MAR036-6 Brand Communication and Reputation Management Assignment Sample 2023
Introduction
The normal functioning and operations of business organisations are jeopardised due to unplanned events or situations resulting in a crisis affecting the operations and requires careful handling to manage the organisational reputation and public relations. The handling of the crisis by the organisational management has a severe impact on the reputation of the brand and its overall position in the market. This report aims to conduct a review of the Boeing crisis and compare it with another crisis faced by Sainsbury’s because of the Covid-19 crisis. Both the crises for the aforementioned companies have taken place in the last 12 months. Boeing is a US-based multinational organisation that specialises in the manufacturing and designing of aircraft and other satellites and telecommunications equipment (Boeing, 2020). Sainsbury’s is a retail company based in the UK and has the second-highest market share in the industry (Sainsbury’s, 2020).
Boeing has faced an unprecedented crisis due to the disasters of the two 737 MAX aircraft in 2019 four months apart causing the death of 346 people in Indonesia and Ethiopia (CNBC, 2019). The crisis for Sainsbury’s has emerged due to the widespread of COVID-19 as the company was forced to close 573 stores of Argos, which is a subsidiary of the firm and provided an estimated GBP 500 million hit to the company profit. This study takes the reference of theories and models for representing the aspects of the crisis for the two cases and how they were handled and managed in regards to their brand reputation.
Body
In the complex aviation industry, it is not generally seen that the crisis of corporate public relation refers to poor communication result. Two aircraft of Boeing 737 max had crashed in Ethiopia and Indonesia where 346 people were died due to unaware defective automated system by the pilots (CNBC, 2019). The crashes had paved the path for the crisis of the company as it has lost billions of valuation and plane orders along with their status or reputation as the largest planemaker. Moreover, the scrutiny under the regulatory and congressional scrutiny and face lawsuits are also faced by the company.
Sainsbury, the popular retail chain is expected to suffer £500 million in costs due to the influence of COVID-19 on the sales of clothing and its merchandise despite the rise in food sales. The share of Sainsbury has reduced by 5% which has extended losses to 14% for 2020. It has also been demonstrated that the demand of customers for the general clothing and merchandises are influenced by feebler economic aspects. The company has also anticipated the influence of viral outbreak for the disruption of the companies until mid-September. The management of the company has also denied all the bonus to the executive team by minimizing the annual payment of director by 13%.
The Boeing crisis had formulated due to the innovative venture of the firm to automate the aircraft handling system for lower fuel consumption. This was done by integrating the MCAS system in the fleet of 737 MAX (CNBC, 2019). The event was covered by the media and caused a stir in the corporate community owing to the corporate governance issues and the negligence by the FAA and the company authorities as there were repeated warnings by the employees regarding the new system. The company failed to communicate fully through the media as they insisted that the planes should be allowed for flying despite the grounding of the 737 MAX by China and the EU. The company, however, took the responsibility of the human lives engendered and fatalities through media communications.
The crisis faced by Sainsbury’s is due to the unpreceded event of the COVID-19 outbreak which had initially caused panic buying for the customers leading to up to 48% increase in sales but followed the way of the closure of the company outlets due to the lockdown. Additionally, the company had to close many of their subsidiaries and cafes and counters and had undertaken the decision to fay in full to the self-isolating staff for 12 weeks (Sainsburys, 2020). The high street sales of the company fell by several folds due to the crisis but the company also decided to pay to thank you for a bonus to the Careline colleagues along with releasing immediate payments for the suppliers. The crisis was adequately covered by the media as it depicted the initial rise in sales due to panic buying and the management of socially distanced queues. There was also the depiction of the immediate fall in sales due to the lockdown and store closures due to COID-19.
The hit in profits of Sainsbury’s and the decision of reinforcement in the online shopping and delivery services were communicated by the company through the media as the CEO of the company made the headlines in the BBC (BBC, 2020).
For the Boeing crisis, it is inferred that the cause of the issue was internal as the company failed to establish streamlined communications across the organisational departments along with product and operational failure. PR crisis for the company was caused due to governance and regulatory issues, which were internal. Sainsbury’s, however, has to restructure their workforce and made added provision for online delivery along with facing losses due to store closures due to the external catalyst of COVID-19.
Brand reputation is considered as the critical marketing aspects which determine the image of company products and service to the customers. Boeing was recognized as the largest commercial airline manufacturer across the globe and the crisis of two plane crashes has impacted their brand image which is reflected from their reduction in profit generation and customer order (CNBC, 2019). The safety and security of the passengers are mainly prioritized after the crashes as the engineering team of the company has changed and improved based on their capabilities despite facing several investigations.
Sainsbury has also faced the decline of sales which has reduced their profit margin whereas the company has followed the principles of health measures and social distancing due to Covid-19 and contribute towards the society for the needy people. The firm has contributed £3 million to fare share and £4 million to the “Big Night In” of the Comic Relief. Moreover, they have focused on the sales through digital medium and the retail products as the customer demand has inclined in that direction.
The issue based on the crashes is induced due to the communication concern as the pilots did not know about the faulty automated engines. The internal communication between the company executives has been improved for ensuring the safety culture and the compliance of the regulations would be communicated. The company has also reduced its production rate after grounded by the Federal Aviation Administration. The company has also set up the compensation fund of $100 million excluding the litigation costs.
Sainsbury has communicated with their executives regarding the changing pattern of sales and it would help them to be regulated with the customer demands and preferences. As the sales of clothing had reduced, more focus on retail sales with adding exciting offers would help the firm to raise its sales and ensure consistency. The crisis has also communicated with the shareholders for keeping them informed about the financial crisis due to the pandemic.
Boundary spanning model
Boundary spanning refers to the effort within the companies which has involved the activities aimed for bridging more than one recognized boundaries of business to facilitate the data flow across the boundaries. The boundaries are mainly developed for measuring the growth and performance which has enabled them to accomplish the holistic approach (Brehmer, et al., 2018). The companies have used the framework for tightening the communication between the departments and external units. After the crisis of Boeing, the investigations had taken place and the firm has focused on the improvement of safety and security concern (Schotter, et al., 2017). So, the management has integrated the engineering department with the research and development to ensure the success of manufactured automated system with delivering proper knowledge regarding the operation. The incident was covered by all the global Media which has directly impacted their brand image and the boundary strategies are need to be formulated for consistent operation. On the other hand, Sainsbury has identified the rising demand of the customers for the retail products through the online medium due to the pandemic. So, the firm has decided to recruit extra 25,000 workers for implementing the safety measures to meet the demand. So, incorporation of boundary spanning would help the companies to identify the needs of the customer and incline the service pattern into that direction.
Horizontal scanning is conducted for the organisations based on the level of impact of the external factors on the business. The Boeing crisis was caused due to the political factor of over negligence of the FAA, which is the regulator. This had a very high impact on the safety clearance of the 737 MAX aircraft, which had crashed. The political decision of implementation of the lockdown was instrumental for the closure of the stores of Sainsbury’s and restricted business operations causing financial losses (Reuters, 2020). The economic impact of the crisis had been significant for Boeing as the company incurred losses over $18 million and loss of trust of regulators and customers. The social aspect of keeping the pilots aware of the changes in the system and the new automated features of the fight system was not done by Boeing, which had caused the crashes.
The company had failed to keep the pilots informed about the changes made in the aircraft and pay more attention to the employees who tried to communicate about the faults in the system to the management (BBC, 2020). Sainsbury’s had been able to bolster their price competitiveness in favour of the customers and handle the crisis very well by the company as fast and convenient deliveries are prioritised. Boeing has been on the front of minimal automation but intended to enhance the technological feature in the 737 MAX for better functioning and increased fuel efficiency, which failed due to horrendous communication and lack of training to the pilots. Sainsbury’s was able to establish a high impact in favour of the company due to rolling out their Nectar app for providing loyalty bonus to the customers and convenient shopping.
Stakeholder theory is considered as the aspects of capitalism which has stressed the interconnected relationship between the company operations and its suppliers, customers, investors and others who have a stake in the business (Jones, et al., 2018). It would also justify the involvement of the executives and other personnel for ensuring the consistency in the business process. Based on the crisis of Boeing, the sales and operation of the company are directly affected as the trust in the airline’s sector has gone after the crash. The company has also stated that the 207 flights were processed with the updated automated software after the testing of 360 hours. The approval of the regulators along with lawsuits faced by the crash victim’s families is a serious threat which is needed to be handled with proper cooperation and maintaining stable communication. On the other hand, the management of Sainsbury has mainly focused on the betterment of the business stakeholders such as customers, employees, investors and the community as well (Reuters, 2020). Despite the financial loss of the company, the management has contributed satisfactory funding for the development of the society whereas the investors are also communicated regarding the changing business strategy along with paying the minimum compensation to the executives.
The two-way asymmetrical model has highlighted the conflicts regarding the loyalty which is common in the practices in public relations. The professionals are considered as a dividend in their loyalty to the organization and stakeholders (Jiang & Kuang, 2016). The balanced persuasion and feedback of the public would help the company to assess the importance of crisis and induce the requirement of formulating strategies. Most of the leading news media had made the report based on the incident whereas the discussion of the topic is also reflected in social media platforms (Grunig, et al., 2005). It has indicated that the negative mindset among the customers and investors are highlighted which is need to be rectified by ensuring the safety and security of the passengers. The promise of proper investigation and change in employees and managers of the company would help to prevent the issue and flourish in the market once again. On the contrary, the public relation is mainly prioritized by the management of Sainsbury as the operation and deliverable pattern of the company is to be inclined in that particular direction (BBC, 2020). The decline in sales of clothing would need to be compensated through the rising retail sales that must be extended via the digital medium. So, tailoring messages to the targeted audience is properly executed through the model that has justified the business growth.
Storytelling refers to the approaches to applying the narrative and facts for communicating messages to the audience. Freytag has focused on drawing a simple triangle with having seven parts of it for perfect storytelling and those are considered as exposition, inciting incident, rising action, climax, falling action, resolution and denouement (Khalili, 2018). The companies can align their crisis and operation through the storytelling for justifying the maintenance of public relation. Initially, the background of the air crashes needs to be presented followed by the actual case happened. In response to the incidents, the action taken by the company such as proper investigation, coordination with authority, changing the managing department of security and tightening the safety protocol would also need to be communicated with the customers for retaining their customer base. The downfall of the sales volume in clothing is mainly caused due to Covid-19 as the monetary resource has become limited for the customers. On the other hand, the demand for quality retail items has increased and the people have preferred to buy the products via an online medium as they have to maintain social distance also. So, the social media platforms are required to be used for providing all the details about the improved retail products to the customers. Meeting the business goals would indicate the denouement for both the companies.
The situational crisis communication theory has mainly identified the response strategies that are applied by the businesses for handling the crisis-induced. It is mainly based on the responsible group for the crisis that has caused threats to the business function (Ma & Zhan, 2016). It has outlined the system of crisis communication and the pre-conceived notion for the response of the shareholder to tackle the crisis. The companies have incorporated the strategies regarding strategy rebuilding, diminishing strategy, denying and bolstered the strategies. Boeing has investigated internally regarding the reason of blunder and the responsible individual. The communication between the departments has also improved and the safety and security of the flights are modified (Barbe & Pennington-Gray, 2018).
The testing facilities of the company has also been improved in preventing future accidents. The management of Sainsbury has incorporated with the theoretical practices to prevent the crisis caused by Covid-19 pandemic. The demand for the groceries has increased by 48% which is needed to be utilized by the management for tackling the threat caused by the pandemic (Sainsburys, 2020). The communication between the customers and executives would also need to be improved for gaining their opinion regarding the business process. It has justified ensuring the brand reputation after the crisis. Boeing was unable to provide adequate reassurance to the regulators and clients regarding the technical soundness of the 737 MAX as they failed to establish proper social communications internally. The lack of proper communications had led to the crisis for the company, which could have been avoided by intimating the pilots about the operational changes in the aircraft’s (Lenz & Engledow, 1986). The organization response using social media to apologies to the victims and take full responsibility were not enough to recover the tarnished brand reputation and bring the public relations to normalcy. In the case of Sainsbury’s, it is inferred that the company has managed the crisis well through timely response to refocus its resources on the online delivery of groceries to the customers. The company had used social media well to address the customers timely and maintain public relations.
The business organisations in the present times operate in the VUCA environment. Boeing operates in the aviation sector, which is complex and volatile due to the new technologies that come up. The integration of high-level automation in the aircraft was a good decision to improve the operability and fuel efficacy along with an enhanced level of control. However, the automation changes were complex and needed to be conveyed to the regulators and the pilots for making them prepared in advanced. The lack of proper leadership, governance and communication had led to the crisis for Boeing, which could have been easily avoided. The retail industry in which Sainsbury’s operates is uncertain and ambiguous as the preferences of the consume changes. The external catalyst being COVID-19 created pressure on the in-store sales of the company and declining the sales of apparels. The company response well through additional online delivery support and digital integration in the business (Su, et al., 2019).
Business Continuity Planning is essential for Boeing as the company has faced tremendous losses for faulty planning and management of the Boeing 737 MAX despite being high in demand. The critical business function of collaboration among the employees and keeping the pilots in the loop for any changes made to the plane were missing. The crisis of air crashes of Boeing occurred at Ethiopia and Indonesia which are outside of the US. The governance of the operations and services of the company are not strict enough to regulate the liability caused by the flight manufacturer. As Boeing belongs to the US, the responsibility of the company is more towards the country which has indicated more adverse effects and the austere case against the company in case of the accident occurring in the US. The structural issue was also characterized as the reasons for causing the crisis as the information regarding the technical development of the flight operation is not expressed to the executives. The incident was covered by all the global Media which has directly impacted their brand image and the boundary strategies are need to be formulated for consistent operation.
Conclusion
The study carries out a comparison of the crisis faced by Boeing and Sainsbury’s. Boeing was recognized as the largest commercial airline manufacturer across the globe and the crisis of two plane crashes has impacted their brand image which is reflected from their reduction in profit generation and customer order. The internal communication between the company executives has been improved for ensuring the safety culture and the compliance of the regulations would be communicated. The incident was covered by all the global media channels which have directly impacted their brand image and the boundary strategies are need to be formulated for consistent operation.
The approval of the regulators along with lawsuits faced by the crash victim’s families is a serious threat, which is needed to be handled with proper cooperation and maintaining stable communication. In response to the incidents, the action taken by the company such as proper investigation, coordination with authority, changing the managing department of security and tightening the safety protocol would also need to be communicated with the customers for retaining their customer base. Sainsbury’s had suffered due to the Covid-19 pandemic as the stores had to be closed and the sales of clothing have declined. The company is set to have a loss of £500 in the year. The company management has formulated effective strategies for controlling the crisis through consistent business operation in the online delivery domain.
Recommendations
The management of Boeing is recommended to fortify the organisational culture to create synergy between the departments and ensure that any development in the organisation conveyed to the stakeholders. The company operates aviation sector, which is highly complex, and hence, poor communication needs to be avoided at any cost and structural regulatory issues are needed to be provided immediate attention to avoid any crisis in the future. The company is also recommended to adopt a servant leadership strategy for operating in the complex business environment and keeping the interest of the stakeholders and the customers at first.
The management of Sainsbury’s is recommended to prioritise online delivery and e-commerce as social distancing norms and restrictive outside movement of people is bound to continue for the foreseeable future. The management of the company is recommended to restructure the workforce for finding out ways to make the existing employees productive by making them operate at the warehouses and shifting them to the online delivery and customer support department for ensuring that jobs are not lost.
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