Crisis and Planning
A crisis can strike a company at any given time. This is because it is an unfortunate event that is beyond the control of anyone or anything. For this reason, it is not known when it will come and where it will come from. Nonetheless, when it occurs it is imperative for the affected company to have in place a crisis communication plan as it will be significant for its survival after the crisis. According to Wigley and Zhang, when a company is facing a crisis its integrity and reputation are under threat. This is usually brought on by adverse and negative media coverage. Crisis communication therefore goes a long way in preventing this and reducing the impact of this negative media coverage following the occurrence of a crisis. It is important to remember that for crisis communication to successful combat the negative publicity brought on by a crisis; the communication process should be as effective as possible. Snauwaert asserts this is to ensure that only clear and accurate information is passed to the company’s stakeholders and the general public so as to prevent any additional negative judgment from the court of public opinion. Thesis: Walmart, as the largest global retailer is not exempt from crises, but effective public relations and collaboration between relevant stakeholders such as shareholders and customers can always save its reputation.
Summary of the Key Points of the Case
Walmart faced a crisis situation when a video surfaced showing four of its employees destroying boxes of brand new iPads before they are placed on store shelves. Bernstein Crisis Management explains that the four were doing this by throwing and dropping the iPad boxes. One of the employees in the video sends out a warning to customers telling them not to buy high end electronics from the retailer as they may have been subjected to the same treatment as the iPads. Although the company was not directly involved the fact remains employee actions have a bearing on a company’s reputation. Thus, the action of these four employees created a reputation management crisis for the giant retailer which required an excellent crisis communication move.
Top Three Publics Most Important for the Company to Restore Confidence
The top three publics that are most important for the company to restore confidence with according to Snauwaert, are its shareholders, customers, and suppliers. Firstly, it is critical the company restores confidence with its shareholders following the crisis because they are its most important source of finance. Further, the negative crisis brought about by the crisis will lead to poor public image and will drive sales down if not well managed. This decrease in sales will translate into loss. The shareholders will therefore worry if the crisis will cause them to lose money. In addition, it is critical for the company to restore confidence with its shareholders because they have the power to enforce change major changes in the company. If the crisis causes them to lose confidence with the company, they are more likely to make key changes such as replacing the management team.
Secondly, the company should strive to restore confidence with its customers. This is because the crisis caused by the video of the company’s employees manhandling merchandize will cause most of the company’s customer to doubt the durability of the rest of the merchandize the company is selling to them. Many of the customers will presume they are being sold pre-broken merchandize and will therefore find new places to shop. This will drive sales down and also destroy the company’s chances of getting new customers. The long run result will be los which may result in a worst case scenario of bankruptcy.
The final public that the company should strive to restore confidence with is its suppliers. The destruction of merchandise by company employees on purpose will cause many of the suppliers to feel their products are not respected by the company. Many will feel uneasy supplying the company with their goods. Since customers will presume that the company’s merchandize is sold to them pre-broken, most suppliers will not want their goods to be associated with the company as they worry that they will not be bought.
Three Tactics to Restore Confidence for Each Public
The tactics that can be used to positively affect the confidence of shareholders are as follows. The first tactic is to present the status of the crisis to the shareholders in a timely manner. Veil and Husted opines that this timely manner should be as soon as the company discovers the crisis. This will help to positively affect the confidence of shareholders as it will show the company considerate. If the shareholders find out about the crisis long after it has taken place, they are likely to feel the company does not appreciate their significance as owners. The second tactic that the company can use to positively affect the confidence of shareholders is to communicate the steps they are taking to manage the situation through social media avenues such as twitter and facebook where adverts can be done. This should be done in detail. It will help calm the shareholders. As a consequence, this calming effect will to an extent restore their confidence in the company. The third tactic the company can use to positively affect the confidence of shareholders is to demonstrate what they are doing to prevent the occurrence of the crisis in future. By showing they are already taking steps to ensure the crisis will not happen again, the shareholders’ trust will be restored to an extent.
For customers, the company can use the following tactics to positively affect their confidence. The first tactic is to engage the customers. This can be done by establishing a notification system that will alert them of the crisis through communication systems such as insta-messages and emails. The company can also use its social media platform such as facebook to do this. Wigley and Zhang assert that this is the easiest way of sending information that is meant to reach a large number of people. This will affect customer confidence in the company in a positive way because it will indicate the company’s honesty with regards to the crisis. Finding out about the crisis from other sources other than the company will indicate it is hiding something a factor that will make many customers to perceive it in a suspicious manner. The second tactic that can be useful in helping the company to positively affect the confidence of customers is to commit to make things right after the crisis. Such commitment will go a long way in reassuring customers that the crisis will not take place again therefore helping to rebuild customer confidence in the company. The third tactic to be used to positively affect the confidence of the customers is to take responsibility for the crisis. Owning up is a very effective way of getting back customer loyalty and trust and rebuilding company relationship with them. This is because despite the impact of the crisis on the customers, people still admire those with the courage to accept they have done a mistake.
Accordingly, there are more tactics that can be used to positively affect the confidence of suppliers after the crisis. One such tactic is to reach out to the supplier affected in the crisis through a common communication channel of twitter or facebook. According to Ferguson, Wallace, and Chandler this can be used as an opportunity to reassure suppliers as company stakeholders that the incident was a onetime thing which will never happen again. In this case, Walmart should reach out to Apple Inc. and communicate to them the crisis. This will make Apple to feel appreciated helping to rebuild its trust with Walmart. The second tactic that can positively affect the confidence of suppliers is showing sincerity in its endeavors to correct the crisis and its impact to the suppliers. It is one thing to claim the company is doing all it can to handle the crisis and its impact to its stakeholders and another thing to be sincere about it. It is imperative that the affected stakeholders be able to detect sincerity in this claim since it plays a major role in restoring their confidence with the company involved in a crisis situation. The third tactic the company can utilize to positively affect the confidence of the suppliers is to empathize with them with regard to the impact the crisis is having on their products. Empathy is key to showing the company not only cares about the impact the crisis is having on their supplier but it has placed itself in their shoes and is feeling with them. This is highly effective in restoring trust.
Measuring the Impact of these Ideas
Measuring the impact of the ideas used to manage the crisis can be done in the following ways. First, the company should assess the response of the affected stakeholders. For the above case involving Walmart, the company should measure the response of its three main publics; shareholders, customers, and suppliers. Snauwaert suggest companies can get customer responses from the feedback they receive in form of comments from social media platforms, anonymous letters and emails, and calls from their customer care desk. If the response is positive then the ideas applied have a positive impact. The opposite is true if the response is negative.
The second way of measuring the impact of the ideas used to manage the crisis is assessing the sales volume of the company after the crisis. Following the implementation of ideas necessary to manage the crisis the company should evaluate its sales after a period of time. If the results of the evaluation indicate that sales have not been adversely affected then the ideas implemented following the crisis have been effective. However, if the sales have fallen then the ideas have failed.
Another relevant way of measuring the impact of the ideas used to manage the crisis is by assessing the type of media coverage received after implementation of the ideas. If after implementation of the determined ideas the company receives positive media coverage, the ideas have had a positive impact. On the other hand if media coverage is negative the ideas can be confirmed to have had a negative impact.
In conclusion, when a crisis occurs in a company, it adversely impacts on the stakeholders. It is imperative for a company to identify the affected stakeholders in the order of their importance. This should then be followed by development of tactics that can be used to restore their confidence and trust to the company. It is also important to assess the impact of the ideas used to manage the crisis. This will act as point of reference towards carrying out any necessary improvements.