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Reputation & Crisis Management for International Businesses

Instructor: Sean Kennedy

Sean has 8 years experience as a supervisor and has an MBA with a concentration in marketing.

Reputation & crisis management for international business varies but is essential in most countries. In this lesson, we will discuss crisis management for reputation, protecting reputation, and when reputation is not important.

Crisis Management for Reputation

A crisis is a problem in a business that is exposed to the public, and can harm a business's reputation and its business operations. It is essential for a company to handle crises correctly and take responsibility when the occurrence could have been prevented to help maintain their reputation.

A crisis management plan for reputation includes an active role from the CEO, organizational activity, and an effective communication strategy. The CEO should take responsibility for the crisis when necessary, and address the public. Mary Barra was a new CEO at GM when a crisis regarding a recall when the company was responsible for multiple deaths. Barra took responsibility, communicated to the public about the issue, and apologized to the public for the company's crisis. This helped the company because instead of lying, the CEO took full responsibility and then put an action in place to recalls for over a million cars. Barra was able to effectively communicate to the consumers by directly speaking to them through a filmed statement.

The CEO plays a crucial role on how the company will react to a crisis. The CEO must ensure that the company maintains a good reputation in order to bounce back from a crisis. When a CEO tries to shift the blame when the crisis could have been prevented, this will give a bad reputation to the company. Bara's decision to speak to the public was appreciated by consumers and news outlets.

The organization must come together and work as a team to try and keep the company's reputation positive to consumers and stakeholders. Communication is essential in international business because when operating in different regions it is necessary for the company to communicate information to continue to build a positive brand reputation.

Protecting Reputation

Protecting reputation is essential in international business to help remain positive in the eyes of consumers, stakeholders, and employees. Maintaining reputation is essential throughout all areas of the world.

The nuclear industry in Europe went under a significant change because of a crisis after an earthquake, and tidal wave caused a breach at the reactor core in Fukushima Japan in March 2011. T The earthquake This convinced Germany, Italy, and Switzerland to get rid of nuclear plants to help protect their reputation. Countries also have to protect their reputation in order to continue to do businesses with other countries.

In 2008, The Halifax Bank of Scotland's shares fell 17% in one day because of false rumors regarding liquidity. The Bank of England had to make an announcement that these rumors were false to help the trading of stock return to normal. The stock rose 10% after the announcement. This shows how essential reputation is globally because one small rumor or crisis can affect the business significantly.

When Reputation Reform Goes Wrong

In the United States, the BP oil spill caused 11 deaths, and created an oil slick in the ocean. The crisis caused significant damage to the ocean, and the once popular company became disliked by people in the United States. The company tried to protect their reputation, by blaming it on the company who rigged the oil rather than taking the blame. The CEO Geroge Stephanopoulos did not handle the crisis properly because he did not show any remorse, and did not take any responsibility for the crisis. BP lacked transparency, empathy, and did not provide regular reports to the public. The company believed they were doing the best to protect their reputation, but they went about it the wrong way.

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