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How important is a favourable Corporate Image prior to a Crisis?

Bachelor Thesis 2006 99 Pages

Business economics - General

Excerpt

Table of contents

List of Tables and Figures

1. Introduction

2. Literature Review
2.1. Definitions
2.2. Corporate Identity, Image and Reputation
2.3. Building a Corporate Image
2.4. Case Studies Johnson & Johnson and Coca-Cola
2.4.1. Johnson & Johnson
2.4.1.1. The Tylenol Crisis
2.4.1.2. Brand Image
2.4.1.3. Media Analysis
2.4.2. Coca-Cola
2.4.2.1. The Coca-Cola Crisis
2.4.2.2. Brand Image
2.4.2.3. Media Analysis
2.4.3. Conclusion relating to the Case Studies
2.5. Moral Panic
2.5.1. Johnson & Johnson
2.5.2. Coca-Cola

3. Methodology
3.1. Primary and Secondary Research
3.2. Qualitative and Quantitative Research
3.3. Secondary Research in this Dissertation
3.4. Primary Research in this Dissertation
3.4.1. Interview (qualitative)
3.4.2. Questionnaire (quantitative)
3.5. Research applied in this dissertation
3.5.1. Interview
3.5.2. Questionnaire

4. Analysis and Findings
4.1. Questionnaire
4.1.1. In General
4.1.2. English and German students
4.1.3. Tabloids and National Press Reader
4.2. Interview

5. Conclusion

References

Bibliography

Appendices

List of Tables and Figures

Figure 1. Connection between corporate identity, image, and reputation

Figure 2. Creating corporate images

Abstract

The purpose of this dissertation is to find out whether a favourable corporate image is important prior to a PR-crisis. This question is also being applied to Merck & Co. Inc., a pharmaceutical company in the U.S. which is currently having its VIOXX-crisis, while researching if their favourable corporate image is helping them to overcome the crisis faster. Furthermore an employee of Merck KGaA in Germany was interviewed, with the intention to find out whether the company has been influenced by the VIOXX-crisis since they are related through their names.

The methodology is a critical review of the literature, in addition to the description of how to put together, employ and analyse an interview and a questionnaire, which was distributed to 180 students in England and Germany.

The findings are comprised of the comparison of the results of the questionnaires and the answers of the interview with the literature. The favourable corporate image proves to be important prior to a crisis and a good relationship with the media should be built by the organisations in order to diminish the risk of moral panic. Referring to Merck & Co., Inc., their favourable corporate image and good relationship with the media give them a strong potential to overcome the crisis.

The method had a limitation: the sample of the questionnaire are English and German students only and therefore do not represent the whole English and German population.

The favourable corporate image and a good media management policy are valuable assets of a company, especially nowadays when bad news can be communicated rapidly by modern media tools, like the Internet.

1. Introduction

During the past years it seems that crises accumulated. Or is it just the media that communicates faster? In either case, crises do exist and will not die away. But what exactly is a crisis? According to Fearn-Banks (2002, p.2), public relations professionals often say, “I have a crisis everyday.” But of course, a crisis is something more serious than a problem. According to Fearn-Banks (2002, p.2), a crisis can be events like a strike, a terrorist attack, a fire, a boycott, product tampering or product failure.

This dissertation is focused on corporate crises. So what can organisations do to prepare for crises? One way is to develop crises or public relations plans. “However, in the new century, many large corporations still have no crisis management or crisis communications plans“(Fearn-Banks, 2002, p.1). Another way is to build a favourable corporate image. According to the 1989 MORI (Market and Opinion Research International) survey, 77% of leading industrialists believe that their company attaches to developing and promoting its corporate image will increase over the next few years (Ind, 1990, p.13).

The reason why this topic has been chosen is the question whether the German company Merck KGaA has been influenced by the Vioxx-crisis of the Merck & Co., Inc. in the U.S.. Furthermore it was of great interest to evaluate the role of the German company’s corporate image and media handling in remaining untouched by the crisis of the American daughter company.

The Chinese connect crisis to two words - danger and opportunities. “While opportunities may arise as the result of a crisis, the effects on corporate images and reputations are mostly negative” (Dowling, 2002, p.252).

The impact of a crisis on the images people have of organisations is composed of

- how favourable or unfavourable their current images and reputations are,
- the magnitude and type of crisis,
- and the amount and tone of media publicity (Dowling, 2002, p.252).

In the opinion of Grahame Dowling (2002, p.252), “many managers believe that a good corporate reputation acts as a type of insurance policy the first time the company faces a serious crisis”.

In most crises incidents, the outcomes depend mainly on how a company can handle the media and what it does and says in the first few hours. Media can influence crises in two ways, one the one hand it can help a company to overcome it faster, but on the other hand it can evoke moral panic and even destroy the company’s reputation irrevocably.

But what is the right way to deal with the media? Have there been cases in the past, companies can learn from? By means of a questionnaire, the aim is to find out what students think about that subject matter and an employee of a large pharmaceutical company is being interviewed about this topic as well.

The literature review aims at first deciding on the most appropriate direction to take in terms of literature scope; second, current crisis theories are highlighted with a critical view to the relevance and the practicality of these two case studies and the credibility of the theories themselves.

The methodology explains methods and techniques used to collect and analyse the information. It describes the secondary and primary research in this dissertation, including advantages and limitations of each method and when giving a reason for the chose of the interviewee, a third case study is introduced. It is about Merck & Co Inc., which has not yet overcome its crisis.

The analysis and findings are combined in one chapter; consisting of two primary research types, one questionnaire and an interview. First every question of the questionnaire is interpreted individually and then the analysis goes into detail with the differences between German and English students, and between tabloids and national press readers. The interview is summarised and analysed as well and everything is combined in the conclusion, with links from the findings to the literature used.

2. Literature Review

The study of corporate image in connection with crises has an extensive library of literature supporting it. This literature review focuses on two case studies of companies that have overcome crises based and on the provision of essential definitions on the subject

2.1. Definitions

According to Kathleen Fearn-Banks, crisis is a major occurrence with a potentially negative outcome affecting an organisation, company, or industry, in relation to target group, products, services, and brand. A crisis interrupts normal business transactions and can sometimes threaten the reputation of the organisation (Fearn-Banks, 2002, p.2).

A crisis consists of five stages. Depending on the crisis they differ in length, and intensity, and sometimes they even happen at the same time.

1) The first stage is called the detection, or prodromal, stage. Prodomals are warning signals, and the organisation has to watch for them continuously (Fearn-Banks, 2002, p.9).
2) In the second stage, named preparation and prevention stage, companies observe the warning signs and make plans to avoid the crisis through a proactive campaign or prepare a reactive campaign to cope with the crisis (Fearn-Banks, 2001, p.480). They build relationships with key publics and regularly inform them about their actions (Fearn-Banks, 2002, p.9). According to Kathleen Fearn-Banks (2002, p.9), numerous crises can be prevented if all members of the management staff are trained to be media savvy. Crisis preparation is necessary for dealing with crises that cannot be prevented. The CCP - Crises Communications Plan - tells each key person on the crisis team what his or her role is (Fearn-Banks, 2002, p.9).
3) The containment stage refers to the effort to limit the duration of the crisis or to keep it from spreading to other areas affecting the organisation.
4) The recovery stage involves efforts to return the company to business as usual. Organisations want to leave the crisis behind and restore normality as soon as possible. Recovery may also mean restoring the confidence of key publics, which means communicating a return to normal business (Fearn-Banks, 2002, p.9).
5) The last stage is called learning stage and is a process of examining the crisis and determining what was lost, what was gained, and how the organisation performed in the crisis. It is an evaluative procedure designed to make the crisis a prodrome for the future (Fearn-Banks, 2002, p.9).

Crisis communication is the dialog between the organisation and its public prior to, during, and after the negative occurrence. The strategies and tactics are designed to minimize damage to the image of the organisation (Fearn-Banks, 2002, p.2).

Crisis management is a process of strategic planning for a crisis or negative turning point, a process that removes some of the risk and uncertainty from the negative occurrence and thereby allows the organisation to be in greater control of its own destiny (Fearn-Banks, 2002, p.2).

The newsletter Public Relations News states:

Public relations is the management function which evaluates public attitudes, identifies the policies and procedures of an individual or an organisation with the public interest, and plans and executes a program of action to earn public understanding and acceptance (Grunig and Hunt, 1984, p.8).

The PR definition of the Chartered Institute of Public Relations reads as follows:

Public relations is about reputation - the result of what you do, what you say and what others say about you.

Public relations is the discipline, which looks after reputation, with the aim of earning understanding and support and influencing opinion and behaviour. It is the planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics (Chartered institute of public relations, no date).

2.2. Corporate Identity, Image and Reputation

Although many people use the terms corporate identity, corporate image, and corporate reputation interchangeably, it is important to distinguish between them (Dowling, 2002, p.18).

Corporate identity consists of the symbols and nomenclature an organization uses to identify itself to people (such as the corporate name, logo or advertising slogan) (Dowling, 2002, p.19). It is the core of an organisation’s existence. It is unique, very difficult to change and formed by an organisation’s history and philosophy (Ind, 1997, p.19).

Corporate image, as stated by Bevis, is the net result of all the experiences, impressions, beliefs, feelings and knowledge a person has about an organisation (Bernstein, 1984, p.125; Dowling, 2002 p.19).

Corporate reputation is the attributed values, such as authenticity, honesty, responsibility, and integrity, evoked from the person’s corporate image (Dowling, 2002 p.19).

Corporate communication is the process that translates corporate identity into corporate image (Ind, 1997, p.14).

Corporate identity helps people recognize a company and corporate image is a set of beliefs and feelings about an organisation. As Dowling (2002 p.19) said, “in effect, the individual’s corporate image is compared to his or her free-standing values about appropriate behaviour for this type of organisation”.

illustration not visible in this excerpt

Figure 1: “Connection between corporate identity, image, and reputation” (Dowling, 2002, p.20)

The top section of the figure shows that a good corporate identity can have two possible effects on corporate image (Dowling, 2002, p.20).

People can make the correct association between the company and its identity symbols and then hopefully, via these identity symbols, recall their image of the company (Dowling, 2002, p.20).

The definition of corporate image above suggests that this construct has a ‘logical’ (cognitive belief) component and an emotional (feeling) component. Both of these are necessary and usually experienced simultaneously in the person’s mind. They fit together to form an overall corporate image (Dowling, 2002, p.20). If beliefs and feelings about a company fit with a person’s values about the appropriate corporate behaviour, then the individual will develop a positive view of that company. This applies for both internal stakeholders (e.g. employees) and external stakeholders (e.g. customers) (Dowling, 2002, p.19). According to Grahame R. Dowling (2002, p.19), a good corporate reputation represents a tight ‘fit’ between the image of the company and the individual’s freestanding value system.

While corporate images and reputations are driven mostly by the need to offer good value to stakeholders, corporate communication has a vital role to play in image formation. First, it can publicize an organisation’s strengths and successes. Second, it is the primary vehicle for positioning the ideal image of the organisation. Finally, it may be the only way to signal to stakeholders that what the organisation is doing supports one of their freestanding values (Dowling, 2002, p.147).

2.3. Building a Corporate Image

David Ogilvy believed that consumers buy products with a personality, namely ‘brands’. Advertising gives products a ‘personality’, their ‘brand image’. That means, images of things exist in the minds of people only and are not a fixed attribute of an organisation. As people have different experiences with these things, an organisation does not have a single image - it has many images (Dowling, 2002, p.17). For consciously creating those images, the major factors have to be identified, that combine to influence how people perceive an organisation. These image drivers are the set of activities that influence every aspect of how a typical organisation communicates with both its internal and external stakeholders. Having identified these factors, it is possible to specify how they interact with each other to form the overall image a person holds of the organisation (Dowling, 2002, p.49).

illustration not visible in this excerpt

Figure 2: “Creating corporate images” (Dowling, 2002, p.52)

The figure above shows the main factors that employees and external groups typically use to form their images of organisations (Dowling, 2002, p.49).

When the corporate image is being measured, the company is concerned with the perceptions of its different audiences and has to look whether they will help the achievement of the strategy or whether they will hinder it.

The audience can be divided into a limited number of groups, employees, consumers, the financial community, suppliers and buyers, government, local communities and the media.

2.4. Case Studies and

Relating to the theory, the following two case studies will demonstrate the importance of a favourable corporate image prior to a crisis. Both had to suffer a crisis and overcame it in different ways and with different actions.

2.4.1. Johnson & Johnson

The health care company Johnson & Johnson grew from a small, family-owned business, founded in 1876, to a worldwide enterprise” (Padmore, 2005). It was an “old and trusted company” (Fearn-Banks, 2002, p.86) and guided by General Robert Wood Johnson who, in 1943, wrote the Johnson & Johnson Credo and advised his management to relate to it as part of their everyday business philosophy (Johnson & Johnson, no date). It had four responsibilities in the following order of priority: (1) to the consumer, (2) to the employees, (3) to the communities, and (4) to the stockholders (Fearn-Banks, 2002, p.89).

A number of organisations put their vision and mission into writing. This can be referred to as a Vision Statement, Mission Statement, or Credo (Dowling, 2002, p.70).

Johnson & Johnson give priority to their consumer. Their work and products must always be of high quality and their goods of reasonable prices. Every employee is considered as an individual, they must have good working conditions and a sense of security in their jobs. Johnson & Johnson feel responsible for the communities, too, encouraging better health and education for instance and protect the environment and natural sources. Johnson & Johnson’s fourth responsibility goes to their stockholders. The company has to develop innovative programs and the business must make a sound profit (Johnson & Johnson Credo see Appendix 1, page I).

2.4.1.1. The Tylenol Crisis

The Credo guided the corporation through the years, and at no time was this more obvious than during the Tylenol crisis of 1982 and 1986 (Johnson & Johnson, no date). as there was no crisis communications plan (CCP) (Fearn-Banks, 2002, p.88).

A painkiller, produced by McNeil Consumer Products, a subsidiary of Johnson & Johnson (Padmore, 2005), was altered by unknown individuals who placed deadly cyanide in the capsules.

The result was the death of seven people. However with Johnson & Johnson’s good name and reputation, and the numerous decisions that were inspired by the philosophy embodied in the Credo, “the company’s reputation was preserved and the Tylenol business was regained” (Johnson & Johnson, no date).

“They showed themselves to be prepared to bear the short term cost in the name of consumer safety. That more than anything else established a basis for trust with their customers” (Mallenbaker, no date), and “within five months of the disaster, the company had recovered 70% of its market share” (Smith, 2004) and “Tylenol had 24 percent of the market for pain relievers, not much less than the 37 percent of the market that the product held before the crisis” (Kaplan, 1998).

2.4.1.2. Brand Image

Guided by their Credo, Johnson & Johnson build “Deep Customer Loyalty” and “the very Powerful Brand Image of a trusted pharmaceutical company” (Fung, no date). Padmore (2005) stated that the company “has emphasised a tradition of being socially responsible”. In the year 2004 the company was on the first place in the annual corporate reputation survey and Robert Fronk says that there is a very high degree of public trust in Johnson & Johnson’s communication. “Johnson & Johnson clearly values this quality that it has built over many years in the minds of consumers as a trusted brand”, stated Allyson Steward-Allen, a director with International Marketing Partners (Padmore, 2005).

The result of Johnson & Johnson’s response to the Tylenol crisis was an enormous amount of very positive media coverage praising the company for placing customer safety ahead of profits. Subsequently there was a complete restoration of public faith in the safety of the brand as well as a big stimulus for Johnson & Johnson's corporate image as a caring company (Subramanian, 2002). Whilst Johnson & Johnson handled the crisis well, it has been suggested that one of the main reasons the company was able to weather the storm was because people trusted the corporate brand - its reputation for gentleness, safety and trustworthiness saw it through (Smith, 2004). Johnson & Johnson has an image that positions the consumer as its first priority. The corporation also had a positive image among its employees and according to Fearn-Banks (2002, p.86) it was listed as one of the 100 best places to work.

2.4.1.3. Media Analysis

Perhaps the most notable fact concerning the print media coverage of the Tylenol Incident is that not one article or editorial contained any negative reference to Johnson & Johnson. In most of the stories, writers portrayed the company in a positive light for its courage in overcoming the crisis.

Lata Subramanian said about Johnson & Johnson’s reaction that they were successful in implementing their crisis strategy, maintaining the favourable reputation of the company, even though authorities quickly established that it was product tampering (Subramanian, 2002). Smith (2004) describes Johnson & Johnson as a “trusted brand” and states trust as an important reason for the “remarkable recovery after considerable short-term losses” Johnson & Johnson’s successful crisis management gave them a reputation for acting in the best interests of its customers, rather than its own profits (Dowling, 2002).

It is clear that the media played a huge role in Johnson & Johnson’s public relations campaign. “The story was at the top of television and radio newscasts” and “about 180,000 news stories ran in the newspapers nationally” (Fearn-Banks, 2002, p.88, 93). By October 1, 1982, the first headline in the Chicago Sun Times came out in the morning linking five deaths to the Tylenol capsules. The Chicago Tribune picked up the story by that afternoon. The Tribune’s coverage was supportive of Johnson & Johnson’s situation and did not blame them for tampering. The paper did not even mention the Tylenol’s parent company name on the first page and kept it buried in the continuation of the story. One of the captions even indicated that the capsules were tampered with after leaving the manufacturing plant (Fearn-Banks, 2002, p.89-90). Jerry Knight (Kaplan, 1998), stated, "Johnson & Johnson has effectively demonstrated how a major business ought to handle a disaster". The Washington Post applauded Johnson & Johnson for being honest with the public (Kaplan, 1998). If the company had not fully cooperated with the media, they would have, in turn, received much less positive media coverage.

2.4.2.Coca-Cola

The Coca-Cola Company (CCC) has headquarters in Atlanta and Georgia (USA) and is “the world leading producer of soft drink concentrates and syrups, providing consumers with one of the world’s most popular soft drinks”. The Coca-Cola brand is the second most recognised phrase worldwide after “OK” and the company has been a standard-bearer of management and leadership practices enjoying

unmatched loyalty and commitment from employees, customers and stockholders. “This favoured status was dealt a severe blow when the health crisis erupted in Belgium” (Johnson and Peppas, 2003).

Coca-Cola is on a never-ending journey, which is represented by the “Manifesto for Growth” (Mission, Vision and Values). They want to refresh growth for the Company, and inspire their people. Coca-Cola’s strategy is accomplishing their goals by building a portfolio of branded beverages, and enabling superior market execution globally and locally (Coca-Cola, no date).

Short definition of Vision and Mission:

House and Shamir (Dowling, 2002, p.69) suggested, in every organisation people have vision, that is, an ideal that represents or reflects the shared values to which the organisation should aspire.

A corporate mission has three elements. It should have a finishing line, it should be attainable - but only with effort and the time limit should be short enough to be within reach of present employees (Dowling, 2002, p.70).

The Mission of Coca-Cola consists of three articles saying that the company wants to “refresh the world”, “inspire moments of optimism” and “create value and make a difference”. The Vision points out five different “P’s”, the profit, people, portfolio, partners and planet, and the seven Values of the company are leader ship, passion, integrity, accountability, collaboration, innovation and quality (For CocaCola Mission, Vision and Values, see Appendix 1 page II).

2.4.2.1. The Coca-Cola Crisis

The Coca-Cola crisis in Belgium started in June 1999, when a number of consumers complained of an irregular taste and smell in bottled Coca-Cola soft drinks. Shortly after, more than 100 students at six schools were reported ill after

noticing an unpleasant odour on the outside of canned drinks (Johnson and Peppas, 2003). The students experienced dizziness, nausea and muscular tremors, and some were hospitalized overnight. Consequently Belgium, Germany, France and the Netherlands banned Coke sales and what followed was the biggest recall in the company’s 113-year history (Anon, no date, c). Seventeen million cases of Coke were recalled and destroyed. Coca-Cola Belgium explained that the contamination was due to defective carbon dioxide (CO2) used at the Antwerp plant (AFP, 1999).

2.4.2.2. Brand Image

The effects from the crisis are still being felt within the organisation and the long- term damage to its image and reputation is still to be assessed (Johnson and Peppas, 2003). That shows that the value of Coca-Cola's brand, built up over more than a century, can be shaken suddenly and unpredictably (Ignatius, 1999).

Verbeke and Van Kenhove (2002) studied the impact of the personality trait “emotional stability” and attitude toward the brand on Coca-Cola consumption decisions during the Coca-Cola crisis of June 1999 in Belgium. They found “a direct and positive effect of attitude towards the brand on the behavioural response”. Another article, published in the Independent said, “if branding itself has managed spectacularly to throw off all negative associations, and reposition itself triumphantly, then so has the world's brand leader”, Coca-Cola” (Orr, 2000). The Coca-Cola brand image is widely recognised throughout the world and has become a symbol of successful global marketing. It is still on the top from the world’s top 10 recognised brands in 2002, as measured by value (Anon, no date, a).

2.4.2.3. Media Analysis

Under the headline “Coca-Cola stumbles in Belgium” Johnson and Peppas find fault with the reaction of the chairman and CEO, Doug Irvester. Even though the company quickly identified the problems, “the first of several public statements addressing the production and distribution problems and apologizing to the customers” was not until one week after the first incident. “History repeatedly shows that the longer the response time to a critical incident, the greater the long- term damage to a company’s financial security and reputation.” “The scare had been mishandled from the start, communication was inadequate and the company was ill-prepared for a crisis of such magnitude.” Coca-Cola’s silence led to a loss of public confidence (Johnson and Peppas, 2003). Coca-Cola misinterpreted the public mood and underestimated the crisis. The company‘s initial key message - that there was no risk to public health - was thus inadequate. Coca-Cola’s failure to recognise public concerns led to people believing the company didn’t care (Regester and Larkin, 2005, p. 151).

M. Gladwell in, The New Yorker, gives a different perspective. As the proportion of sulfide leftovers in carbon dioxide must have been thousands times greater to cause illness, “Belgium should have experienced nothing more than a minor epidemic of nose wrinkling”. Psychiatrist Simon Wessely, said, ”It’s just mass hysteria.” Again, Gladwell defended Coca-Cola and remind the people, who judged Coca-Cola, of D. Ivesters (CEO of CCC) words “We let the people in Belgium down,” and ends his article with the sentence “Or perhaps it was the other way around” (Gladwell, 1999).

2.4.3. Conclusion relating to the Case Studies

The Times criticized Coca-Cola for not measuring up to the gold standard of crisis management set by Johnson & Johnson during the 1982 Tylenol poisonings (Anon, no date, c), and David Ignatius, in his article about the Coca-Cola crisis, describes Johnson & Johnson's handling of the Tylenol scare in 1982 as the classic example of how to cope with such crises (Ignatius, 1999).

As already mentioned above, it can be said that Coca-Cola made severe mistakes, but the most significant disadvantage was the non-existing Credo, or “Mission Statement”, of the company. Johnson & Johnson referred to “Our Credo” with every uncertainty about the next step and any question they had. It helped to define their priorities and successfully guided the company through the crisis.

In reacting too slowly to the emerging crisis Coca-Cola revealed they had no contingency plans for such problems, they firstly denied that Coca-Cola was the reason for the 100 illnesses and then misread the public mood and underestimated the scale of the crisis, by saying that there was no risk to public health. Inferred from this information it can be said that Lawrence Foster, Johnson & Johnson’s Corporate Vice President, reacted in a perfect way by immediately warning the public not take any Tylenol capsules.

Unlike Coca-Cola, Johnson & Johnson had built a good relationship with the media over the years, which again helped the company to overcome the crisis.

Generally it can be said that both companies had and still have a favourable corporate image, which helped them to overcome the crisis, but Johnson & Johnson have a credo everyone can refer to and they made better decisions and therefore were able to overcome the crisis faster than expected.

2.5. Moral Panic

In the article of Arnold Hunt “’Moral panic’ and moral language in the media”, three moral panic theories are introduced. The most common one includes Stanley Cohen’s definition of the term. He said that societies appear to be subject, every now and then, to periods of moral panic. The threat becomes defined and its character is presented by the mass media, which is an “especially important carrier and producer of moral panics” (Hunt, 1997).

“Sometimes the object of the panic is quite novel and at other times it is something which has been in existence long enough, but suddenly appears in the limelight. Sometimes the panic passes over and is forgotten, except in folklore and collective memory; at other times it has more serious and long-lasting repercussions and might produce such changes as those in legal and social policy or even in the way the society conceives itself” (Hunt, 1997).

The concept of moral standing can also be adopted in relation to the two case studies. Two articles about each case will prove the appearance of moral panic.

2.5.1. Johnson & Johnson

When the story ran in the media, the public became afraid. People were saying, “I have a terrible headache, but I’m alive.” Even consumers outside the Chicago area were afraid of Tylenol capsules, if not also afraid of all over-the-counter pain medications (Fearn-Banks, 2002, p.88/89). “Two thousand telephone calls were taken from the media” and thirty thousand calls from consumers came in during the first months following the deaths0 (Fearn-Banks, 2002, p.93).

The news that each of the people that died, had ingested an Extra-Strength Tylenol capsule laced with cyanide travelled quickly and was the cause of a massive, nationwide panic. One hospital in Chicago, for instance, received 700 telephone calls about Tylenol in one day. The Food and Drug Administration counted 270 incidents of suspected product tampering, but assumed that “this number may have been inflated by the hysteria of consumers who blame any type of headache or nausea on food and medicine they think may have been poisoned” (Kaplan, 1998).

2.5.2.Coca-Cola

The explanation for the illnesses seemed to be found when it was clear that contaminated carbon dioxide had been used. But Gladwell.com states that the portion of the carbon dioxide had to be thousands of times greater to cause illness, “which means that Belgium should have experienced nothing more than a minor epidemic of nose-wrinkling”. And half of the kids hadn’t even drunk any Coke that day. Simon Wessely, a psychiatrist said, “It’s quite simple. It’s just mass hysteria. These things usually are.” The fact that the outbreaks occurred in schools is also typical of hysteria cases. "The classic ones always involve schoolchildren," Wessely continued. In the end of his article Wessely gives the reader something to think about by citing Douglas Ivester, “we let the people of Belgium down" and assuming that it was the other way around (Gladwell, 1999).

Psychiatrist Marc Feldman says that Coca-Cola was dealing with a classic outbreak of mass hysteria. In his opinion the company did the best they could because “if they had come out and said 'this is just mass hysteria' they would have been vilified 10 times as much as they were”. But like most observers, Feldman

criticizes Coke’s Ivester for his lack of visibility during the Belgian scare. "It allowed the situation to spiral," says Feldman. "Mass hysteria is like a virus, if you leave it untreated it spreads. You have to intervene early with information and assurances" (Cobb, no date).

3. Methodology

The methodology is a set of rules for applying the method and introduces the research procedures applied in this dissertation. It is the section, which includes the methods, procedures, and techniques used to collect and analyze information.

3.1. Primary and Secondary Research

The distinction of business research is generally drawn between primary and secondary research.

Primary research is customised to suit the research problem and always gathered first hand (Pickton and Broderick, 2005, p.723). and secondary research is often known as ‘desk-research’. It should always be used as a foundation before doing primary research. A key characteristic is that it is gathered from existing, published sources (Pickton and Broderick, 2005, p.734).

Gilbert and Iacobucci advise to begin with the secondary data, and only when the secondary data are exhausted or show diminishing returns, proceed to primary data (2002, p.198). Even though it is rare that secondary data would completely solve the particular problem under study, secondary data typically will help to clarify the problem. It will also propose improved methods of collecting data and provide qualified benchmark data against which primary data can be more insightfully interpreted (Gilbert and Iacobucci, 2002, p.199).

The most significant advantages of secondary data are the cost and time economies they offer the researcher. If the required information is available as secondary data, the researcher basically needs to get online or go to the library, locate the appropriate sources, and take out the desired information (Gilbert and Iacobucci, 2002, p.197).

3.2. Quantitative and qualitative research

Furthermore it is important to distinguish between quantitative and qualitative research.

The work of quantitative researchers employs measurements that can be constructed as a strategy that emphasizes quantification in the collection and analysis of data (Bryman and Bell, 2003, p.25). Samples have to be relatively large in size, with the intention of creating statistical validity (Pickton and Broderick, 2005, p.733).

By contrast, qualitative research can be constructed as a research strategy that usually emphasizes words rather than quantification in the collection and analysis of data (Bryman and Bell, 2003, p.25). The aim is to find out what “relevant others” think, and to uncover whatever issue are important in the situation. Such an approach is only feasible on a relatively small sample (Pickton and Broderick, 2005, p.732).

3.3. Secondary research in this dissertation

The secondary research of this dissertation consists of several books, articles and Internet documents.

The books have been used to establish a basis of theories regarding the question whether a favourable corporate image is important prior to a crisis. Besides it gave certain rules and proposals that helped compiling the questionnaire and the interview questions. Articles and Internet documents were mainly used to update the information found in the books and they helped finding details about the case studies.

3.4. Primary research in this dissertation

A questionnaire and an interview are the primary research methods applied in this dissertation.

3.4.1. Interview (quantitative)

The interview is probably the most widely employed method in qualitative research. The kind of interview conducted for this dissertation falls in the category of focused interviews. Merton, Fiske, and Kendall refer to them as using mainly open questions to ask interviewees about a specific situation (Bryman and Bell, 2003, p.119).

Reasons for making interviews are that, comparing to a questionnaire it has an open-ended and flexible nature and can achieve a greater depth of understanding (Willis, 2000, p.283).

Recording interviews is useful as it helps to correct the natural limitations of people’s memories and allows more detailed examination of what has been said. It helps to counter accusations that an analysis might have been influenced by the researcher’s values and also allows the data to be reused in other ways from those intended by the original researcher (Broadbent, 2000, p.353).

3.4.2. Questionnaire (qualitative)

There are some guidelines for developing, distributing and analysing a questionnaire.

First the objectives that the study is to answer have to be defined (Brace, 2005, p.8) and the questionnaire writer decides on the sample (Bryman and Bell, 2003, p.92). The next step would be the decision on the mode of administration followed by developing the questions (Bryman and Bell, 2003, p.92).

When planning the main questionnaire, the writer must consider the order in which the different topics are presented to the respondents. It is better to work from the

most general topics through to the most specific. One reason is, if the questions regarding the specific topic of interest were asked first, respondents might be aware of the questionnaire’s agenda and this would affect their answers to the more general market questions that come later. Secondly, starting with general questions allows the respondents to think about their behaviour in the market before getting into the detail (Brace, 2005, p.49).

A number of other issues need to be considered when writing a questionnaire.

- The language style tone in which it is written. The questionnaire writer has to ensure that the respondents will understand the questions and will not feel intimidated or threatened by the questions (Brace, 2005, p.113).
- Ensure that there is no ambiguity in the questions or the responses. If a question is ambiguous, the respondent might be presented with the dilemma of seeing two different questions and will not know which to answer (Brace, 2005, p.118).
- The use of prompt material. Prompts can be anything that the questionnaire writer wants to use in guiding the respondent or obtaining a reaction (Brace, 2005, p.125).

Having set up the questionnaire it is desirable to conduct a pilot study, particularly with self-completing questionnaires, since there will not be an interviewer present to clear up confusions (Bryman and Bell, 2003, p.170). Failure to pilot the questionnaire represents a serious risk to the success of the project (Brace, 2005, p.163).

The next step would be to distribute the questionnaires to the sample and when retrieving them, transform the complete questionnaires into computer readable data, which in this case is the SPSS program. SPSS is the short form of Statistical Product and Service Solutions. SPSS for Windows is the oldest and most popular of the many packages of computer programs currently available for statistical analysis (Corsten and Colman, 2003, p.1).

After the data has been collected, they will need to be analysed (Brace, 2005, p.8) and the findings interpreted. The last step is to consider the implication of the findings for the research questions (Bryman and Bell, 2003, p.92).

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Details

Pages
99
Year
2006
ISBN (eBook)
9783638540827
File size
1.6 MB
Language
English
Catalog Number
v60386
Institution / College
University of Lincoln
Grade
2,1
Tags
Corporate Image Crisis

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Title: How important is a favourable Corporate Image prior to a Crisis?