Why do some companies get boycotted while others don't?

in #finance8 years ago

The DeleteUber campaign that mushroomed after Uber continued to send cabs to JKF during the taxi strike has resulted in chief executive Travis Kalanick standing down from Trump's advisory council.

However businesses like Walmart, which decided not to comment on politics at all and take no side on the muslim-travel ban, despite employing muslims and having muslim customers, have not been boycotted.

So why do some companies get boycotted and others get left alone?


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It depends on whether you can find substitutes

Various pressure groups (on behalf of small businesses Walmart has hurt, employees, people protesting imports from China etc) have been trying to launch boycotts of Walmart for what seems like forever. But they have always failed. And that is usually because there is no easy substitute for Walmart that provides the same range of goods for the same price.

To boycott Walmart you need to make an effort. You need to drive to a different store, and purchase goods that may be slightly different and more expensive. And you need to do this week in, week out. It costs you something to boycott Walmart.

Boycotting Uber is simple. There are loads of substitutes, so you simply delete your app, download an app from a competitor like Lyft, and off you go. There isn't much difference in customer service or price between the different Uber clones, and they all get you from A to B. The effort that it cost you lasted the ten minutes it took you to delete Uber's app and download Lyft's. That's it.

We saw the same effect during the protests against tax dodgers in the UK

Both Google and Starbucks were singled out for not paying any corporate tax in the UK because they used EU-sanctioned tax avoidance schemes (the notorious Double-Irish-Dutch-Sandwich) where they used an accounting trick to move all the profits to a low-tax jurisdiction by paying the low-tax holding company an intellectual property fee.

Despite public outcry and public shaming, Google experienced no boycott of it's services and experienced no drop in revenue. Because there is no other search engine that works as well as Google. In order to boycott Google you have to endure the massive frustration of using services like Bing and DuckDuckGo and waste time trying again and again to find things by tweaking your query.

However Starbucks was badly hurt by boycotts because there was a UK competitor, Costa Coffee, that was paying it's UK tax in full and had lots of branches, often in the same location as Starbucks. And their coffee was both good and cheaper. After the boycott hurt revenue badly, Starbucks offered to pay a voluntary tax to the Treasury for years past, to "make up" for it's sins.

If you want to protect your business from boycotts and politics you need to be unique

If you offer something that people need and can't get anywhere else, then you are pretty much invulnerable to protest as Google and Walmart have shown. If you offer a service that people can easily get elsewhere for the same price (or a lower price), then you are vulnerable.

Both Uber and Starbucks could have responded by lowering their prices - but that would have meant a permanent hit on margins. So they tried a temporary placation of the protesters, the idea being that if they can just get the protesters to shut up for a bit, people will forget about the dispute and everything will go back to normal.

If you can't make your business unique and you have a lot of close competitors out there, then the smart thing to do is keep your head down and keep out of politics altogether.

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