When facing a crisis the former and present reputation of a company could result to instability; hence drive the company in a direction that is unfavorable. The strategy by which a corporate company decides to issue responses in relation to a crisis may positively or negatively influence the reputation perceptions of stakeholders and customers. In turn, this may impact how they choose to interact with the company. This research uses theoretical literature regarding the management of corporate crises, as well as consumer perception to establish the best ways through which a crisis can be avoided or dealt with, despite the magnitude of the crises. The reason of utilizing such literature is to help us analyse a situation using knowledge and insights gained from the Toyota case
1.1 Problem Discussion
A crisis is a situation that has a 50/50 probability of occurring in a company, hence can cause a company’s instability from an internal or external perspective, resulting to serious implications on its reputation, assets, et cetera (Carroll, 2009). Any potential Crisis is considered as a threat to the company, and could cause harm such as distorting the company’s profitability and growth therefore threatening its survival (Tucker and Melewar, 2005). The depth of a crisis which threatens corporate reputation is rather complex. It is worth noting that crises could occur suddenly and/or caused by problems which could have built up over a period of time (Greyser, 2009). Therefore, any company may encounter serious challenges from the public, media, stakeholders and competitors, since it relies on such elements to build trust and reputation (Tucker and Melewar, 2005).
To be able to come to sound decisions, it is necessary to derive resources about corporate crises that occur as a result of causes such as product failure, corporate ignorance, mismanagement, et cetera. According to arguments made by Tucker and Melewar (2005), news media and the internet community are certainly a substantial threat to any corporate reputation since the public are more sensitive to a corporate scandal. In the event of a crisis in a corporate company, the effect affects stakeholders, the community, dealers/suppliers, employees, et cetera (Coombs, 2007). A majority of company stakeholders get informed of a crisis through mediums such as social media; hence the media plays a key role through which people’s perception may be guided in times of crisis. The headline-hungry media have vicarious appetite for obtaining material that is newsworthy. In doing this, practicing the freedom of speech, they place emphasis on hooking up such news (negative), which may create a sensation that may not be questioned (Tucker and Melewar, 2005). Additionally, journalists are keen on spreading news which seems could act as a revenue generator
From the above point, it is obvious that any crisis that could portray a company’s picture in a negative way could affect a broad range of...