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=> Warning to Corporate Executives

Warning to Corporate Executives
Posted by Jeff (Guest) - Saturday, July 8 2006, 16:37:49 (CEST)
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Warning to Corporate Executives
Boycotts Affect the Bottom Line

By David S. Chartock

Boycotts not only impact economies, but the way corporations, society and even nations behave.

“It’s hard to get a precise quantitative figure on the impact of boycotts on the overall economy because it is difficult to isolate a boycott’s direct impact from other factors,” explains Clifford Winston, an economist at the think tank Brookings Institution in Washington, D.C.

“In some instances, boycotts have a short-term impact and in other ways there are long-term socio-economic impacts that change our lives,” he says.

For example, during the Civil Rights movement of the 1960s, “a lot of Americans of all ethnic backgrounds – although they were largely African-Americans – boycotted segregated retail chains. With other factors, it helped to end segregation as we knew it,” according to Ken Goldstein, an economist with The Conference Board of New York.

Then, in the 1970s and 1980s, Cesar Chavez wanted better working conditions for workers in the fields. He called for a national boycott of grape consumption. In the end, he got the field hands better working conditions, but it resulted in increased wine and liquor prices,” Goldstein notes.

One of our nation’s more memorable boycotts is that of canned tuna in the late 1980s, Winston points out.

“It was a combination of media attention and people that led canned tuna companies to label tuna as ‘dolphin safe,’” Winston adds.

Paul Watson, president and co-founder of the Sea Shepherd Conservation Society, a Friday Harbor, Wash.-based marine wildlife and habitat conservation organization, along with Earth Island Institute of San Francisco, says the two organizations helped to facilitate a boycott in the early 1980s against Chicken of the Sea, Starkist and Bumble Bee, because “American tuna boats were killing hundreds of thousands of dolphins each year that were caught in their nets.”

“The boycott consisted of newspaper and television ads and got a boost from Dick Donner, the director of ‘Lethal Weapon’ and ‘Free Willy,’ when in ‘Lethal Weapon,’ actor Mel Gibson has a discussion over the dolphin killings with another actor in the movie,” Watson says.

Not only did the boycott help to get canned tuna labeled “dolphin safe,” but it resulted in the Dolphin Protection Consumer Information Act of 1990, according to Winston. This law outlines conditions under which canned tuna can be labeled ‘dolphin safe,’ he adds, noting that this, like the Boston Tea Party that led to the Revolutionary War, was a successful boycott.

Winston says boycotts have an impact on the corporations being boycotted.

“Our most recent issue involved Nissui, the Japanese fish company that owns Gorton’s seafood in the U.S. and Sealand seafood in New Zealand, as well as half the Japanese whaling fleet,” says Watson.

“We were one of many organizations calling for a consumer boycott of Gorton’s and Sealand, with Sealand receiving over 100,000 emails regarding the illegal whaling by the parent company’s fleet in the Antarctic. The result was Nissui’s divestiture of its whaling holdings,” asserts Watson.

“This boycott was conducted over the Internet, asking consumers to boycott Gorton’s and Sealand’s products,” he adds.

Watson says currently “we have a boycott to pressure the Canadian government to end the annual killing of (350,000) seals for their oil and fur.”

“We have U.S. chains, such as Trader Joe’s, Whole Foods and Miami Crab, to stop buying Canadian seafood. These firms substituted fish from other countries. We’re boycotting Red Lobster for refusing to join the others. The result is that the Canadian seafood industry has lost well over $100 million, according to the Humane Society of the United States in Washington, D.C., which is spearheading the boycott,” states Watson.

According to Patricia Ragan, director of the ProtectSeals campaign for the Humane Society of the United States, Canadian snow crab imports are down $158 million (Canadian), since the campaign began in March 2005.

“The loss incurred by the Canadian snow crab import market alone is 10 times that of the $16 million (Canadian) baby seal market. By perpetuating the killing of baby seals, Canada is risking its main seafood industry,” Ragan adds.

“The value of Canadian seafood imports in the U.S. is valued at $3 billion annually,” she notes.

Corporately, many U.S. companies are onboard with the Canadian seafood boycott. Ragan says one such company is Publix Super Markets, Inc. of Lakeland, Fla. “Publix has joined the ProtectSeals campaign by condemning the slaughter of baby seals and requiring all of their distributors certify they do not buy their seafood from anyone participating in the killing of the baby seals.”

On the public side of the campaign, Ragan notes that since the campaign began in March 2005, “more than 280,000 individuals in the U.S. have pledged to boycott Canadian seafood until the killing of the baby seals has ended."

Similar to the impact of Mel Gibson’s discussion in “Lethal Weapon,” which was perceived as a celebrity endorsement, such endorsements are helping the current Canadian seafood boycott, Watson explains.

“For example,” he says, “actress Pamela Anderson spoke out against Canadian seafood at the March 2006 Juno Awards, which are Canada’s equivalent to the Grammy Awards.”

“And actors Martin Sheen, Susan Sarandon and Richard Dean Anderson, who is a member of the board of the Sea Shepherd Conservation Society, have all done television ads endorsing the boycott,” Watson says, adding “celebrity endorsements are very useful” for boycotts.

Raymond Fisman, an associate professor of finance and economics at the Columbia Graduate School of Business in New York City, says there is evidence that consumer sentiment matters. One case in point is when Americans stopped buying French wine because of France’s opposition to the U.S. invasion of Iraq.

This boycott was the subject of a January 2006 study published by the National Bureau of Economic Research. The study, The Impact of the Iraq War on French Wine Sales in the U.S., was authored by Phillip Leslie and Larry Chavis.

According to Leslie, an assistant professor at the Graduate School of Business at Stanford University in Stanford, CA, the French opposition to the war in Iraq in early 2003 prompted calls for a boycott of French wine in the U.S. The study measured the magnitude of consumer participation in the boycott and looked at basic evidence of who participated.

Conservative estimates indicated that the boycott resulted in lower weekly sales of 26% over the estimated six-month duration of the boycott, according to Leslie.

“These findings suggested that businesses should be concerned that their actions may provoke a boycott which hurts their profits,” Leslie emphasizes. The boycott resulted in a decrease in imports of French wine entering the U.S. by $112 million.

According to Winston, “socially undesirable behavior affecting the less fortunate, in particular, such as animals, the environment, children, less affluent people or specific socio-economic groups,” can lead to a boycott. When the public responds accordingly, the result can lead to financial consequences for the firms and an adjustment in their corporate behavior.
The Power of Boycotts

Boycotts affect economies.

The Canadian seafood industry boycott in the U.S. is 280,000 strong since its inception in March 2005, and has resulted in a loss of $158 million (Canadian) in Canada's snow crab market alone. This is 10 times the $16 million baby seal market which the boycott targets.

Boycotts affect the behavior of corporations, society and nations.

Boycotts create awareness.

The six-month U.S. boycott of French wines resulted in a 26% decrease in total imports during the duration of the boycott.

Boycotts affect a company’s bottom line.



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