Crisis Management and Corporate Reputation

CORPORATE MANAGEMENT WITH NEW MEDIA

Crisis management and corporate reputation

By, Morteza Javadinia

Ryan Allag

Lecturer: Vidhi Chaudhri, PhD

Agenda

• Definitions

• Insight into Theory

• Crisis types and responses

• Case studies : BP, Pepsi, Dell , New Medias Vs.

Traditional Communicating

Crisis

“ The Perception of an unpredictable event that threatens important expectancies of stakeholders and can seriously impact an organization’s performance and generate negative outcomes” Coombs (2007)

Crisis Management

“… a set of factors designed to combat crisis and to lessen the actual damage inflicted; it seeks to prevent or lessen the negative outcomes of a crisis and thereby protect the organization, stakeholders and/or industry from damage. ” Coombs (2007)

Crisis Communication

“… a set of factors designed to combat crisis and to lessen the actual damage inflicted; it seeks to prevent or lessen the negative outcomes of a crisis and thereby protect the organization, stakeholders and/or industry from damage. ” Coombs (2007)

Secondary Crisis Communication

Secondary crisis communication will assess the recipients’ intentions to tell friends about the crisis, to share the received information with others and to leave comment.

Corporate Reputation

The stakeholders’ collective judgments of a corporation based on assessments of financial, social and environmental impacts attributed to the corporation over time.

Positive Reputation Include: Customer satisfaction Loyalty Trust Positive word of mouth

Insight into Theory

Attribution Theory: Based on Psychological Research Crisis is seen as a negative event Looking for responsibility

Situational Crisis Communication Theory (SCCT): Founded on attribution theory to understand factors shape crisis perception Why do we need theory :

Crisis are serious time and during this time it would be better for mangers to rely on evidence based ideas rather than just speculation

Focus on organizational legitimacy• Reputation and legitimacy are not synonyms

“suffering from an imperfect reputation is less dire than suffering

from an organizational legitimacy crisis because being less well

regarded by other organizations does not threaten the

organization’s continued existence”. (Deephouse and Carter,

2007)

• Different approaches of legitimacy (passive/static VS

“actional”)

Policies and communication activities are likely to alleviate the

social issues to which they were addressed and therefore

reinforce perceptions of legitimacy among publics.

Crisis Types and Responses

• Cluster by how much responsibility is attributed by

stakeholders

• Victim cluster = Low responsibility

• Accidental cluster = Minimum responsibility

• Preventable (earlier called: intentional) cluster =

High responsibility

• Crisis Response:

• To what extent organization perceived as

accepting responsibility

Crisis Types and Responses

• 5 response strategy :

• Denial

• Excuse

• Justification

• Corrective action

• Diversion or Appology

BP, Pepsi, Kryptonite, Dell , Dominos

Case studies

BP

• BP took responsibility for the spill

• BP mainly used traditional Media to lessen the crisis

• Commitment to environmental responsibility• Calling themselves as a leading developer of alternate

source of• energy• b. New logo design, yellow and green sunflower• c. New tagline: Beyond Petroleum• d. Affordable, secure and does not damage the

environment

Pepsi / Kryptonite

1993: Claims of syringes being found in cans of DietPepsi

Contingency plan• Release of videos showing the different

productionprocesses, showing how it was impossible thatsyringes could end up inside the Pepsi cans.• Alliance with FDA (Food & Drugs

Administration)

Domino’s pizza

• Context: “Contagion”

• Dilemma of the hoaxes (paradoxical communication)

• Domino’s pizza challenge (Strategic actions)

Questions:

Should companies always respond to hoaxes?

“ Satisfied customers tell 3 friends, angry customers tell 3000

friends”, how do you feel about this?

DELL

• Definitions: all around the Blogosphere

• Purpose of Corporate Blogs

• The Dell case

• Effects, must-do and limits of blogs

• QUESTIONS: Multi-authors blog or unique author blog?

Blogging the good stuff only or the bad stuff as well?

Corporate Blogs

Corporate Blogs

INTERNAL EXTERNAL

Organize culture

Share knowledge

Celebrate collaboration

Customer relationships

Sales and Marketing

Brand awareness

Thank you for your attention