EXERCISE 3.3 The Reputa- tion Trap: Can You Escape? What happens if a company ca
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EXERCISE 3.3 The Reputa- tion Trap: Can You Escape? What happens if a company cannot change how it is viewed by consumers? As you read this case, consider the following questions 1. What does this case reveal about the challenges faced by successful businesses? Is it possible to be too successful? 2. How does a successful organization determine whether an environmental change is a brief fad or fashion to be ignored, or a development that requires a fundamental rethinking of the way in which it does business? LO 3.1 3. What change issues does this case raise with regard to the significance of reputation? 4. What actions would you recommend be taken by Big Food and the fast-food compa- nies that have been caught in the reputation trap? Try this simple test. Say the following out loud: Artificial colors and flavors. Pesticides. Preser- vatives. High-fructose corn syrup. Growth hormones. Antibiotics. Gluten. Genetically modified organisms. If any one of these terms raised a hair on the back of your neck, left a sour taste in your mouth, or made your lips purse with disdain, you are part of Big Food's multibillion-dollar problem. In fact, you may even belong to a growing consumer class that has some of the world's biggest and best-known companies scrambling to change their businesses. (Kowitt, 2015, p. 61) Fortune magazine prides itself on being able to feel and report "the pulse" of U.S. busi- ness. In 2014 and 2015, two articles by Beth Kowitt, "Fallen Arches" and "The War on Big Food," explored the impact that consumer preference for healthy foods was having on Big Food organizations such as General Mills and Kraft, and also on some fast-food outlets like McDonald's and Subway. A growing number of consumers are suspicious of processed foods. Ironically, although processing (e.g., salting and curing) has traditionally been associ ated with reducing the risk of illness from the food we eat, food processing is now seen as the antithesis of healthy eating. The annual sales of processed food are declining, but these are the core products of mul tibillion-dollar Big Food companies. Since 2009, the top 25 food and beverage companiesExplanation / Answer
1. The case has raised various questions and one of the most profitable and growing industry is suffering today because of the change that has been visible in the mindset of the people. This case proves that even big players can suffer if the consumers are not happy with their way of doing business thus it should noted that the customer can be considered as the most important stakeholder in this case. Future market analysis is not easy in such kind of business because food items are something whose business cannot be predicted at all as people tend to change their way of eating food a lot.
Yes, it is possible to be too successful and the organizations who are suffering today were one of the most successful brands in the past. Sometimes the way of doing business needs to be changed according to the market demand and organizations should come out of their stereotype nature which is actually affecting the business recently. Consumers are constantly avoiding such organizations because they have grown a negative attitude regarding them and a change is difficult but possible if the organization is able to understand the actual reason behind this failure and rejection.
2. Determining that a change in the preference is short term or long term is what differentiates a successful organization from the rest. There are various tools with the help of which this can be done but for that there has to be a lot of research in various spheres of the business. Market research is very much importance in this context because the change that has taken place is not something very regular, instead this is a rare incident and the organization should also assess such instances that has happened in the past because that will help the organization in understanding the issue. It has been observed that some changes are short term which are dealt with time and little effort and the business should be flexible enough to deal with such changes in the demand, but if the change is along term one then the business should seriously think about being dynamic and flexible so that the situation is dealt with as soon as possible or else this will go on and the business will be at a huge loss. Determining the trend is important but this not very easy as such trends do not change that often.
3. Reputation is considered as an asset rather a fictitious asset that an organization or a business has gained because of the good work it has done over the years. A very small incident can affect reputation and this is a very serious issue because the organization may lose potential business and consumers because of such an incident. The case has also raised various questions regarding reputation because the brand value has gone down as people are not preferring these brands as they believe that the food products sold by them are not healthy. This loss is huge and cannot be calculated in terms of money but the organization is actually losing a part of its revenue because of this. Reviving the lost reputation is actually very tough but it can be done and may require years in this case because if people reject a brand due to quality and hygiene factor, then the organizations has to work very hard in order to get back its lost glory.
4. The organizations who are at loss should at first understand the mistake that they are doing and they should refer to the strategy adopted by the organizations who are still doing good. The requirement of the consumers has to be understood and the organizations has to display flexibility in order to revive the market hold it has lost. If people wants healthy food then the organizations primary focus should be healthy foods and they have to make their customers believe that they are preparing healthier food items and proper marketing and advertising strategy has to be used in this context. They have to get rid of the fast food tag they possess and they have to achieve the healthy food tag in order to do that the organizations can advertise the way they prepare their food items and quality should be mandatory here. The business strategy is very simple, which states that you have to manufacture according to the demand or manufacture something which creates demand.
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