Brand and Corporate Communications 7
Brandand Corporate Communications
CorporateReputation CR is a “soft concept,” as confirmed by Harrison(2013, p. 1). The ‘concept’ goes hand in hand with the overallevaluation that is held by both the internal and externalstakeholders, regarding a particular company’s previous actions andthe probability of what the face of the future behaviour will looklike. It is worth identifying that the CR of a company is imperativefor its overall survival. CR, in recent times, has been seen toattract the attention of companies, as identified by Bracey (2017, p.1). The reason for the kindled interest in CR by the management ofcompanies is attributed to the fact that these businesses value theneed of being good graces with their stakeholders. The importance ofreputation has attracted the attention of the Malaysia Airlines,particularly the essence of having the positive side of CR. Theairline’s reputation has in the recent past faced a beating, whichthe airline is currently seeking to repair. The suffering has beenimmense, following the unexplainable disappearances of Flights MH370and MH17 (four months apart).
Thereport, drawn through the lens of the Head of CorporateCommunications of the MA, will identify the importance of themanagement of brand reputation by looking into some factors that arecritical to branding and corporate reputation management.
Themanagement of corporate reputation is vital to the success of anycompany. Being the Head of Corporate Communications in the MalaysianAirlines, I know the truthfulness of the aforementioned statementgiven the events that have surrounded the airline in the recent past.The airline faced two air disasters that spanned a period of fourmonths (MH370 and MH17) in 2014. The disasters destroyed theairline`s CR, which further led to massive financial losses andreputation destruction. In the bid to understand the magnitude of theaftermath of the air disasters, looking at the financial state andthe status of the corporate reputation of the airline before the twinair disasters of 2014, is of the essence (identified in Section 4.0).
Theidentification of the forces that influence a brand is imperative, atthis point, as I set the stage for an in-depth understanding of theattributes of the MAS case at hand.
2.0Forces that Influence a Brand
Abrand is influenced by multiple forces, which exert an impact on themarketing function. These factors can be drawn from the external,internal and relational perspectives (Ebstudies 2012, p. 1). Thesection will cover the internal, external and relational factors, asbrand influencers of the MAS.
Externalfactors exceed the scope of control of a brand. The microenvironmentis confined within the proximities of business, while the macroenvironment is external to the business and tends to beuncontrollable. The macro environment is critical for this report andon that note I made consideration for the PESTLE model.
APESTLE analysis is a useful business model that comes in handy in thedefinition of the macro environmental pressures that influences thefunctioning of a given business (Lardbucket 2012, p. 1).Understanding the PESTLE factors is imperative when mapping out amarketing roadmap for a brand and the assessment of the valuecreation aspect of a marketing strategy. Also, the analysis helps inthe identification of the impact of the external forces and theeffect that is exerted on the business objectives. The analysis belowis fundamental in the evaluation of the MAS growth, potential, newmarkets launches, declines, current position and the direction thefuture ought to take.
Taxationhas been considered to be a burden in the times of financial crisiswhere the airline made considerable losses in 2012 (RM 433 million).The airline has affected negatively by the increased operationalcosts because of the wage policy incepted by the government.
Heightenedfuel prices have been noted because of the crisis in Ukraine, whichfurther affects the share price in the SE. Fluctuations in thecurrency’s exchange rate have resulted in reductions in the revenuegarnered by the airline. A difference in the ‘need’ of thepotential consumers affects the carrier, where regular travellersconsider air transport as a luxury, while their business counterpartsconsider travelling as being mandatory.
TheMAS is affected by people who prefer cheap ticket charges to thequality of services and food offered by the airlines, thus presentingcompetition by the LCC, which offers low prices. The MAS has had tomake use of segmentation of its market in as far as pricing isconcerned. Safety factors have an impact on the MAS (following thedouble airline crashes in 2014), which the airline must navigatethrough in the bid to eliminate the fear factor in potentialcustomers. A considerable portion of the younger generation considerair travel as a favourite holiday pass time. This is an opportunitywhich the MAS must consider tapping into.
Technologicaladvancements in the MAS allow the increment in the usage of internetfacilities for e-commerce activities. Limitation in technology skillsamong citizens in the rural areas presents a challenge to consumersin the said regions. Advancement in telecommunication tools that theMAS uses is critical in cutting operational costs.
Thelegal brand influencers of the MAS takes note of aspects that revolvearound the open skies agreement with the US, which presented intensecompetition in rather challenging environmental set ups. Regulationof competition is present in Malaysia, where major mergers andacquisitions are prohibited. Expensive charges for landing manifestin the MAS gateway airports like the ones in Beijing and Hong Kong.
Thekey influences affecting Malaysia and the MAS particularly are drawnfrom the emergence of global disease pandemics like the H1N1, Ebola,and SARs, heightened CSR duties, the need for carbon dioxide emissionreduction, delays caused by adverse weather conditions, as well asthe risks of global terrorism after the 9/11 disaster.
Theinternal factors are within the scope of control of a marketingdepartment. Among the various components of internal marketingfactors, the most critical for the report is finance and accounting.It was of the essence to incorporate the Acid-Test of the MAS in thereport.
Acid-Testof the MAS between 2008 and 2012
Financialratios like the Acid- Test are critical in giving information aboutthe degree of soundness of business (Delen, Kuzey, and Uyar 2013, p.1). The calculation of the Acid-Test ratio as given by Collier (2015,p. 108) as
Itis critical to note that the required quick ratio is dependent on agiven industry, with a majority of industries requiring a ratio thatis more than 1 (Investopedia 2017, p. 1). A ratio that significantlyexceeds 1 may not be good for business because of the impression ofthe existence of ‘idle cash,` which requires either reinvesting ortransferred, back to the shareholders.
MAS Financial Year
Thetable above identifies the quick ratio of the MAS over a span of 5Years (2008-2012). In 2008, the airline had the ability to pay offits creditors about 1.23 times. It is obvious to note a downwardtrend in the ATR between 2008 and 2012, indicating poor yieldmanagement. The MAS as of 2012 could pay off its creditors only 0.52times, indicating poor asset management. The drop in the quick ratiobetween 2008 and 2011 shows an increase in the current liabilities,with poor asset management.
Usingthe above liquidity ratio, the MAS marketing and accounting teams canidentify the changes that ought to be made to eliminate adverseinfluences of poor asset management and thus ensure that viability ofthe brand exists (through the use of proper asset management tools).
Theissues revolving around the MAS, particularly when assessing thefinancial turmoil that was worsened by the twin air tragedies in2014 I can confirm that relational factors are in fact brandinfluencers. The various disasters tainted the corporate image of theairline, to the extent that customer loyalty was negatively impacted(Woon 2015, p. 79). It is critical to note that the CR of a companyinfluences the repurchase intention of the customers. A negative CRon the other hand, influences customers to ignore brands, which theyfeel compromise on matters like safety, value and quality. The truemeaning is clear in the MAS after the twin crashes, where thedevelopment of fear was instilled on the potential customers of theairline’s services, who then opted for other service providers(Woon 2015, p. 79). It is apparent that the purchase or repurchaseintentions of the airline were negatively affected, which can beproven by the reduced number of consumers in the airlines’ waitinglines.
Consumers,according to Brown and Ponsonby-McCabe (2014, p. 38), often viewbrands as having distinct traits and personalities dubbed as ‘brandpersonalities,’ which they use to match with their personalities,and then decide whether to buy into the corporate identity of a brandor not. The ‘match’ defines a relationship, which Brown andPonsonby-McCabe (2014, p. 38) mention could be a marriage, kinship,or even a friendship, and I could not agree more. Whatever therelationship that is developed, relational factors come into play,which may include ‘love,`‘interdependence,’ ‘intimacy,’ or even strong ‘commitment’(Brown and Ponsonby-McCabe 2014, p. 38).
Bydint of the mentioned relational factors, and the effect that wasfelt in the MAS in as far as brand loyalty is concerned, it isapparent that influence on the magnitude of brand loyalty, brandattachment, and brand reputation is a reality. I can, therefore,conclude that relational factors confer influence to brands,especially when the personality of the consumer experiences either analignment (good CR) or misalignment (bad CR) with the followingissues corporate image, consumer satisfaction, perceived quality andvalue.
Havingaddressed the brand influencers, identification of the factors thatmake up CR is imperative.
3.0Factors which make up Corporate Reputation
Corporatereputation (CR), is considered by Abratt,and Kleyn (2012, p. 4) to be a strategic resource that allowscompanies to exploit new opportunities thus gaining a competitiveedge. Theoretical concepts have been identified by Cornelissen (2011,p. 76) as key components of building reputations (robust anddistinctive) with the stakeholders. Cornelissen (2011, p. 76)identified one important observation as being the core values of afirm, which function as the windows to the essence of what anorganization is made of. Core values have the ability to offer anorganization the much needed competitive advantage, particularly whenlooking at the management communications (PR) with the stakeholders(Pickton and Broderick 2006, p. 588). The question I would pose atthis juncture is what exactly constitutes the evaluation criteria ofCR that a stakeholder uses?
Craftingan identity that sells the firm’s functions to the stakeholders,and which is in fact bought by the stakeholders, is what defines CR.In other words, stakeholders tend to seek for the ultimate cooperateidentity (authentic and distinctive) that they can buy into. For afirm to confer management to its CR, an alignment must rest betweenits outward image and inward identity. A form of transparency existswith the marriage of three elements, which are the building blocks ofCR, organizational culture (as seen by the employees), corporatevision (as per the managers), and the image viewed by the externalstakeholders (Conelissen 2011, p. 69). I believe that whentransparency is embraced in the three areas presented above, theinternal identity of a firm will reflect positive expectations of thestakeholders.
TheCR in the MAS indicates a misalignment that is in place of thefactors presented above, so much that the current state indicatesdissatisfaction on the end of the consumers, organizational mishapsand disengagement of the employees. With the knowledge of thebuilding blocks that define CR and its state in the MAS, it isimperative at this point to ask why reputation management is vitalfor the airline.
4.0Analysis: Justification as to why Reputation Management is important:The Malaysia Airlines Case
Recapof the Malaysia Airline’s Case Before 2014
Amajority of articles prove that the MAS was in the ‘good financialbooks` before 2011 (Hodgson et al. 2015, p. 1). Financialdeficiencies, according to Hodgson et al. (2015, p.1) beganmanifesting in the airline back in 2011 and the years that followed.The MAS quarter results that were made available to the public in2013 indicated the existence of financial losses that wereconsecutive, particularly commencing from the first quarter results(Gibson 2014, p. 1). The actual statistics presented in the articleby Gibson (2014, p. 1) portrayed that the first quarter in 2013,recorded a net loss of €273million (in the 2013 fiscal year). Thenet loss of the carrier, as identified by Gibson (2014, p. 1), wasrecorded at about €103million (for the first quarter of 2014). Thefigure indicated further net loss plummeting (€64.9million netloss), which was higher than the figure that was reported in theprevious corresponding period (Gibson 2014, p. 1).
Onereason that was put forward to explain the reasons behind thefinancial losses before the 2014 back-to-back the MAS accidents waslooming competition from low-cost carriers as mentioned by Baines(2014, p. 1). The article by Jansen (2014, p. 1) confirmed heightenedfuel costs that were in considerably higher, soaring airport chargesand the weakening of the Malaysian currency against the dollar, aswell as financial embezzlement further, prompted the financiallosses. Other difficulties faced in the recent past included theattacks on September 11 and the SARS pandemic, plus slow response tochange, thus losing on the younger consumers (World Finance n.d, p.1).
Inaddition to the financial turmoil that the MAS has faced, theairline’s reputation has had its share of the beating as well, butit was all rosy at one point (Andrews 2015, p. 1). The airline’sreputation was impressive, particularly in marketing Malaysia asbeing one of the world’s most desirable destinations (Andrews 2015,p. 1).
The2014 Double Doom
Thegood standing of MA, as well as its financial performance, worsenedafter the twin air crashes, as affirmed by the World Finance (n.d, p.1). Searching through the pages of the internet as well as lookingthrough reports that have been presented, revolving around the MAStwin crashes, it is clear that a sizeable damage to the reputationhad been done (World Finance n.d, p. 1). In fact, the number ofconsumers using the airline has significantly dropped, and thetruthfulness of this fact can be confirmed by taking a look at thepresent waiting section in the airline.
Justificationof CR Management
Asthe Head of Corporate Communications in the MA, I know that for theMAS to regain its previous glory and thus going above and beyond willrequire addressing CR management. Looking at the critical aspects ofbrand management and reputation was vital to gain understanding onhow the airline will stage its recovery plan. The justification ofthe management of reputation is centred on certain importanttheoretical perspectives. The views that have been presented byBarnett, and Pollock (2012, p. 384) indicate that companies, whetheryoung or developed, require reputation management. When taking theexample of the MA, and the fact that the firm`s reputation has seen aslap, because of the unfortunate occurrences over the past two years,it is safe to point out that the need for reputation management inthe airline is a reality.
Thetheoretical perspectives that ought to be considered by managementsfor reputation management are reputation borrowing, building, andendowment. Reputation borrowing defines the need for firms to haveaffiliations with third parties. Affiliations will communicate tostakeholders about the existence of a company that has potential and,which has some form of worthiness and the ability to offer quality(Barnett, and Pollock 2012, p. 385). Relationship building is anothertheoretical factor that is critical for gauging reputationmanagement. Here, an emphasis is placed on intermediaries like themedia and analysts available at the industry level that functions tobring a firm to the attention of the broader stakeholder audience, byuse of reputation measurement (Barnett, and Pollock 2012, p. 386).The final perspective is reputation endowment, where the experienceof the effects of experience on the perception of the stakeholders,particularly in different uncertainty levels.
Stagesof Reputation Analysis
Giventhe knowledge of the theoretical perspectives that have beenpresented earlier, identification of how reputation management mustbe done throughout the various stages of reputation development isessential. The three stages that have been identified by Barnett, andPollock (2012, p. 390) include attention generation, uncertaintyreductions and finally, the creation of evaluations. In the firststage, firms must identify ways of navigating through limitedawareness by the public. At this step, reputation is managed by theuse of affiliations with the main industry players, communications(through the media) and engagement in visibility-based activities.The second stage mitigation of uncertainties is essential, thanks tothe knowledge that such like reductions are the key to developingevaluative criteria (CR building blocks), which the stakeholders haveto be aware of. The uncertainties are managed by communications,affiliations, milestone achievements, organizational structure andthe reputation of the founders. Finally, the third stage ofreputation development and management identifies the need foralliances with highly ranked customers, innovations, productdevelopment, communications and the reputation of the founder. Thethird step stages the firm closer to garnering positive evaluationsfrom the stakeholders.
Theabove information provides the need for reputation management, whichought to be done while employing different objectives, as per thestages of the reputation development. With the insight on thetheoretical perspective, it is essential to identify the currentstate of reputation management.
4.1Diagnosing the Current State
Thepresent state of reputation, in the Malaysia Airlines, indicates thata gap that manifests, which may hinder the process of having positiveevaluations of the brand in the long run. As shown by West (2014, p.1), there are uncertainties regarding the future of the MAS airlines,because of the twin air disasters that struck the carrier. West(2014, p. 1) mentioned in his article that even with the rebrandingplans of the MAS, consumers will tend to see through the rebrandingand still see the MAS as being the company behind air disasters.There is the fear of the collapse of the MAS (the national pride),which adds to the twin crush blows, thus confirming that actions toensure reputation management are of the essence. I believe that thepath to the transition from to a positive reputation has to be madetimely, to salvage the reputation of the MA.
4.2Managing the Transition
Ibelieve that the management of the transition in the MAS requires athoughtful approach, bearing in mind that the development ofreputation of the MAS will have to start from the first stage ofattracting the attention of the stakeholders. As a company, we willbe required to make strategic considerations in the transition. Here, the airline will have to be committed to regaining the trust ofthe public. Some of the mechanisms that must be employed in the MASinclude engagement in communications, use of affiliations,innovations, and the use of positive reputation of the founders.Having employed the use of the above means, the Malaysia Airlineswill be steps closer to gaining positive evaluations from thestakeholders.
4.3Designing the Future State
Inthe search to design the future state of reputation in the MA, therewill be a need to take into consideration issues surroundingprotection of reputation. In line with the views of Kalb (2014, p.1), the airline should have to find ways of handling situationsthrough public relations. Moving forward and with the strife for theMAS achieving positive stakeholder evaluations, the carrier must workon the effectiveness of its PR team to ensure that assurance ofsustainability, quality and safety is instigated when at the sametime, the airline protects its CR.
5.0Crisis Management Plan
Crisisoccurrences in the day to day operations are bound to occur, the muchthat can be done is mitigating the adverse events that are likely tohappen. With that in mind, I believe that a crisis management planmust be put in place to address components that are critical for theprotection of CR. I will draw the inspiration of the CM plan that theMAS can adopt the views by Bernstein (2016, p. 1), which placesemphasis on communication as seen below:
Therecommendations that can be put forward, in as far as CR managementand branding is concerned, while looking at the MAS case, I find thefollowing options to be viable:
Adoption of a CM system, which ensures that tactful communication is put across, in the event of a crisis given that crisis is likely to manifest in operation, even if the magnitude is minor.
Setting up of an effective PR, to ensure that the public is provided with the necessary information at the right time. This will serve as a means of protecting the CR of the airline.
Consideration of starting from zero in the reputation development and management process, as a means of repairing the tarnished CR.
Development of a marketing strategy, drawn from the brand influencer components, as a, means for recovery.
Transformation of the corporate culture, to accommodate the changes and strategies that will be employed by the airline.
Havinglooked at the Malaysia Airlines case, I find that loose ends werepresent, and which worsened the CR situation of the airline after thetwin crashes. I believe that it is the time that the MalaysiaAirlines picks up its broken pieces and work towards repairing its‘wounded image.` We as a corporate will have to go back to thedrawing board to identify the brand influencers that are critical tous. While doing so, we can address the loopholes in our corporateculture, which will facilitate the adoption of new policies andprocedures, which are fundamental to the recovery process. Thesolution that I provide is one that proposes the redevelopment andmanagement of CR and branding. On that note, I believe that MalaysiaAirlines must use branding and CR management techniques, in its pathto recovery, and restoration, to its status as the Asian Pride!
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