Corporate Reputation and Competitiveness Reputation is at the heart of a company’s success. This unique book, from four of the world leaders in reputation research, reveals the very latest thinking about how organ- izations can improve, whether they are in the public, commercial or not-for-profit sector. The philosophy is to match the external (customer) perception of the organization and what they value, to the internal (customer-facing employee) perception and their organ- izational values. Only when these are ‘harmonized’ can the firm be truly competitive. Corporate Reputation and Competitiveness takes the subject of Reputation Management further than any previous text. It covers some familiar ground: dealing with the media, crisis management, the use of logos and other aspects of corporate identity. But it also argues for Reputation Management to be seen as a way of managing the long-term strat- egy of an organization. It presents a new approach to measuring reputation, one that relies on surveying customers and employees on their view of the corporate character. It carries detailed results of studies showing the interaction of customer–employee per- spectives and how and why customer views influence commercial performance. The book introduces the Corporate Reputation Chain – the potential to link staff and customer satisfaction via the organization’s reputation, and to the Corporate Personality Scale – a way of measuring what customers and staff feel about the organization itself. Detailed case studies from a variety of different companies and sectors reveal the prac- tice of Reputation Management. Corporate Reputation and Competitiveness is intended to be useful to both managers and students on postgraduate courses. Gary Davies is Professor of Corporate Reputation at Manchester Business School where he heads the Corporate Reputation Institute. Rosa Chun is Fellow in Reputation Management at Manchester Business School and a member of the Corporate Reputation Institute. She teaches Reputation Management and Business Strategy. Rui Vinhas da Silva is Lecturer in Marketing at Manchester Business School and a member of their Corporate Reputation Institute. He teaches Reputation Management and Marketing. Stuart Roper is Senior Lecturer in Marketing at Manchester Metropolitan University. Corporate Reputation and Competitiveness Gary Davies with Rosa Chun, Rui Vinhas da Silva and Stuart Roper London and New York First published 2003 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2004. © 2003 Gary Davies, Rosa Chun, Rui Vinhas da Silva and Stuart Roper All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-203-21811-6 Master e-book ISBN ISBN 0-203-27369-9 (Adobe eReader Format) ISBN 0-415-28743-X (Print Edition) Contents List of figures vi List of tables ix Foreword x Introduction xii PART 1 Reputation as a strategic approach 1 1A brief history of strategic thought 3 2The traditional approach to Reputation Management 24 3The reputation paradigm 58 4The company as a brand 77 5Defending a reputation 99 PART 2 Managing reputation by managing corporate personality 135 6Measuring reputation: the Corporate Personality Scale 137 7The management of image and identity 159 8Managing the Reputation Chain 176 9Reputation and business performance 201 10 Challenges in Reputation Management 218 11 Managing the personality of the organization 235 References 259 Index 269 Figures 1.1 Gap analysis 5 1.2 The two planning flows 7 1.3 The Five Forces Model 9 1.4 The PIMS paradigm 11 1.5 The SERVQUAL model and gaps 13 1.6 The chain effect in a service business 14 1.7 The Business Excellence Model 14 1.8 Top down vs bottom up? 17 1.9 Mission and vision 20 1.10 Analysis and implementation 22 2.1 Public affairs activities 31 2.2 The elements of public relations 32 2.3 Guidelines for media relations 32 2.4 Citizens per retail outlet in Japan 1970 to 1998 38 3.1 A stakeholder model of the organization 59 3.2 The stakeholder perspective 60 3.3 Gaps in reputation 62 3.4 Organization culture, identity and image 62 3.5 How reputation is created 63 3.6 Identity, reputation, and outcome 67 3.7 Reputation and business performance 70 3.8 The Corporate Reputation Chain 76 4.1 The six assets of a brand 78 4.2 Supply chain cost structures for competing own brands and brands 81 4.3 Metaphors for a brand 85 4.4 The marketing mix 90 4.5 Advertising in the services sector 92 4.6 Product positioning 94 4.7 Image positioning 94 5.1 Phases in a crisis 102 5.2 The escalation of media comment 102 5.3 The effect on expenditure on beef from the BSE crisis 105 5.4 Transaction analysis theory 113 5.5 McDonald’s sales and profits following the McLibel case 119 5.6 Turnover at Marks and Spencer flattens 126 Figures vii 5.7 Profits at Marks and Spencer nosedive 126 6.1 The Reputation Quotient 139 6.2 The ROIT measure of identification 140 6.3 Scale to assess internal and external views of reputation 152 6.4 Agreeableness 153 6.5 Enterprise 153 6.6 Competence 154 6.7 Ruthlessness 154 6.8 Chic 155 6.9 Machismo and informality 156 6.10 The Corporate Personality Scale applied to a service organization 157 6.11 The Corporate Personality Scale applied to a similar organization 157 7.1 The Corporate Reputation Chain 159 7.2 Sales performance 161 7.3 A checklist to measure market orientation 162 7.4 A checklist to measure customer orientation 163 7.5 Internal and external values 164 7.6 Average identity and image scores 166 7.7 Correlation of identity and image 169 8.1 The Corporate Reputation Chain 177 8.2 Average staff and customer satisfactions 181 8.3 Average staff and customer satisfaction for individual business units 181 8.4 Average satisfaction at business unit level for a financial services distributor 182 8.5 Average satisfaction at business unit level for a food retailer 182 8.6 Average satisfaction at business unit level for a fashion retailer 183 8.7 A positioning map indicating how commercial banks might be seen as different from their mission and vision statements 192 9.1 Reputation rankings and financial performance 202 9.2 Differentiation and brand strength 203 9.3 The Corporate Reputation Chain 204 9.4 Average customer competence and satisfaction scores: fashion retailer 207 9.5 Average customer informality and satisfaction scores: fashion retailer 207 9.6 Average customer enterprise scores and sales growth: fashion retailer 208 9.7 Average customer enterprise scores and sales growth: fashion retailer 209 9.8 Average customer modernity scores and average staff age: fashion retailer 209 9.9 Average customer dominance scores and sales growth: construction company 210 9.10 Average customer satisfaction and sales growth: food retailer 211 viii Figures 9.11 Average customer satisfaction and agreeableness: food retailer 212 9.12 Average customer agreeableness and sales: food retailer 212 9.13 Average customer chic and satisfaction: food retailer 213 9.14 Customer satisfaction reducing as sales increase 214 9.15 The reputation toolkit 216 10.1 Identity by origin of employee 219 10.2 The identity as seen by staff with and without regular customer contact 220 10.3 The identity of a bank formed by merger depending on a bank worked for previously 222 10.4 A few rules for logos 226 10.5 Different typeface, different identity 227 10.6a The original green box design 231 10.6b The original green box design with examples of its application 231 10.7 The final version of the logo 232 10.8 The logo as modified for use by the school’s Centre for Business Research 232 10.9 The logo applied to signage 232 10.10 Internal and external views of financial management 233 11.1 Combinations of personality dimensions: staff 254 Tables 2.1 Variations in retail structure from country to country 37 2.2 Companies surveyed 45 2.3 Respondents’ description of core values 47 4.1 The image of brands and own brands 88 6.1 Neurotic styles and their characteristics 143 6.2 Retail image criteria, after Berry (1969) 143 6.3 The items and dimensions of Aaker’s (1997) scale 146 6.4 The seven dimensions of corporate personality 150 6.5 Co-relation with satisfaction 151 7.1 Co-relation of corporate personality dimensions with satisfaction of customers and staff 165 7.2 Average scores for each personality dimension 166 7.3 Satisfaction of drivers at branch level 167 7.4 Average scores of the seven factors at branch level 168 7.5 Co-relation coefficients for facets of agreeableness with satisfaction 170 7.6 Ideas from the workshops for changing identity 173 7.7 Ideas from the workshops for changing image 174 9.1 Co-relation coefficients of personality dimensions with satisfaction (all companies) 204 9.2 Co-relation of the personality traits of agreeableness 205 9.3 Co-relation coefficients of personality dimensions with satisfaction: four retailers 205 Foreword What drives competitiveness? This is the central question that animates most dis- cussions about strategic positioning.