is still difficult.“The dialogue here has taken a positive turn” Finn Hansen, ED Arla Food01.02.06 – Arla ensures that it will spread the statements01.02. (press adverts) of the Danish Prime Minister and Jyllands- Jyllands-Posten from press conference on 31th Jan, when they emphasized that cartoons are a part of freedom of speech not incursion on Muslims society and that they want to continue the dialogue and restore good relations with Arab world. 18
  19. 19. 2010-05-19In French, German, Italian and Spanish newspapers appearreprints of the cartoons18.02.06 – Arla participates in Middle East’s largest food18.02. exhibition “Gulf Food” in DubaiSigns at Arla’s stand show it’s distance from the cartoons Arla cartoons.staff gives away customers copies of Jyllands-Posten’s apology Jyllands-and is willing to answer to the questions of the local media.“A face-to-face dialogue is extremely important in the Middle face-to-East and cannot be substituted by a phone call” says Jan E.Pedersen, Arla’s Director for the UAE20.02.06 – as a reaction to rumors in the media that Arla is20.02. boycotting Isreal, Andreas Lundby, Deputy Managing Director, makes a statementIn the statement he also emphasizes that all of productsexported to KSA are Danish and none of the ingredients comes Israel. from Israel 19
  20. 20. 2010-05-1902.03.06 – estimations of Arla show that the boycott will cost02.03. the company 400 m DKK20.03.06 –20.03. Arla announced that it was going to publish on 25th explanation of it’s stand in case of the offensive cartoons in full page advertisement in 25 newspapers across the Middle East“Arla Foods distances itself from the act of Jyllands-Posten in Jyllands-choosing to print caricatures of the Prophet Muhammad andwe do not share the newspaper’s reason for doing it. (…) We reaction,understand and respect your reaction leading to boycott ofour products as a result of the irresponsible and unfortunateaccident. (…) The years that we have spent in your world havetaught us that justice and tolerance are fundamental values ofIslam….in the hope that you will reconsider your attitude toIslamour company”.22-23.03.06 – Arla took part in The First Conference of the22-23.03. International Committee of the Support of the Final Prophet in Bahrain 20
  21. 21. 2010-05-1903.04.06 - International Committee for the Support of the03.04. Prophet publishes press release with the result of the conference in which itappreciates “the attitude of Arla Foods that declared its rejection ofthe pictures and was not in agreement for reasons for theirpublication.“ The president of ICSFP, Yousef Al-Qaradawi noticesthat Arla is an objective of criticism for it’s standpoint in Denmark. T HE OFFICIAL END OF THE BOYCOTT06. – Arla decides to sponsor humanitarian projects in the Middle East (giving aid to disable children, cancer suffers and the hungry) and activities that will build mutual understanding between different cultures“The boycott had been lifted only against Arla This company Arla.apologised to Muslims and sponsored humanitarian projects forthe needy" says Adel Al-Maawdah, a spokesman of ICSFP 21
  22. 22. 2010-05-19Arla was the first company which Arab world have lifted theboycott forIt’s products came back on 6th April 2006 on shelves of over3000 shops in the Middle EastBy the end of 2006 Arla recovered 50% of the pre-boycottannual sales volumeThe company restored good image in Muslim society throughcutting off from Denmark. Arla regained consumers trust.“We must differentiate between those who insulted us andthose who stood by us.” us. Soliman Albuthi, spokesman of ICSFPIn western countries the image was tarnished.The Arla’s apology for the cartoon was perceived asa denial of a fundamental value of modern society –freedom of speech. The campaign “Support Denmark Boycott Arla” was launch. Before crisis Arla supplied – 50 000 shops* 22
  23. 23. 2010-05-19The biggest problem of the Arla’s case was the fact that thecompany had strong national image image.“Key to Arla Foods’ strategy was deconstructing thesometimes conflicting national and organizational identitiesthat emerged.” Patricia A. Curtin, Thomas K. GaitherIf a company does not want to be perceive as a country-of-origin any more, then it can as a part of PR campaign: • Get involved in local community issues (homelessness, cancer patients etc.) • Publicly distance itself from the source of offence • Cut off from the image of a company from the issue • Resign or downplay the “Made in…” aspect of the brand • Change the name of the company 23
  24. 24. 2010-05-19 A. Maamoun “Guilty by association: The Boycotting of Danish Products in the Middle East” [in:] “Journal of Business Case Studies” volume 4, number 10, 2008 W. Doesum “Crisis Communication in a GlobalizationR. Tench, L. Yeomans “Exploring Public Relations”, World: Arla and the Cartoon Crisis”, a master thesis,Prentice Hall, 2009 2008E. Feghali “Arab Cultural Communication Patterns”[in:] ‘International Journal of Intercultural Relations” 3, number 3, Aug 1997 er_van_doesum.pdf%3Fsequence%3D1+%22boycott+ arla%22+support+denmark&cd=7&hl=pl&ct=clnk&gA.O. Sherif, N.J. Brown “Judicial Independence In The l=pl&client=firefox-aArab World”, a study presented to the Program of Governance of The United Nations Development NewsBBC.comProgram TheEconomist.comhttp://www.undp- ArabNews.comR.S. Zaharna “Overview: Florence Kluckhohn Value English.Al-Jazeera.comOrientations” , 2000 Zaharna “Understanding Cultural Preferences of Communication Patterns” [in:] “Public Relations dimensionsReview”, volume 21, issue 3, Autumn 1995 Lehtonen “Country Image and Consumer lobal_public_relations/Nationalism. Case Arla and the Mohammed Cartoons” [in:] Ch. M. Schimdt, D. Neuendorff “Sprache, Kultur und Zielgruppen”, DUV, 2008 danish-export-dhimmi- cheese.html splay.jsp?vnu_content_id=1001920646 24