Corporate Scandals Hit Home

1
Corporate Scandals Hit Home

• Wall Street Journal
• Feb. 19, 2004
• By Lauren Bolger Taylor Koebele

2
Scandals

• Reputation of big name companies are still
  declining after two years of scandals
• Harris Interactive and the Reputation Institute
  conducted surveys and found that ¾ of the public
  are still angry with 60 companies
• Public rated the image of corporations as either
  not good or terrible

3
Publics Insight

• Public is unwilling to forgive companies for
  their deception, greed, and fraud.
• Public feels that the big fish of the companies
  are getting away with their scandalous
  actionsex Martha Stewart
• Publics feelings go beyond scandals, they feel
  customer service, treatment of employees, and
  company policies are not up to their standards.

4
Publics Thoughts

• M. Brandon Fargis, 23 yrs. old, states
• I really wonder how drug companies sleep at
  night due to the fact that many Americans have to
  choose whether they are going to pay their bills
  or purchase much needed overpriced medications

5
Exxon Mobil Corp.

• 1989 oil spill keeps the disaster fresh in
  peoples minds and lowers its ratings for
  environmental responsibility
• Each year the company has an uphill battle to
  regain consumer trust because its been an
  unsettled issue

6
Wal-Mart

• Fell from No. 17 in 2002 to No. 23 in 2003
• Its ratings dropped due to the fact that their
  contractors used illegal immigrants
• Workers also complained about low pay and
  employee discrimination suits against the company

7
Microsoft

• Returned to the top 10 in 2003
• Always scores well for leadership, vision, and
  financial performance, but has been accused in
  recent years of monopolizing the software industry

8
Methodology Ranking of Company Reputation

• Phase 1 random selection of 6,331 people from
  the Harris Interactive database who name the
  companies they feel have the best and worst
  reputations
• Phase 2 An additional 22,000 people are surveyed
  online and base their response on 20 attributes
  in 6 key dimensions
• All data is weighted to represent U.S. adult
  population. (Weighting variables include
  demographic variables, non-demographic variables,
  and a measures of ones tendency to participate
  in online studies)

9
Reputation Quotient

• Reputation Quotient
• -60 Companies scored by 600 respondents
• -Highest Score 100
• -Estimated Sampling Tolerance of
• /- 1.5

10
Rankings

• 2003 top 10
• JJ
• UPS
• Coca-Cola
• Disney
• Microsoft
• General Mills
• Fed Ex
• 3M
• PG
• Dell

• 2003 bottom 10
• Qwest Comm.
• United Airlines
• Firestone
• Altria Group
• Martha Stewart
• K-Mart
• R.J. Reynolds Tobacco
• Global Crossing
• MCI
• Enron

11
Conclusion

• Reputation repair is a slow process
• Many companies have taken steps to mend their
  reputations, including making changes in
  corporate governance and pledging more ethical
  behavior.
• Too many companies feel that they can advertise
  their way out of a bad reputation
• Businesses that work for the good of their local
  communities will benefit from their better
  reputations

12
Text Book Integration

• Harris Interactive used survey research to
  conduct the studies which according to the book
  has advantages and disadvantages
• Dependent variables
• -publics opinion- based on their personal
  feelings towards the companies negative and
  positive actions
• Independent variables
• -companies reputations- their rankings can be
  manipulated by the survey respondents