crisis management and corporate reputations

8/14/2019 Crisis Management and Corporate Reputations

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Kyle CatonMegan ColwellAlex KaramSam SmithAriella Vance

Crisis Management and Corporate Reputations: The effect that crisis management has onpeoples perceptions of a companys credibility

Introduction

History suggests that companies who actively participate in public relations after a

crisis are more successful at restoring a positive image or reputation that may have been

damaged (Alvintzi and Eder, 2010). Different strategies that are used and suggested by

professionals are often times derived from common communication theories. The recent

decades popularity in Internet and social networking sites has made it easier and quicker for

news to be delivered to the world. Crisis management has become more essential to a company

or brands market strategies,mainly due to this quick and progressing advance in technology. A

simple 215-character (about fifteen small words) tweet can make or break a businesses

reputation. Research suggests businesses need to react quickly and efficiently to protect their

image when a crisis occurs.

The three crisis management situations we chose to reflect on are; Deepwater Horizon oil

spill (BP oil spill) in the Gulf of Mexico in 2010; Exxon Valdez oil spill in Alaska in 1989; and

the Costa Concordia cruise ship-sinking calamity in 2012. All of which are examples that caused

a lot of publicity and cost the companies a lot of money. By analyzing each scenario from a

public relations standpoint, we are able to draw conclusions from each of their reactions, or

responses to the public, and learn good public relations from bad. All three of these companies

had a similar goal in mind, to repair their brands image and make right what they had

wronged.


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Review of the Literature

Crisis Management

The topic of crisis management within corporations has been researched extensively.

According to authors Alvintzi and Eder (2010), Crisis management is defined as the

intervention or co-ordination by individuals or teams before, during, or after an event to resolve

the crisis, minimize losses or otherwise protect the organization. In other words, corporations

and businesses rely on crisis management to rebuild or correct their companys reputation.

Corporations who have a crisis management plan before the event of a crisis occurs are more

effective in protecting the organizations image (Albrecht, 1996). Handling a crisis successfully

so that the reputation is insured involves three different phases: Pre-crisis phase, Crisis response

Phase, and Post-crisis phase (Alvintzi and Eder, 2010). According to Alvintzi and Eder (2010),

the pre-crisis phase involves prevention and preparation so that the corporation can handle a

crisis situation effectively. During the crisis response phase, those in the top management

positions at an organization respond accordingly to a crisis. The last phase deals with ways to

improve the situation and look for better ways to prevent the crisis that just happened (Alvintzi

and Eder, 2010).

Corporations that do not follow these guidelines for crisis management will face long

term consequences in regards to public opinion about the organization (Albrecht, 1996). An

example of these consequences is clearly recording in the aftermath of the 2010 BP oil spill.

Jonathan Bernstein, president of Sierra Madre, Calif.-based Bernstein Crisis Management Inc.,

states that it was clear that BP did not have a crisis response plan before the spill took place,

despite the fact that this type of crisis is a likely outcome in this field of work (Casale, 2010).

Not only did BP lack a plan to resolve and clean up the spill, but they also failed to acknowledge


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consumer concern. The arrogance of the company when it came to crisis management resulted in

a poor public opinion regarding the organization as a whole. Critics suggest two main reasons

contributed to BPs poor human relation skills. First, BPs failure to bring in outside help from a

professional and experienced firm, and secondly, announcing that the company will only pay

what was appropriate for legitimate claimsor simply not directly addressing the consumers

(Casale, 2010). According to Casale, transparency, honesty and humility can go a long way when

resolving a crisis situation in order to appease the public so that an organizations reputation is

not ruined (2010). BP did not have these qualities thus causing a disaster for the corporations

image. The article addressed these issues several times stating that BPs reputation, especially as

an environmentally friendly company, will most likely never recover (Casale, 2010).

EXXON Valdez Oil Spill

On March 24, 1989, The Exxon Valdez oil spill occurred in Prince William Sound,

Alaska, leaking somewhere between 260,000 to 750,000 barrels (estimated at 11 million gallons)

of crude oil into the ocean. According to scientists Ronald Atlas and Terry Hazen, many factors

have been identified as the cause of this catastrophe. First, the ship crew was insufficient and

inexperienced in specific safety precautions that should have been accounted for. Second, one

ship crew member failed to properly maneuver the vessel and all crew members failed to

maintain the Raytheon Collision Avoidance System (RAYCAS) radar, which would have

warned the crew mates of any potential collision. It was discovered later that the radar wasnt

even turned on, and it had actually been broken for at least a year before the disaster (Atlas &

Hazen, 2011, pg. 3-5). This particular spill is said to be responsible for the deaths of, at least,

100,000-250,000 seabirds, 2,800 sea otters, 300 harbor seals, 247 Bald Eagles, and many more

salmon fish. The severe reduction in salmon ended up affecting the killer whale population in


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Prince William Sound and Alaskas Kenai Fjords region. 20 years after the spill, scientists found

that sea life is still suffering from effects of the spill and habitats may take up to thirty years to

recover.

Exxons initial PR attempts were quite unsuccessful and to some extent harmful to the

companies image (McClam, 2010). Firstly, Exxon was accused of being apathetic to the

situation in the early moments after it occurred. One major mistake was that instead of the

chairman of Exxon himself going to Alaska, he sent lower ranking executives there to handle the

situation (Holusha, 1989). Another problem was that the company refused to comment on the

situation for almost an entire week after the spill. This led to increasing tension from the public

that was concerned about Exxon not responding in time to the disaster. The main mistake that

Exxon made during this time was that they did not fully make the public aware that they were

responsible for the disaster (Holusha, 1989). This sudden shift in blame or signs of apathy could

have been detrimental to the companys reputation, but in the following weeks, Exxon was able

to shift the publics view positively by making key PR moves. Mr. Rawl, the chairman of the

Exxon, made a pledge that the company would be responsible for cleaning up the affected areas

(Holusha, 1989). Rawl also went to different news operations to explain the steps that Exxon

planned to take in the following weeks and answered every question that was asked with

confidence and no ambiguity. This event was still the most devastating environmental disasters

caused by man, until the 2010 Deepwater Horizon oil spill. BP managed to approach their

disaster with a rockier start than Exxon.

Deepwater Horizon Oil Spill (BP)

The Deepwater Horizon spill, or BP oil spill, occurred in AprilAugust (over an 87 day

period) in 2010, leaking 4.9 million barrels (210 million gallons) into the Gulf of Mexico due to


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an explosion caused by high-pressure methane gas expanding into the drilling riser. Like the

Exxon Valdez, BP was blamed for making a series of cost-cutting decisions and lacking

necessary safety precautions. The explosion killed 11 men on the job, leaving 17 injured, and

more than 400 species in the Gulf wear at risk (and still are), including many endangered turtle

breeds. The spill killed over 6,000 birds, 600 sea turtles, and 300+ dolphins and other mammals.

Dr. Darryl Felder examined the ocean post-spill and concluded that mutations, abnormalities,

and unexpected abortions have occurred in disturbing numbers since the spill (Jamail, 2012,

pg. 1). As a result, according to The Washington Post, by the end of September, BP reported

that it had spent $11.2 billion in reparations, not including compensation to victims, which in

total estimated an extra $4.7 billion (Skoloff & Wardell, 2010, pg. 1). This was the largest

remediation and emergency response worldwide to an oil spill.

One major event was the CEO of BP coming off as annoyed in an interview by stating he

just wants his life back. According to Erin McClams article on MSNBC, crisis management

experts believe that BP showed no human compassion in the aftermath of the event (2010). The

public saw BP not taking action or making any sacrifices after the initial spill and it led to

decreasing in favor towards the company. Other image-harming acts from BP included subtle

attempts to blame the company that constructed their drill and also a message from the President

Obama stating that BP should spend less money on ads and more on fixing their mess.

BP was able to change their strategies to create a more positive light on their company

again. Former President of Shell Oil, John Hofmeister, stated that the company needed to take

the blame, spend money on fixing theproblem, and simply soldier on through this situation

(2010). BP did just this after their initial crisis management strategies and effected the outlook on

them great and the company has managed to survive to this day.


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Costa Concordia

The third crisis to be examined is the Costa Concordia cruise ship partial sinking on

January 13, 2012. This event was caused by hitting a reef off the Italian coast, which flooded

the engine room and generators, resulting in the emergency evacuation of 4,252 people on board.

This wreck killed 32 passengers, and injured an additional 64 (Jones & Denti, 2012, pg. 1). The

captain of the ship, Frencesco Schettino, was arrested for multiple charges of manslaughter,

including failing to assist 300 passengers, and failing to be the last to leave the wreck

(Washington Post). According to The Guardian, Schettino claims he abandoned the ship

because he tripped into a lifeboat (Klington, 2012, pg. 1). Due to many surviving passengers

accounts of what really happened, the constant criticism and negative publicity made it difficult

for Carnival cruise line executives to respond quick enough to the brand crisis, according to

PRNewser (Lazarus, 2012, pg. 1).

This tragedy is still fresh to the world. Their parent company, Carnival, was highly

involved in implementing forms of crisis control to preserve cruise ship consumer confidence

and Carnival stock from plummeting. Both companies were very accessible to the public,

releasing new statements and information when appropriate. A high amount of blame was placed

on the ships captain, though not by the company itself. However, they profited highly from this

strategic, though incorrect, place of blame. Interestingly, the company has faired well and

continued to sustain public support.

Public Opinion/Reaction

Companies around the world are concerned about earning high profit. However, to

accomplish this goal, they must consider the companys image in the publics view. When a

large company crisis emerges, they must figure out a way to save themselves. Advertising and


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public statements are the best way to change the publics perspective of them. Images damaged

by chaos within the company rises as long as certain steps within the company do not take place.

In relation to the BP oil spill in the Gulf of Mexico, some people are firm believers in the

notion that no amount of money or public relation assistance can repair the public standing or

image of the damage caused by the enormous spill. BP has tried to contain their spill by hiring

more workers to assist in the cleanup of the Gulf of Mexico, though many people have a problem

with the fact that the hourly wages for those who were hired to clean this area has risen

significantly. A majority of people believe that this extra money should have been allocated to

people who were directly affected by the disaster. This notion, however, seems to be

insignificant, as the BP Company itself has stood the test of time, and continued to expand,

financially. Their public relations campaign led them to release advertising of their CEO

apologizing to the masses for the spill. Apart from these videos, their PR team did little on a

world-wide scale to repent for their damage.

The oil spill committed by Exxon in Alaska is similar to the spill in the Gulf of Mexico

by BP; however, their public relations team was less experienced. Exxon executives hoped that

time would cover their blunder. In fact, they decided outright to not talk to the media about the

spill. They hoped people would forget how tragic and corrupting the spill was for local residents.

In failing to tell the media about their spill raised the question by the general public about the

companys ethics. Exxon had a responsibility and moral obligation to tell the public about the

devastating spill and their plan to clean up the area. Instead, they hoped that their public inaction

would result in people soon forgetting the whole ordeal.


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Risk management is essential in order to sustain company image. The only way to

survive a disaster caused by company recklessness is to have a strategic plan to handle the

publics reaction and the aftermath. Exxon and British Petroleums public relation campaigns did

well because their product is inelastic. The necessity for oil allows the companies to fair well in

the global marketplace. Though Costa Concordias product is elastic, the desire of luxury has

still been able to retain consumer satisfaction. From the rubble, these tragedies were not

completely horrific. Several jobs were created for clean-up purposes, and ethical practices

questioned, resulting in better consumer choices. Overall, the various public relations campaigns

were able to maintain their respective company image because they have continued to flourish.

Methods

Fantasy-Theme Criticism

For this particular study, two artifacts or social texts will be critiqued using fantasy-theme

criticism, a type of rhetorical criticism, created by Ernest G. Bormann, which is designed to

provide insights into the shared worldview of groups (Foss, 2009). Using fantasy-theme

criticism is important in this case because this type of method of rhetorical analysis can be

applied to different kinds of rhetoric in which themes function to connect an audience with a

specific message. The artifacts chosen intend to do just that, they are all forms of rhetoric that

assist in crisis management for a corporation. Therefore, each artifact intends to connect to their

audience by reaching out with a specific message that the audience can relate to. Analyzing

social texts through fantasy-theme criticism reveals the convergence of peoples private

symbolic world with common experiences (Foss, 2009). This community of shared meanings

between audience and social text develops a sense of community due to similar attitudes and

emotional responses (Foss, 2009). The analysis of the social texts being looked at will interpret


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and come to an understanding of this convergence while attempting to answer our research

questions.

The basic unit of analysis of fantasy-theme criticism is the actual fantasy theme itself.

This is the means through which the interpretation is accomplished in communication and is

interpreted through a word, phrase, or statement of past, future, or current events (Foss, 2009). In

general, fantasies are a way of making sense out of experience, thus fantasy themes are a more

organized way to provide explanations for our own experiences. The social texts that will be

analyzed attempt to create a shared reality with their audience and they do this by referencing

common experiences that many people may have. The fantasy-theme analysis will interpret these

shared experiences and determine how and in what ways do they affect the audience rhetorically.

This would tie into the second primary unit of analysis in fantasy-theme criticism which is the

rhetorical vision. This is a unified putting together of the various shared fantasies to provide a

specific interpretation of reality (Foss, 2009). The fantasy themes relate to different settings,

characters, and actions that, when put together, form a symbolic interpretation of the real world.

The presence of a rhetorical vision suggests that a rhetorical community of people with shared

fantasy themes has already been formed. The social texts that will be analyzed assume that there

is a rhetorical vision with their audience, thus their messages will be interpreted positively

because of their commonality. An important note to remember when looking at a rhetorical

vision is that actions that make little sense to someone outside of a rhetorical vision make

perfect sense when viewed in the context of that vision because the vision provides the motive

for action (Foss, 2009). So, if the audience does not actually share the rhetorical vision that the

social text intends, then the message will not be interpreted in the way that was intended.


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Procedures of Fantasy-Theme Criticism

The foundation of rhetorical analysis is the research question. The purpose of analyzing a

social is to answer a question that tries to better understand the rhetorical importance of the

artifact. The question asked in a fantasy-theme analysis determines which direction the paper

goes as well, so formulating a good research question that will ask the desired interest of the

analysis is an important first step. In our own analysis the research question asks how a

corporation expresses a worldview to create a fantasy about the image of their company. The

analyses of the two artifacts will serve to answer this research question.

Using fantasy-theme criticism to analyze a social text involves two major steps: coding

the artifact for setting, character, and action themes; and constructing the rhetorical vision(s)

from the fantasy-theme (Foss, 2009). The first step requires a careful examination of the social

text by picking out any reference to the characters, settings, or action themes. This is a

preliminary stage that just identifies these three aspects of a piece of rhetoric. Some themes may

identify with more than one category, like setting and character or action and character. If this is

the case, it is fine to code the theme in both categories because the next step of analysis involves

looking for patterns that will determine exactly which category that word or phrase best belongs.

The next step of analysis is constructing the rhetorical vision. During this step in a

fantasy-theme analysis, the rhetorical vision is constructed from the patterns found in the fantasy

themes. Determining the major themes from the minor themes is the first stage in this step. The

themes that appear most frequent would be categorized as major themes and become the subject

of the analysis. The minor themes are not important to the rhetorical vision and are discarded.

The next stage in this step is identifying the patterns between the categories of setting, character,


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and action and the fantasy themes that were identified. There may be more than one rhetorical

vision in the social text chosen.

Discussion of Artifacts

The first artifact chosen is a television commercial used by BP, after the oil spill crisis. The

commercial aired nationally in the United States as an effort to gain more favor from the public. Before

the company aired this commercial, BP gained even more hate from the public by trying to shift the

blame of the spill on third parties. We find this an important artifact because it signifies a change in the

direction that BP took their public relation efforts after the crisis. The commercial allows both dialect and

images that will be important in fantasy-theme criticism.

The second artifact chosen is the official statement from Costa Concordias CEO that blamed the

incident solely on the captain. Costa Concordia went under loads of media scrutiny after their initial

disaster. However, they were able to steer away the hateful view of the public from their company to the

ship captain. This will be a crucial piece to our research because it shows a major move from a company

they helped save it from going under.

Results

Artifact Analysis: British Petroleum Commercial

By utilizing Fantasy-Theme Criticism as a method to analyze the British Petroleum

Commercial, this study will attempt to determine how BPs endeavors to convince the masses

that they are apologetic for the devastating oil spill in the Gulf Coast of Mexico determine how

effective this form of crisis management was on increasing the publics perception of their

credibility.


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Examining this artifact revealed that there was an underlying message of extreme

apology that strove to influence the publics perception of BPs credibility. If a company messes

up, the public not only usually appreciates an apology, but expects one. The commercial portrays

a drama or story, in which there are several characters for people to connect to. There is the

central character, then BP CEO Tony Hayward. He never raises his voice or makes any large

gestures with his body. He is completely composed and relatable in the sense that, if you had to

apologize to someone, you might act in the same way. Supportive roles include BP workers,

volunteers, and wildlife spread throughout the commercial. Fantasy-Theme Criticism dictates

that an individual will root for the goal achievement of whatever character(s) that individual

identifies with. Therefore, if one feels a particular connection to Tony Hayward, they may hope

he can, and will, fulfill his promises of righting the companys wrongs through whatever means

possible.

By watching the commercial, an individual participates in a social reality that is being

constructed and defined by the story that Tony Hayward tells. Getting too involved in this social

reality, if even momentarily, has the potential to motivate participants to commit certain actions,

like maybe the decision to volunteer in the cleanup, or change their personal beliefs about the

company. Tony Hayward spins a web of dramas throughout this commercial in the hopes that an

individual will connect to the underlying message as much as possible. This includes creating

sympathy for him, the wildlife, the locals, the economy, and the environment. These fantasy

themes strive to encourage viewer participation in the commercials constructed social reality.

These fantasy themes fit together to create a rhetorical vision in which once accepted by the

participant, can be very compelling in changing perceptions of a companys credibility and draw

a large number of followers in support of BP, among other possibilities.


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Hayward literally gives the public ultimate legitimizers that Fantasy-Theme Criticism

describes as the bottom line values which justify BPs decision to fix their wrongs by making

certain statements such as: We all feel the impact, Our responsibility is to keep you informed

and do everything we can to make sure this never happens again, and We will get this done.

We will make this right. These declarations suggest a strong company conviction of

accountability and the real possibility that the company is in fact truly apologetic. He creates a

sense of camaraderie as he makes heavy promises and invites the viewer to be a part of his

positive and hopeful outlook for the future.

Through this analysis of BPs commercial, the fact that British Petroleum still makes

astronomical profits, and the small detail that oil is still an inelastic commodity in our economy,

it is safe to say that this particular artifact used by BP to manage their crisis was effective in

increasing the companys credibility in the publics eye. BPs image was initially tarnished and

eventually forced them to create a strategy plan for crisis management that actually produced

their desired effect.

Artifact Analysis: Costa Concordia

The second artifact that the paper will analyze is an article covering the statements Costa

Concordia made concerning their crises. As stated earlier in the paper, Costa Concordia had a ship of

theirs overturn off the coast of Italy. This disaster resounded through the newspapers and press releases

globally and created a negative connotation with the company. When looking through this article, we will

be coding the vocabulary used by the company to determine if they focus their rhetoric on setting,

character, or action. This coding will help answer the question How does Costa Concordia express their

worldview in the artifact?


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The first type of fantasy rhetoric we looked for was vocabulary concerning the setting. We found

little to no speaking on this subject from the people of Costa Concordia. Besides the pictures associated

with the article, the only piece of it at all that talked about the setting was from one of the coast guard

officials saying there is a glimmer of hope of people surviving inside the vessel.

The next speech we analyzed was vocabulary concerned with character. There was a little more

substance on this subject, but there seemed to a conscious effort by the company to avoid talking too

much about the captain. The captain and the company were the only two characters introduced in the

wording of the artifact. These two characters played a traditional role of villain and victim. Concordia was

shown to be a victim of Captain Schettinos recklessness. This role between the two characters is better

shown in the analysis of the action vocabulary.

Action words were easily the majority of the vocabulary used by Costa Concordia. Character was

used somewhat in the rhetoric, but it was only to increase the effect that the action words had. All

character words were put together and associated with the actions to create a relationship between the

character and the actions. The actions were mostly described in a negative manner such as unapproved

and unauthorized when describing the actions the captain took during the disaster. Along with negativity,

the action words described responsibility as well. Doing so creates a theme between the two that becomes

associated with the character being described. Costa Concordia said that the captain took his own

initiative and didnt get the approval from others.

Why Concordia decided to take this approach was to shift the negativity away from the company and

push it onto the captains own morality. This helps strengthen to theme of victim and villain by

associating all of the negative terms toward Schettino. This approach was very beneficial and smart for

Concordia to make in their time of crisis. The main goal of these actions was to make a statement that

wouldnt cause more negativitytowards the company. That is why the setting is completely avoided in

the vocabulary. People know what happened to the ship, so talking about it anymore would just put more


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admit their mistakes and be trusted by the public again. It is also why fake or half-hearted apologies

create such a fuss in the public. These kinds of apologies go against and insult the importance of

responsibility that our society sees. As long as companies admit their mistakes and accept responsibility

of their actions, they should be able to survive through a crisis in their corporation.


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