Each and every organisations, no matter how large or small, conclusively depends on its reputations for survival as well as success. Public Relation (PR)is the best way to manage the reputation. Effective Public relation is very important for the company as it aids to manage the reputation by communicating as well as building a good relationship with all the stakeholders of the company (Doorley and Garcia, 2015). It aids in building mutual understanding between company and audiences that is a crucial part every enterprise success. In developing awareness in the company and its customers, PR plays a key role. Apart from this, in the reputation of the company, crisis are considered as a major threat and it affects the stakeholders of the company. Thus, in order to handle the crisis, company's uses to analyse the needs of public so that stock price of company can be maintained.
Thus, In this report, I will discuss two leading business (Facebook and Tesco) that faced crisis related to PR by handling bad and good. It will assist to figure out how efficaciously companies handle the crisis as well as how PR techniques aids to maintain the image of the company.
Facebook is an American online social media as well as social networking service organisation. It is on of the well-known company across the world, Company was founded in 2004 by Mark Zuckerberg. Its headquarters is located in California. About 2 billion people across the world are using the Facebook application. By using Facebook Application, one can easily connect to any other person living across the world and now it is very easy for anyone to make connection with any other person living across the world. With the help of Facebook, the connectivity becomes very easy and convenient (Dijkmans, Kerkhof and Beukeboom, 2015). As compare to other application like Twitter, Instagram and other apps, Facebook is highly used application. In 2017, the revenue of the company was $40.653 billion. 30,275 people are currently employed in the company. The ethical responsibilities of Facebook is to keep the information of users private and secret and are not allowed to share with any other prior permission.
In 14 years of Facebook history, the serious challenges faced by the company in recent is very serious and challenging. In recent 12 months, a British newspaper (The Observer) reported that Cambridge Analytica company had been provided access to the personal data of about 50 million Americans by Facebook. This report has very badly affect the management of Facebook along with its reputations, image and goodwill. In heart and mind of the users, such situation decreases the threat as well as risk of insecurity. These crisis have resulted to fall approximately 14 percent of share prize in the stock market and the shocking factor is that within in two days only, the entire image of Facebook has fallen (Heding, Knudtzen and Bjerre, 2015). The administration and management of Facebook have to handle this issue as soon as possible as well as more effectively.
The Contribution of Media
In the area of communication, media plays a critical role. Media is only the one who had given the full attention towards the scandal of Facebook. Aleksandr Kogan was the man who is a scientist has supplied the data to Cambridge Analytica Company. An application is made by him to accumulate the data from millions of users of Facebook.
The consequence of Media
As per the report releases by the media stated that the main intention of Cambridge Analytica's involvement is support Donald Trump (Urde, 2016). At the same time, $15 millions was invested by the supporters of Donald Trump in Cambridge Analytica company in order to make deviations on elections.
Actions taken by Facebook
Role of Facebook PR
The role played by Personal relation is very critical as in the time of crisis , Facebook use its Public Relations as well as its relevant practices into a negative manner. When the criticism has raises, it places its own defence and views. In these type of situation, firms usually response in proactively manner rather than I reactive way. Apart from this, company should immediately accept the mistake which is based on apologises as well as guild activities in the media and in-front of public. It has been found that, Facebook is trying to sue the newspaper and blog writer which affects the PR in negative way (Schaarschmidt and Walsh, 2018). Rather, then blaming or suing other or taking action against Cambridge Analytica, Facebook should take corrective actions and necessary steps because it is best respond quickly.
Situational crisis Communication Theory
It is fact that crisis are considered as a threat to the reputation, goodwill of company. Thus, it is very important that crisis communication management must be adopt different strategies of management as well as keep on concentrate of the crisis. This theory is very important as it very effective in managing the crisis effectively. This theory was developed by W. Timothy Coobs in 2007. As per this theory, it is very important that the manager of crisis within organisation must match the responses of strategic crisis, to the level of responsibilities of crisis as well as reputation danger posed by a crisis. By using this theory, it becomes easy for the crisis manager to predict as well as evaluate the level of reputation threat. The best manner to cope up with the situations, company should adopt the activities of PR. Facebook is an international social media company having huge number of users. The best way to gain the confidence and trust of users, Facebook should pick out random apology letters to its uses that comprises warning to avoid download of such applications that is against their rules in coming time. In addition to this, they should sue Cambridge Analytica along with Aleksandr Kogan for the misconduct (Fearn-Banks, 2016). Further, in order to raise as well as build trust of users, Facebook should bring the letter of agreement among public to maintain the goodwill of the organisation.
SCCET's Crises response strategies of Facebook
Crisis response strategy is the best way to maintain a good reputation as well as goodwill of the company and it also protects firm from pessimistic impact of outsiders. There are many companies choose this strategy for effective protection and management of goodwill of the organisation. There are mainly two classification of SCCT strategies which are primary and secondary.
Primary Dimensions- This is the dimension demonstrate the actions or strategies before or during the occurrence of crisis. There are three strategies identified in this dimension which are Denials, Diminish and Rebuild.
Denials- it is to attack the accusers as well as crisis manager combat an individual or group by defending on something wrong happening with the Facebook.
Diminish- This is very important strategy as in this stage the manager of crisis management of Facebook used to reduces the damages caused by crisis. Crisis manager takes immediate steps to control the damage.
Rebuild- In this step, crisis manager of Facebook apologize for the misconduct from the stakeholders and they also demonstrate that they will take full responsibilities to control the events which brings about the crisis.
Secondary Dimensions- This is very important dimensions as each and every organisation have a great concern on their reputations. After the crisis, it is very essential to maintain the reputation of company. There are three strategies that needs to be considered to maintain the goodwill which are Reminder, Ingratiation and Victimage (Schivinski and Dabrowski, 2015).
Reminder- As per the strategy of reminder, it is up to the crisis management of the Facebook to remind and recall the past recognised or good contributions of the company to its stakeholders.
Ingratiation- As per the ingratiation strategy, it is the duty of crisis manager of the Facebook to make obvious efforts in order to obtain stakeholders favour about the past good works and contribution.
Victimage- According to strategy of Victimage, crisis manager of the Facebook encourage stakeholders that company is a victim of the crisis as well.
Stakeholders are the heart of the each and every organisations operating in the world of business. Stakeholders are the employees, customers, government, share holders, investors, society and many others which have direct or indirect interest in the company (Stakeholder Theory, 2017). Stakeholders are those people that are affected by the working of the company. According the theory of stakeholders, it is very important that manager of the company should maximise the interest of stakeholders that fulfils the needs and expectations in effective way. Further, this theory also states that it is also very essential to maintain the level of trust and integrity with the stakeholder by communicating them each and every aspect of company along with its external and internal issues. This theory enables the company to make the strategies and plan of actions to maximise the interest of stakeholder (Jiang, Luo and Kulemeka, 2016). Apart from this, it is also very essential that stakeholders of the company must be aware of all the crisis faced as well as currently facing.
From the above stakeholder theory, Facebook company has no any idea that they will face such crisis in coming time. Similarly, stakeholder are not known about such incident of data stolen from the users otherwise they would acquire the trust of other stakeholder quickly on time. It will decrease the crisis of the business as well as maintain the share price in the stock market. Thus, it is very essential that Facebook needs to implement effective theory of crisis management. Hence, in the absence of PR activities of Facebook exert pressure towards the market share of the company.
Tesco is one of the well-known British Multinational groceries as well as general mechanise retailer. It is a public limited company which was founded in 1919 by Jack Cohen. Its headquarters are located in England. In terms of revenue, Tesco is the third largest company in United Kingdom. The revenue of the company in 2017 was £55.9 billion. There are 6553 shops are operating by more than 746000 employees. Since 1990, the expansion of Tesco is very fast as it becomes one of the well-known organisation across the world by having operations in 11 countries.
It is fact that, Tesco is one of the well-known and recognised organisation across the world. But Tesco has faced a serious and challenging crisis in recent year. The watchdogs have found that, Tesco delayed payments to suppliers in order to boost profits. This scandal has adversely affected the reputation of the company in the market. The adjudicator of Groceries store identified Tesco supermarket fails to pat back the multi-million pounds sums owed from up to two years but regulator is unable top levy fine. This news has released all over the world which directly affects the image of Tesco. The watchdogs of grocery market had strictly ordered after the finding that Tesco had deliberately delayed the payment to raise the profit and with this practice that they should have to make changes in a way they are dealing with the suppliers. The Groceries Code Adjudicator said that company had breached the standard and norms that legally bind them to adopt fair practices. GCD found that major practices of Tesco was unfair like they take two years plus to pay back their money which was a huge amount which results in changing of prices being incorrectly applied over long time (Flax, Bick and Abratt, 2016). Data input errors were also identified where the suppliers have to wait for more than two years for the refund of £2 million because of duplicate invoicing. This scandal of Tesco directly raise the questions on its ranking as well as on its reputation.
The contribution of Media
For this incident, media gave too much attention and popularity which directly hitting the image of Tesco in the market. Media has released this misconduct made by Tesco from its suppliers. This misconduct of Tesco is a normal thing as it is the crime as per the law of UK. With the help of media only, the wrong practises of Tesco was figure out. This media release report is not only to make a fall of Tesco but it is lesson for all other supermarkets that this practise is totally illegal and it badly hit the image of company (Doorley and Garcia, 2015). On the other hand, Tesco also apologises for the misconduct in the media and make promise to audience that this practices would be stop and never be conducted again. In order to build the image, Tesco has taken the help of media. Thus, the role played by media in the scandal of Tesco was incredible for the both side.
Crisis Response Strategy of Tesco
This is one of the best strategy that is used by Tesco to build ore reconstruct the image or reputation in the market. With the implementation of this strategy, the negative impact of scandal on the reputation of company was bought down. There are two dimension of Crisis Response strategy which are Primary and Secondary. These dimensions are studies and used by the crisis manager during, after and before the crisis.
Primary Crisis Response Strategy
Deny Incident- it is to attack the accusers as well as crisis manager combat an individual or group by defending on something wrong happening with the Tesco.
Diminish- The crisis manager of Tesco put their efforts to minimise the damage caused by the scandal on the reputation of the company (Hewett and et.al., 2016).
Rebuild- At this stage, Crisis manager of Tesco used to apologise and make efforts to build the truest relationship with the customers.
Secondary Crisis Response Strategy
Reminder- According to this stage, crisis manager of Tesco remind the past good words of Tesco such as environmental contribution, employment generation, health and safety contribution to the stakeholders in order to heal the damage caused by the scandal.
Ingratiation- According to ingratiation strategy, it is the responsibility of crisis manager of Tesco to make apparent efforts to obtain stakeholders favour about the past good works and contribution.
Situational Crisis Communication Theory
As per the words of Coombs (founder of the SCCT theory), the fundamental intention is to offer a scheme for understanding how crisis manager can use this theory to defend the company's reputation during the crisis. It is very important that company should protect their stakeholder rather than worrying about the image or goodwill of the company because stakeholder are like oxygen for the company to survive. There are three types of crisis which are Victim crises (caused by natural disaster), Circumstance crisis (not in hand, circumstances may cause) and preventable crises (caused by human errors) (Buil, Martínez and Matute, 2016). Thus, Tesco has faced preventable crisis and it is one of the dangerous crises as compare to others because it directly hit the image of the company.
Crisis Management Theory
Crisis management theory is also very essential that organisation used in order to analyse the level of crisis faced by the company as well as it how it influenced the business reputations. The crisis faced by Tesco is very big as it directly hit the reputation of company among its stakeholders. It is the duty and responsibilities of crisis manager to take immediate actions to resolve or overcome the impact of crisis (Crisis Management Theory, 2017). The best way to overcome the threat is to send the apology message or letter via social media, newspaper, email etc. to stakeholders. The PR action of Tesco in order to retain the generously as well as reputation holds by the business in the applicable sector.
Stakeholders are the key to achieve success in the market and it is fact. It is vital for all the organisations to implement or use stakeholder theory as it is very essential that company should create value to stakeholder not only for shareholders. Company should have to behave fairly and equally with all its stakeholders. According to this theory, company should have to take steps to maximise the interest of stakeholders because they are only the people who can save the business from the exit. Thus, Tesco should also send message of apology and commit sorry to all its stakeholders so that they feel a little sympathy for the company and give one more chance to more on. The primary purpose of using this theory to make the stakeholders always inform about what is happening in the company and by what stage they are passing through (Dutot, Lacalle Galvez and Versailles, 2016). For Tesco, this strategy directly helps them, to build trust and worthy relationship with the stakeholder.
The above report concluded that impact of risk factors in the businesses as well as the importance of reputation of the company in the market. It is fact that, in the world of business, no one knows what will happen next to them, thus, it is very important that company's should be aware of the crisis that they have to face in the future. The above study makes it crystal clear that crisis is the part of organisation operations activities. Further, the importance of PR to overcome the threat was also discussed which is the best way to build and re-construct the reputation of the company. The PR techniques helps both Facebook and Tesco to maintain their reputation after the scandal in effective manner if PR techniques fails than company have to suffer the huge loss.
Books and Journals:
Buil, I., Martínez, E. and Matute, J., 2016. From internal brand management to organizational citizenship behaviours: Evidence from frontline employees in the hotel industry. Tourism Management, 57, pp.256-271.
Dijkmans, C., Kerkhof, P. and Beukeboom, C.J., 2015. A stage to engage: Social media use and corporate reputation. Tourism Management, 47, pp.58-67.
Doorley, J. and Garcia, H.F., 2015. Reputation management: The key to successful public relations and corporate communication. Routledge.
Dutot, V., Lacalle Galvez, E. and Versailles, D.W., 2016. CSR communications strategies through social media and influence on e-reputation: An exploratory study. Management Decision, 54(2), pp.363-389.
Fearn-Banks, K., 2016. Crisis communications: A casebook approach. Routledge.
Flax, J., Bick, G. and Abratt, R., 2016. The perceptions of supplier-buyer relations and its affect on the corporate brand. Journal of Brand Management, 23(1), pp.22-37.
Grunig, J.E. and Hung-Baesecke, C.J.F., 2015. The effect of relationships on reputation and reputation on relationships: A cognitive, behavioral study. In Public Relations As Relationship Management (pp. 95-145). Routledge.
Heding, T., Knudtzen, C.F. and Bjerre, M., 2015. Brand management: Research, theory and practice. Routledge.
Hewett, K and et.al., 2016. Brand buzz in the echoverse. Journal of Marketing, 80(3), pp.1-24.
Jiang, H., Luo, Y. and Kulemeka, O., 2016. Leading in the digital age: A study of how social media are transforming the work of communication professionals. Telematics and Informatics, 33(2), pp.493-499.
Schaarschmidt, M. and Walsh, G., 2018. Social media-driven antecedents and consequences of employees' awareness of their impact on corporate reputation. Journal of Business Research.
Schivinski, B. and Dabrowski, D., 2015. The impact of brand communication on brand equity through Facebook. Journal of Research in Interactive Marketing, 9(1), pp.31-53.
Urde, M., 2016. The brand core and its management over time. Journal of product & brand management, 25(1), pp.26-42.
Crisis Management Theory. 2017. [Online]. Accessed through: <https://instituteforpr.org/crisis-management-and-communications/>.
Stakeholder Theory. 2017. [Online]. Accessed through: <http://stakeholdertheory.org/about/>.