ACQUSITION OF INTERNATIONAL REPUTATION Dr. Mehmet Cihan Yavuz, Assoc.Prof. 14 August 2014

REPUTATION ‘It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.’ Warren Buffett.

WHY IS REPUTATION IMPORTANT?

Reputation is a word much used today. Pick up a newspaper and turn to the business, sport or travel section and you will find the word reputation in relation to a person, organisation or place.

Reputation is a rough measurement of how much the community trusts you. Yesterday is focused on brand promotions; today is also emphasizes development and defense of corporate or country reputation.

Because, we are living in a global village... A good reputation has both intangible and tangible benefits. It is important for stakeholders, customers and employees.

“Made in Germany” VS “Made in China”

In which way is building a solid reputation for reliability and quality key to a economic success – and how can it be achieved?

ASPECTS OF REPUTATION Perception of Control Quality Stakeholders Reputation Vs Brand Asset Value Ownership

Reputation vs Brand The image of an organisation is its immediate external perception, a snapshot frozen in time. The reputation of an organisation is the historic and cultural dimension of that image, the ‘social memory’ of the stakeholders which acts as a platform for expectation.

ASPECTS OF REPUTATION Perception of Control Quality Stakeholders Reputation Vs Brand Asset Value Ownership

Kind of Reputation National Corporate

Many survey-based studies in the marketing literature, emphasize the role of country of- origin labels in setting consumer perceptions of quality.

NATIONAL “National brand image” matters because it provides an anchor for the expected unobservable quality of imports. Consumption decisions, in practice, are based on a limited information set about the characteristics of goods or varieties.

Specifically, for new and unknown foreign brands, the main piece of information available to consumers is the “made in” label, which indicates the country of manufacturing and creates a key role for national reputations.

National reputations create history dependence in the range of goods a country can successfully export. A damaged national reputation is a barrier to entry for companies that develop more expensive high-quality products, threatening the success of such a growth strategy.

Goods imported from a given country are first evaluated according to a country- wide prior, which is determined by the average quality of the country’s exports in a long-run industry equilibrium. Importers then learn about the true quality of firms that have exported in the past.

How can countries improve their “national brand name” and is it worth it? First-best policies would involve conducting verifiable quality audits or taxing low-quality firms and subsidizing high-quality ones. These policies are not feasible when policy- makers are not better informed than consumers about firms’ quality levels.

Since their creation, country-of-origin labels have been related to protectionist concerns. Even more surprinsingly, “English manufacturers even began to forge the label, printing it on their English-made products”. The “Made in Germany” label had turned from a signal of poor quality into a signal of the best quality.

Similarly, at the end of World War II, “Made in Japan” goods had a reputation for being cheap low-quality goods. Japanese companies were suffering from an inferior “national brand”. On the contrary, currently, Japanese cars and electronics are ranked among the most reliable in all consumer surveys. Japan’s pattern of specialization in manufactures has evolved, shifting from unskilled labor-intensive goods to human capital and R&D-intensive products.

We call “national reputation” the common component of consumers’ perceptions of the quality of goods produced within a given country.

Usual examples of such priors are the widespread perceptions that “German goods last a lifetime” or “Chinese goods break down quickly”.

Country reputations determine the quality that buyers expect from a product before they learn any information specific to this variety. In the long-run, reputations should adjust to the actual average quality of exported goods.

PROBLEMS How does a poor “national brand” act as a barrier to entry into foreign markets? Which policy instruments can help countries overcome the adverse impact of such barrier?

Gaining reputation ability was the outcome of both private companies and government initiatives.

Reputation = Sum of Images = Performance + Behavior + Communication This definition helps make it clear that performance and behavior, as well as communication, are critical components of reputation.

A reputation is built on performance, behavior and communication and it can generally be repaired only by working on all three aspects.

IDENTITY It is, simply, what the organization stands for above all else. Companies, such as General Electric and Starbucks, have stayed true to a dominant identity: Developing and marketing consumer and technology products of the highest quality, and employing the best people to obtain, market, and sell quality coffee and collateral products in a warm and welcoming venue.

Starbucks blog says, “value today has new meaning. It’s not about what’s cheapest—it’s about what’s best—for [consumers], their families, their communities and the world around them.

MANAGING REPUTATION It is one way for an organization to get its arms around this asset, and a way to manage reputation problems, vulnerabilities, and opportunities.

SUCCESS CRITERIAS Innovation Quality of management Employee talent Financial performance Social responsibility Product quality Communicativeness (transparency) Governance Integrity (responsibility, reliability, credibility, trustworthiness)

Thank You... Q&A