Reputation and Brand Management
Title: Reputation and Brand Management. In the recent years, some companies have been paying little attention to managing their reputations. Although the image of some companies is at risk, they do not see the risk posed by the loss of reputation (Issacharoff & Rave 2013). The BP oil spill accident was one of the largest environmental crises to happen in the recent times because it affected both the marine life and the human sector (Issacharoff & Rave 2013). Although this accident may not have affected the company directly in terms of financial performance, it lost part of its reputation. The company spent a lot of money on restoring the undermined image, although its efforts were not largely successful. The reputation of BP was made even worse by the responses given by the CEO Tony Hayward (Economist, 2018). In particular, the CEO tried to shift blame to other parties without taking full responsibility and making the necessary efforts to curb the situation.
Despite some of the bad remarks made by Hayward, when the accident happened, the company tried as much possible to curb the situation. Even James Ross, the Chairman of BP in the U.S., decided to go to the scene and estimate the level of the accident in order to see how the damage can be minimized. In just two hours after the accident had occurred, BP opted to send skimming team to the accident scene (Du, 2012). In addition, after 24 hours, BP had had already sent about 36 specialists to the site, which was a crucial step due to the fact that it reduced damage which has been caused to the company’s reputation. The measures taken succeeded in one way or the other. The company should have focused further on how to deal with the situation instead of spending a lot of money on PR exercise.
Volkswagen Company in 2015 was involved in emission scandal, whereby EPA issued a statement stating the company had greatly violated the Air Act (Ewing, 2015). According to the report released by EPA, it is clear that their TDI engines emitted a few poisonous gases after conducting a laboratory test, whereby in the real sense it was not the case because these engines emitted about 40 times more poisonous gases (Benjamin, 2018). The scandal affected the reputation of the company because the diesel emissions from the engines made by Volkswagen are not currently considered suitable due to not being environmentally friendly.
In order to solve the problem, Volkswagen came up with ways of reducing the diesel emissions. First of all, the company acknowledged the fact that they were involved in manipulating the tests conducted to investigate the vehicle emissions. The CEO himself apologized to the customers by admitting that the scandal had completely damaged the public trust and customers as a whole (Zhang et al., 2016). In addition, the company decided to pay the fine as result of damage caused by the diesel emissions, although it was costly to the whole organization. The effort made by the company to compensate for the damage caused by the pollution proved to be important because after some time, Volkswagen started to regain its lost customers sales, brand management and Reputation.
Brand Management Reputation Marketing
Also, Wells Fargo scandal was one of the biggest financial crimes committed ever, whereby the bank intentionally created more than 2 million fake accounts (Corkery, 2013). According to the report conducted in 2016, it was clear that this scandal inflicted a lot of damage to the Company because its reputation was largely damaged. For example, negative perception towards the bank increased from 15% to 52% after the criminal activity was revealed, which means that the bank had to witness decreased loyalty and the number of customers as result of the scandal (Corkery, 2013). Most of the customers started leaving the bank because it had already lost its reputation.
Further, the management of the bank tried as much as possible to restore its image at all cost. For example, after the occurrence of the scandal, it decided to pay compensations to some victims. The bank wasted significant costs on settling the damage done to its reputation by the scandal. For example, it had to pay $ 185 million in order to settle the charges resulting from the manipulation (Mims, 2017). In addition, the bank paid 570,000 customers, whom the company claimed to have taken car loans without their permission (Mims, 2017). After making efforts to compensate the affected customers, the bank’s activity started to alleviate the situation. For example, it managed to win back the faith of some of the loyal customers. In addition, the reputation of the company started to improve to some extent because it made efforts to rectify the fault.
Corkery, M. Wells Fargo Struggling in the aftermath of Fraud Scandal. The New York Times, 2013.
Du, S., & Vieira, E. T. Striving for Legitimacy through Corporate Social Responsibility and Brand Management: Insights From Oil Companies. Journal of Business Ethics, 110 (4), 2012: 413-427.
Economist. “A year on, Wells Fargo cannot shake off its mis-selling scandal”, 2018.
Ewing, J. Volkswagen says 11 Million Cars Worldwide are Affected in Diesel Deception. The New York Times, 2015.
Issacharoff, S., & Rave, D. T. The BP Oil Spill Settlement and the Paradox of Public Litigation. Louisiana Law Review 74(2) 2013: 397.
Kervyn, N., Chan, E., Malone, C., Korpusik, A., & Ybarra, O. Not All Disasters are Equal in the Public’s Eye: The Negativity Effect on Warmth in Brand Management Perception. Social Cognition 32(3) 2014: 256-275.
Mims, J. H. The Wells Fargo Scandal and Efforts to Reform Incentive-Based Compensation in Financial Institutions. NC Banking Institute 2(1) 2017: 429.
Preston, Benjamin. “Volkswagen Scandal Tarnishes Hard-Won US Reputation as Green Company.” The Guardian, 2018.
Zhang, B., Veijalainen, J., & Kotkov, D. (2016). Volkswagen Emission Crisis: Managing Stakeholder Relations on the Web. In Webist 2016: Proceedings of the 12th International conference on web information systems and technologies. Volume 1. Scitepress, 2016
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