Prevent reputation risks and avoid corporate "brain death"

In November 2006, China's first credibility survey report - China Enterprise Credibility 100, Haier became the top Chinese local enterprise, ranking sixth in the overall list.

It is expected that Haier won the first place on the credit list of Chinese local enterprises. Haier established the concept of "selling reputation first, and products second" in the early 1990s. Starting out, Haier formulated the strategy of creating a world famous brand and became a giant in China's home appliance industry.

The concept of "selling credibility" is not only the secret of Haier's success in China, but also the success of many of the world's top 500 multinational companies. Many of these multinational companies that have entered the top 500 are "century-old companies", and the good reputation that these companies have formed during their long-term operation has become a strong support platform for the sustainable development of these companies.

Reputable companies have a market

In the 1980s, companies that had products would have customers; in the 1990s, they would have sales if they had advertisements; in the 21st century, only reputable companies would have a market.

In today's era of highly homogenized products, product quality is almost the same, and brands are seriously flooded. It is very difficult for companies to surpass competitors only by relying on these two. Unlike improving product quality and brand, which is mainly to serve consumers and promote product sales, the goal of reputation competition is to serve the relevant stakeholders of the enterprise and build a harmonious coexistence environment. Therefore, the competition of corporate reputation has gone beyond the pure brand competition and sublimated to a higher level.

Pepsi-Cola once suffered a downfall in its corporate reputation.

When PepsiCo first entered the Philippine market, PepsiCo claimed in a bonus promotion that it would get 40,000 yuan as long as the XX logo was found on its product bottle cap, but due to work mistakes, the result was 80 million The logo is printed on the caps of Pepsi bottles sold by 10,000. If honored, PepsiCo will suffer huge financial losses in this promotion. As a result, PepsiCo refused to redeem the prize, consumers who won the prize felt cheated, and a massive anti-Pepsi-Cola campaign was launched in the Philippines. They smashed PepsiCo's headquarters in the Philippines, beat up the staff, and caused a lot of uproar in the whole Philippines. This incident not only caused PepsiCo to suffer a lot of economic losses, but also had to withdraw from the Philippine market because of its complete loss of credibility in the Philippines.

Credit bankruptcy equals "brain death"

The biggest crisis of a company is bankruptcy, but before that, credit bankruptcy has already begun. If bankruptcy is the heartbeat of a company, then credit bankruptcy is the "brain death" of a company. Because the credit bankruptcy will depreciate the net assets of the enterprise, making the enterprise fall into the quagmire of a vicious circle.

Nanjing Guanshengyuan is the first domestic well-known enterprise to go bankrupt due to dishonesty in recent years.

In 2003, media reported that Nanjing Guanshengyuan used old stuffing to make moon cakes, and Nanjing Guanshengyuan immediately faced a public reputation crisis. In the face of the crisis, Nanjing Guanshengyuan did not show due integrity. First, he argued that this practice is "very common" in the industry; in terms of hygiene management regulations, there is a shelf life requirement for moon cakes, but there is no time requirement for fillings, which means that it is not illegal to use old fillings to make new moon cakes. Afterwards, he hurriedly issued an open letter to continue arguing, but he never made any apology to consumers. What he did not only chilled consumers' hearts, but also further lost his credibility. The lack of credibility caused Nanjing Guanshengyuan, which has been focusing on moon cakes for many years, to be expelled from the moon cake market. Since then, Nanjing Guanshengyuan, whose production is unsustainable, has never recovered, and finally filed a bankruptcy application with the court. A well-known time-honored company with a history of 70 years collapsed.

Don't take corporate reputation as a powder

Most local Chinese companies still take their reputation seriously enough. They regard corporate reputation as a powder, rather than as a driver of corporate performance.

For example, there are many uncredible organizations who set up their own projects and collect company fees through various so-called selections, awards, honors, etc. that are not recognized by consumers to seek profits. Take shortcuts, take shortcuts, and spend money to buy many medals such as "Gold Award", "Best", "Contract-honoring and Promise-keeping" to establish "company reputation" and improve "company image". In fact, what the company does is not only worthless, but also has a negative effect. This apparent fraudulent behavior itself is a form of deception and disrespect to people, and companies that use this method also obviously underestimate people's judgment.

The good reputation of a company exists in people's minds. Although a certain amount of financial investment is required to establish a good corporate reputation, it is by no means something that money can buy.

Four Capabilities to Upgrade Reputation Competitiveness

How can corporate reputation be the driver of corporate performance? Dr. Pan Shaohua, President of the International Reputation Research Institute (China), summed up the four capabilities that enterprises need to build to build a high reputation. They are:

Operational capability of reputation platform: This is the core tool for enterprises to develop and manage reputation.

Reputation risk tolerance: From the perspective of reputation management, the correspondence between corporate market perception and corporate substance is often subtle. Excellent enterprises have created huge intangible assets for enterprises by improving market perception and gaining credibility due to the role of reputation management. However, as a general enterprise, it lacks a perfect and systematic reputation management mechanism, and the asymmetry of market perception undoubtedly increases the reputation risk for the enterprise.

The planning ability of the reputation system: If the enterprise lacks long-term planning and effective mechanism for the reputation, it is difficult to make the reputation management have continuity and durability, and it is easy to generate loopholes. Therefore, the ability of an enterprise's reputation system planning directly determines its reputation among the public.

The ability to deal harmoniously with the interests of stakeholders: This is the most advanced and core component of corporate reputation building. The optimization of the enterprise's own interests is often manifested in coordinating and balancing stakeholder relations and obtaining resources and support from them. An important part of corporate reputation assets is composed of market and social capital contained in stakeholder relationships. For example, let the regulators be tolerant, consumers are loyal, public opinion support, employees assume obligations, win capital from investors, suppliers obtain cooperation, get understanding from the society, and get objective reports from the media, etc.

The author is the editor of the CEConline website.