Business Ethics, Government and Society EXAM #3

The General Public BUS 166, Week 16 Matthew Maguire [email protected] San José State University

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The general public

General public = an organizational stakeholder comprising individuals and groups found in society.

• Ordinary people in society, rather than people who are considered to be important or who belong to a particular group.

• The general public affects the firm through its opinions of the firm’s activities or performance, which in turn help shape the firm’s public image or reputation.

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What is reputation?

Corporate reputation = desirable or undesirable qualities associated with an organization or its actors that may influence the organization’s relationships with its stakeholders.

• It relies on the collective perceptions of past actions, results and future prospects.

What do you believe is the reputation of ....?

• Apple

• Samsung

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What is reputation?

A reputation must be built over time:

• Managers must first strive to offer significantly better products and services than its competitors.

• Managers must aim to create and convey an identity: a consistent and compelling story about who the company is and what it stands for.

• Warren Buffet: “It takes 20 years to build a reputation and five minutes to ruin it.”

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Why does reputation matter?

Question: Should companies care about their reputation? If so, why?

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Why does reputation matter?

Respected organizations are generally more successful because they:

• Receive more opportunities to advance their interests.

• Are given the benefit of the doubt in uncertain circumstances.

• Are able to charge higher prices.

• Have better access to capital markets and investors.

• Obtain better credit, trust, and social ratings.

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Why does reputation matter?

Question: What can a company do to form and maintain a good reputation?

• Which companies come to mind as positive examples (i.e., companies with a good reputation)?

• Companies with a poor reputation?

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The public relations department The role of the public relations department is to manage the firm’s public image and, more generally, its relationship with the public.

• Also called media relations, since much of its work involves interacting with the media.

• Activities include: (1) advertising, (2) corporate sponsorship, (3) external communications; (4) internal communications, and (5) publicity.

• Brand management = when managers use techniques to increase the perceived value of a product line or brand over time.

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Crisis management

Corporate crisis = a significant business disruption that stimulates extensive news media or social networking coverage.

• “Acts of God”—earthquakes, tornados, violent storms.

• Mechanical problems—breakdown of or faulty equipment.

• Human errors—through miscommunication, improper employee behavior.

• Management decision or indecision—o ten involving a cover-up or lack of urgency.

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Crisis management

Crisis management = process by which an organization deals with a major event that threatens to harm the organization, its stakeholders, or the general public.

• Have an internal communication system ready before the crisis hits. Put yourself in the best position to not be surprised.

• Communicate with the media and others quickly but accurately. Disclose fully what the company knows.

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Crisis management

• Use the Internet to convey the message to minimize the public’s fears and provide assistance.

• Do the right thing. O ten the true test of an organization is how it reacts in a time of crisis.

• Follow up and, where appropriate, make amends to those affected. Seek to restore the organization’s repuation.

Consulting — e.g., Institute of Crisis Management https://crisisconsultant.com

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Crisis management

Think about the company you are writing about for your stakeholder project.

• How well is this company responding to the crisis you describe?

• What additional recommendation might you now make for its management team?

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