 Formed in individual or prospective customer’s minds, based on all of their impressions of the organization  Derives from how the organization interacts with its customers, suppliers, employees, community, – all points of contact  Impression is not necessarily “first-hand” but can be fact, rumor, urban legend, etc.  Treating stakeholders ethically translates to a positive value image

 As well as being market sensitive, company must deliver satisfaction to customers while being considerate of societal well being  Goal: Improve life quality. Includes company’s social responsibility, citizenship, role in the “greater scheme of things.”

 Organizational Leadership: o Specify in the company’s mission that ethical behavior and societal good are part of the mission; o Create reward structures that allow and reinforce ethical behavior

 Clash of ethical standards among stakeholders  Clash of ethical standards at different levels of the organization  Clash of individual ethical standards and the organization’s performance standards

 Individuals ultimately make choices; sometimes these choices conflict with their own values or self-perception

 Natural law  Positive law  Self-Interest Considered Upon the Whole  Situational Ethics

 Product announcements  Product capability claims  Obtaining competitive information

Ethically problematic activities that usually grow out of a creeping commitment to do what is seen as necessary to compete or to achieve value for stockholders  Paying bribes  Charging an exorbitant price for your product when in short supply  Taking unearned marketing allowances  Posing as a prospective customer to obtain competitive information  Creating an unfair advantage, for one distributor over another

 Ethical behavior is intertwined with the occurrence and the management of crises  Problems arise from less than stellar ethical choices or ethical conflicts  A robust value image that involves social capital built up through a strong ethical theme in the company’s culture › Inoculate against crises › Resolve issues regardless of cause

 Some crises can be avoided through careful preparation  Some incidents and accidents will still occur, but can be contained with foresight and good coping systems  Some incidents and accidents inevitably become crises, no matter how much preparation is done

Layers of Pauchant and Mitroff’s Crisis Management Model 1.Character of the people in the organization – willingness to take responsibility and take corrective action 2.Culture existing in the organization – supports appropriate preparation and response actions 3.Organizational structure – crisis management structure in which all stakeholders are represented 4.Plans and mechanisms for dealing with crises – crisis management team has fully prepared plans, disseminated them, and trained people in key roles Source: Thierry C. Pauchant and Ian I. Mitroff, Transforming the Crisis-Prone Organization: Preventing Individual, Organizational, and Environmental Tragedies, (San Francisco: Jossey-Bass, 1992). Layers of Pauchant and Mitroff’s Crisis Management Model 1.Character of the people in the organization – willingness to take responsibility and take corrective action 2.Culture existing in the organization – supports appropriate preparation and response actions 3.Organizational structure – crisis management structure in which all stakeholders are represented 4.Plans and mechanisms for dealing with crises – crisis management team has fully prepared plans, disseminated them, and trained people in key roles Source: Thierry C. Pauchant and Ian I. Mitroff, Transforming the Crisis-Prone Organization: Preventing Individual, Organizational, and Environmental Tragedies, (San Francisco: Jossey-Bass, 1992). Exhibit 16-5

1. Establishing effective structures for planning and handling crises 2. Assessing the elements of the company’s operations that produce risks and reduce these risks 3. Plan procedures to follow as events occur 4. Inoculate negative public attention that will occur during a crisis

 Early buildup period  The organization goes through a preparation period if early signals perceived  If signals have not been picked up, the crisis will be triggered by some event  If the organization has been able to prepare for, but not prevent a crisis, a trigger will occur that creates an incident or accident

 A period of intense activity and public scrutiny will ensue  Following the crisis  The organization may take follow-up actions and may go through a period of serious learning

 Give the media access  Tell the truth  Be proactive  Stay calm

 Make sense out of incoming data  Avoid wild speculation (by yourself and others), so reactive stance toward media at this time

 Respond quickly, backed by effective action  Both communication and action will be anticipated prep is well done  Limit points of contact for consistent, focused message  Value network partners may assist  Company may have to accept blame, make apologies, and “fix” things

 Begin repair of the company’s image (time consuming process)  Thoroughly debrief, learn from experience  Value Image can be sustained/ repaired if organization maintains ethical approach  Reinforce management, employees they have done the right thing(s)

 Same approach for handling minor or everyday issues that can erode public image or confidence  Preparation and avoidance are preferred over having to handle each problem as a one-off  Reoccurring incidents indicate a structural solution rather than a band-aid

 Special case – they have only begun to anticipate what problems can occur, what risks exist.  Little or no experience with media interaction.  Utilize Public Relations firm with values consistent with the company’s  Set in writing the young company’s philosophy for handling public adversity.

 Potential Conflict  Risk taking in entrepreneurial marketing is taking manageable financial risks  Minimizing risks in crisis planning is more about minimizing non-financial risks