Still with Front Groups? Walmart still abuses PR

The Edelman-Walmart flog (fake blog) scandal should have been a warning.  Do not pretend to be someone else online even if your PR agency suggests it to you.  It is a quick way to offend stakeholders and galvanize opposition to an organization.  Your core stakeholders will probably just ignore it.  The new concern involves issues management in Chicago.  Walmart is still trying to expand its presence in Chicagoland.  People involved in the online debate over Walmart in Chicago notice series of unusual posts in support of expansion.  The screen name for the posts challenging arguments against expansion was “Chatham.” An online reporter for the Chicagoist decided to research Chatham.  The posts were traced to a URL address for ourcommunityourchoice.com.  The site is run by the Chicagoland Chamber of Commerce in support of Walmart expansion and notes Walmart is a member of the organization.  Here is a statement from the web site:

” The mission of the Chicagoland Chamber of Commerce, of which Walmart is a member, is to make our region the most business-friendly in America and enhance our members’ success through programs in advocacy, member benefits, services and actionable information. The Chamber proudly supports the effort to bring businesses including a Walmart to the south side of Chicago, which would create hundreds of jobs, millions in tax revenues and provide access to fresh fruit and produce. As part of our support on this issue, we have delegated our own resources to create and manage a Web site called www.OurCommunityOurChoice.com to provide the latest information on the Walmart issue to the public and help connect the public to their Alderman.” http://www.ourcommunityourchoice.com/

The group is using social media as well with both a Twitter account and a Facebook page.  The key theme to the site is “Everyone else but Chatham and the South Side are making the decisions – It’s OUR CHOICE, NOT THEIRS.”  It should be noted the people running the Chicagoland Chamber of Commerce are not from the area either (http://chicagoist.com/2010/01/26/wal-mart_using_fake_community_group.php).  Moreover, the online reporter discovered the IP address associated with the web site was from Serafin and Associates, a public a public relations agency.  The Chicagoland Chamber of Commerce acknowledge the agency had been part of their strategy sessions but were not aware of posts being made on behalf of the campaign. 

A number of online stories argue that a front group had been uncovered:

“While Wal-Mart certainly has the right make its case to Chicago, the way they’ve gone about this – creating a fake community group that purports to represent a community’s residents and interests – is sneaky and underhanded. If what they have to offer Chicago is such a great deal, why did they need to go through the Chicagoland Chamber of Commerce to set up a bogus grassroots group? When I started asking questions around their tactics, they refused to talk to me, except on their own terms. Wal-Mart claims that Chatham residents should be the ones speaking up and making the decisions about what happens in their neighborhood. Over the next few weeks, we plan to look even further into this issue, including talking to residents and community leaders in Chatham and their thoughts on the issue. But it looks like Wal-Mart is working behind the scenes to make sure that the official corporate line is the only one being heard.” http://chicagoist.com/2010/01/26/wal-mart_using_fake_community_group.php

The concern is that ourcommunityourchoice is a front for Wal-mart channeled through the Chicagoland Chamber of Commerce and facilitated by Serafin.  There is not a ‘genuine” citizens groups pushing for Walmart’s expansion.

Questions to Consider

1. Would you consider this case a true front group?  Why of why not?
2. What are the ethical concerns for the communication activities of the Chicagoland Chamber of Commerce?  Walmart?  Searfin?
3. Why does it matter than no local people are behind the web site ourcommunityourchoice?
4. Where do find the hidden bias in this case?
5. How does this case further erode Walmart’s online credibility?
6. How could this case be used to build even greater opposition to Walmart’s expansion?
7. How does the case highlight the failings of transparency?

Toyota Recall: Hit or Miss?

Without reading or watching any coverage of the Toyota recall, you can bet the critics will say Toyota reacted too slowly in the recall.  That is a safe criticism to make.  Hindsight is 20/20 so it is easy to argue Toyota should have recognized the signs sooner and acted sooner.  Sometimes the default speed criticism is valid, sometimes it is unfair.  Keep in mind that managers are evaluating a number of variables simultaneously including financial concerns.  Besides, the speed of the reaction is relative.  What we should be more interested in is what was communicated through words and actions.  Speed is a secondary concern as long as it was not so slow that it placed people at undue risk because the organize had a very good idea of what the problem was.

A quick recap is of the recall is warranted here.  The problem was that accelerator pedals were sticking or returning to their normal position.  Drivers are worried when cars accelerate on their own—unintended acceleration.  The problem was found in a variety of Toyota vehicles in the U.S. and China.  The cars manufactured and sold in Japan did not have any problems.  The initial diagnosis was that improper installation of floor mats was to blame for the problem.  A message went out customers about the floor mats on Nov. 2, 2009 in relation to the Sept. 29^th recall.  On Jan. 21, 2010 another recall notice was delivered about the accelerator pedal itself followed by a suspension of selling the vehicles in doubt on Jan. 28, 2010.  It seemed both the floor mats and the pedal design were both to blame http://pressroom.toyota.com/pr/tms/toyota/toyota-consumer-safety-advisory-102572.aspx.  The bigger issue is whether or not Toyota knew of the problem since 2007 and that the problem went beyond the floor mats and pedal design to its drive-by-wire technology (latimes.com/news/opinion/editorials/la-ed-toyota5-2009dec05,0,1844374.story). The LA Times news story does seem to accuse Toyota of ignoring the problem for over two years.  Toyota disagrees:

“Today the Los Angeles Times published an article that wrongly and unfairly attacks Toyota’s integrity and reputation.

While outraged by the Times’ attack, we were not totally surprised. The tone of the article was foreshadowed by the phrasing of a lengthy list of detailed questions that the Times emailed to us recently. The questions were couched in accusatory terms.  

Despite the tone, we answered each of the many questions and sent them to the Times. Needless to say, we were disappointed by the article that appeared today, and in particular by the fact that so little of our response to the questions appeared in the article and much of what was used was distorted.

Toyota has a well-earned reputation for integrity and we will vigorously defend it.” http://pressroom.toyota.com/pr/tms/our-point-of-view-post.aspx?id=2378

Here is a link to the exchange of questions and answers between the LA Times and Toyota:  http://pressroom.toyota.com/pr/tms/document/LA_Times_questions_and_Toyota_answers.pdf

Records show the NTSB has investigated eight acceleration problems with Toyota’s since 2003.  Six of the investigations were closed with no action taken while two did involve small recalls related to floor mats http://archives.chicagotribune.com/2009/nov/26/business/chi-tc-biz-toyota-1125-1126-nov26. We should return to the point that the recalls affect cars outside of Japan including China, the U.S., and Europe.  The accelerator pedal has a different supplier in Japan.  Here is where Toyota makes some interesting communicative choices.  Toyota has the chance to scapegoat the supplier but provides this statement about the supplier:

“Toyota Motor Engineering & Manufacturing North America (TEMA) has been working closely with supplier CTS on a revised design that effectively remedies the problem associated with accelerator pedals. Pedals featuring the revised design are now in full production at CTS to support Toyota’s needs. Meanwhile, we are also working with them to test effective modifications to existing pedals in the field that will be rolled out as quickly as possible.

“We commend CTS for working diligently and collaboratively to find a solution to the potential problem and in developing a new design,” said Chris Nielsen, TEMA’s Vice President of Purchasing. “CTS is a long-term and valued supplier to us.”

http://pressroom.toyota.com/pr/tms/manufacturing/statement-from-toyota-on-supplier-153203.aspx

Toyota stands with the supplier rather offering them as the cause.  This statement shows Toyota’s willingness to take responsibility for any problems found in their vehicles even in the face of its largest recall involving millions of vehicles.  CTS made its own case saying the design they followed was from Toyota and that they are being unfairly linked to the recall.  Here are some CTS comments:

“”We are disappointed that, despite these facts, CTS accelerator pedals have been frequently associated with the sudden unintended acceleration problems and incidents in various media reports,’ said Dennis Thornton, CTS Vice President and General Manager of Automotive Products Group. Toyota itself has also publicly stated that this recall is separate from the earlier recalls which were done to remedy sudden acceleration in vehicles.” http://www.theautochannel.com/news/2010/01/29/463816.html.  CTS is having to address its own reputation issues but Toyota is not the one pointing fingers or implying responsibility.

In addition, Toyota took the unusual stand to suspend the sale of new vehicles:

“Toyota Motor Sales (TMS), U.S.A., Inc., today announced that it is instructing Toyota dealers to temporarily suspend sales of eight models involved in the recall for sticking accelerator pedal, announced on January 21, 2010.
 
“Helping ensure the safety of our customers and restoring confidence in Toyota are very important to our company,” said Group Vice President and Toyota Division General Manager Bob Carter. “This action is necessary until a remedy is finalized. We’re making every effort to address this situation for our customers as quickly as possible.”
 
Toyota announced it would recall approximately 2.3 million vehicles to correct sticking accelerator pedals on specific Toyota Division models. Toyota has investigated isolated reports of sticking accelerator pedal mechanisms in certain vehicles without the presence of floor mats. There is a possibility that certain accelerator pedal mechanisms may, in rare instances, mechanically stick in a partially depressed position or return slowly to the idle position.” http://pressroom.toyota.com/pr/tms/toyota/toyota-temporarily-suspends-sales-153126.aspx

Toyota had already recalled over million vehicles for the floor mat issue.  Toyota was willing to recall and suspend sales, both are corrective actions designed to reassure customers the vehicles would be safe once the recall changes were made.  Toyota’s President, Akio Toyoda apologized to customers:

“’We’re extremely sorry to have made customers feel uneasy,’ Akio Toyoda told public broadcaster NHK on the sidelines of the Davos forum in Switzerland, in his first public remarks on the recall since it went global this week.

‘Right now, we are trying to establish the facts and preparing for giving an explanation so anxiety among customers would be removed as soon as possible’” http://news.yahoo.com/s/afp/20100130/bs_afp/japanautocompanyrecalltoyota_20100130082516

Toyota’s words and actions indicate a strong concern for customers and a willingness to protect its reputation.  Still, if the problem really was known in 2007 and goes beyond what has been disclosed, a serious problem still remains.  However, at this point the facts do not support the charges of a cover up of an even larger problem.  That is the dilemma in product recalls.  When is a problem isolated and when is it systemic?  There are no clear rules for answer that question.

Questions to Consider

1.  How would you evaluate Toyota’s communicative response to the acceleration crisis?
2. Why might it be fair to criticize Toyota for being slow?  Why might it be unfair?
3. Why do you think Toyota directly addressed the LA Times story?
4. Who seems more credible in the exchange, the LA Times or Toyota and why does that matter?
5. What role does being slow to respond play in shaping stakeholder perceptions of an organization in crisis?
6. How does this case illustrate the connections between reputation management and crisis communication?
7. How would you rate the ethics of Toyota’s crisis communication given the facts reported in the case thus far?

Is Imagination better than Reality? iPad and Apple Stock drop

The Internet buzz for the new Apple tablet has been intense.  See the early blog case about it http://prstrategyandapplication.wordpress.com/2010/01/01/when-a-rumor-is-a-good-thing/.  Or go out online and find any of the thousands of posts and the invention.  It was rumored to do almost anything.  More specifically it would be a huge iPhone (iPod touch if you do not have AT&T) that would be a great book reader, wonderful gaming platform, perfect for on the going video, and change our lives forever.  An investors were excited by the prospect.  Apple stock constantly went up.  There almost seemed to be a correlation between iPad rumors and stock price increases. 

On January 27, 2010, the iPad arrived.  People finally had an official name.  The tablet had been rumored to be called the iSlate or simply called an iPhone on steroids.  Apple CEO Steve Jobs stood before the news media and showed what the iPad could do including a demonstration of its on-screen keyboard.  Finally the Internet had real information, not just rumors or what publishing executives claimed they learned when talking to Apple about creating content for the device.  http://www.ktla.com/business/sns-ap-us-tec-apple,0,3176809.story.  News outlets and bloggers created a second sea of information about the iPad touch.  Now speculation shifted from what it will be and do to how it will impact businesses, society, and individuals. 

We now know the iPad does read books, play video games, show videos, and web browses through the Apple Safari browser.  People speculate that Kindle finally has a rival.  A rival with better features (still speculative) and access to content (a known fact).  So iPad will impact the e-reader market in some way.   Next up is video games.  Smart phones brought mobile gaming to millions through apps.  There are mobile gaming systems such as the DSi but those are for people who want games.  Smart phones drew in another group,  people who were not gaming or mobile gaming but now could and did now.  Will the iPad impact video gaming, especially mobile gaming?  The potential is there with the better screen size reducing eye fatigue and frustration of missing a detail that hurts your game play.  The question will return to price and variety of games.  With apps being plentiful the issue may be more price of the iPad than available content.  http://www.modbee.com/business/story/1023644.html#ixzz0dqE1XIVw

 Video is better with a bigger screen.  High definition is not the same on the iPhone screen compared to a bigger screen.  Also the connectivity of the iPad should make it easier to watch videos, especially streaming videos.  There are application for mobile teleconferencing but more people will watch videos than teleconference.  So changes in how people access video many continue.  Nexflix has direct viewing of films and YouTube will be easier to watch while on the move.   The telconferencing eas was anticipated but, as of now, there is no camera for the iPad.  There is also no Flash capability or USB port.  Here is an article that details what is missing from the iPad http://www.guardian.co.uk/technology/blog/2010/jan/28/apple-tablet-computer.  More evidence that our imagination of what the iPad could be does exceed the reality. 

The oddity in all of this is the stock price reaction to the iPad official reveal.  Apple stock prices went down after the announcement.  In early Wednesday trading the share price fell $4.65 or about 2.3% http://www.ktla.com/business/sns-ap-us-tec-apple,0,3176809.story.  Still Apple is well ahead of where share prices began before the iPad buzz.  But we must wonder if the iPad seemed better in our minds than it did in reality?  Yet more disappointment for people wanting to live or visit Pandora.

Questions to Consider

1.  Was Apple’s publicity build up to the iPad too successful?  Why or why not?
2. Is it ethical to leak information online to help build interest in a product?  Why or why not?
3. How did bloggers and the Internet in general help to build interest in the iPad?
4. How was the iPad build up a type of investor relations?
5. What is the advantage of Apple making the announcement after the Consumer Electronics Show (CES)?
6. Why is CES such an important publicity event in the electronics industry?

Greening Apple and Greenpeace Likes It

Apple and Greenpeace have had their disagreements about how environmentally friendly Apple should be.  Greenpeace has been a critic of Apple urging them to become a better company, environmentally and CSR-wise.  We call this instructive churn.  Instructive churn is when companies learn from stakeholder criticism by internalizing the criticism and making positive changes.  In essence a negative becomes a positive.  Two recent developments highlight Greenpeace and Apple being linking in instructive churn. 

Greenpeace regularly issues its “Guide to Greener Electronics.”  According to Greepeace, “The guide ranks the 18 top manufacturers of personal computers, mobile phones, TVs and games consoles according to their policies on toxic chemicals, recycling and climate change.” http://www.greenpeace.org/international/campaigns/toxics/electronics/how-the-companies-line-up.  The guide began publishing in 2006.  This year Apple improved and is listed in the Better category and fifth overall.  Here is the entry for Apple from the 2010 report released recently at the 2010 CES.  The CES attracts the attention of the electronics industry so the trade show offers a great opportunity to publicize the report:

“Apple continues its climb up the ranking from 11th place in v.12 to 9th in v.13 and is now in 5th place, with a score of 5.1 points, up from 4.9. Apple does best on the toxic chemicals criteria, where it scores most of its points. It scores substantially less on waste and energy. In this evaluation, Apple wins and loses some points on toxic chemicals, but gains on energy. All Apple products are now free of PVC and BFRs, with the exception of PVC-free power cords in countries where their safety certification process is still ongoing. For this Apple continues to score full marks (doubled). The tightened C1 criterion now requires companies not only to have a chemicals policy informed by the precautionary principle, but also to show support for bans on PVC vinyl plastic and brominated/chlorinated flame retardants (CFRs/BFRs) during the revision of the EU’s RoHS Directive (Restriction of Hazardous Substances in electronics). Apple gains a point for lobbying the EU institutions, but for full marks it needs to provide a public position on its support for immediate restrictions in RoHS 2.0 on organo- chlorine and bromine compounds. It also needs to clarify its stance regarding the position of the trade federation TechAmerica on further immediate restrictions and in particular PVC and BFRs. Apple loses a point for providing even less information (on its updated web-pages) about its supply chain communications than before. This criterion evaluates disclosure of information flow in the supply chain. Apple also loses a point for minimal information about its future toxic chemical phase-out plans, reducing its communication on this subject on its updated web-pages.” http://www.greenpeace.org/international/press/reports/apple-guide-to-greener-electronics-14

Apple and others have spread the good news around the Internet.  For instance, see the story at theappleblog.com (http://theappleblog.com/2010/01/08/apple-advances-in-greenpeace-charts/).  The message should disseminated.  Apple has made progress addressing environment deficiencies.  The report shows positive actions being taken by Apple and praised by a critical stakeholder (Greenpeace).  As one online source noted:

 “Despite the two companies’ somewhat spotted history together, Greenpeace has awarded Apple four giant gold stars for its efforts to rid its products of brominated flame retardants (BFR) and polyvinyl chloride (PVC). (BFRs and PVC have long been on Greenpeace’s hit list of environmentally unfriendly chemicals.) In fact, Apple received a large gold star—the highest rating Greenpeace gave out—in each of the four categories rated in its latest report: desktops, portables, cell phones, and displays. Of the six companies with products in all four categories, Apple was the only one to receive a large gold star in any category, and, in general, it blew away the other five. Dell, Lenovo, Samsung, and LGE received only one small gold star each.” http://arstechnica.com/apple/news/2010/01/greenpeace-gives-apple-gold-stars-for-green-efforts.ars?utm_source=rss&utm_medium=rss&utm_campaign=rss

The second piece of news is that Apple is looking to make solar power a better reality for its products.  Apple has been working with the idea since 2006 but the new patent suggests solar for you iPod and iPhone might be getting closer. http://news.cnet.com/8301-11128_3-10439525-54.html?part=rss&subj=news&tag=2547-1_3-0-20.  A stronger solar move would strengthen Apple’s green credentials and move it to the front of CSR in the electronics industry.

Questions to Consider

1.  Why is the Greenpeace evaluation of Apple’s environmental record so important to Apple’s CSR efforts?
2. How is the Internet helping to build awareness of Apple’s CSR?
3. Could the solar story hurt Apple if the solar technology does not appear within the next year?  Why or why not?
4. How do Greenpeace’s past criticisms of Apple make their approval of Apple even more valuable to Apple?
5. Of what value is the fact that the ranking allow Apple to compare itself to its competitors on environmental issues?
6. Visit Apple’s environment site.  What do you like and dislike about the site?

Taliban using Public Relations in Afghanistan: Worth a Look

Critics of Edward Bernays like to note that Joseph Goebbels, the Nazi propaganda chief, used the writings of Bernays to help build the Third Reich.  The focus is on the knowledge that Goebbels had a copy of Crystallizing Public Opinion.  Keep in mind it was not an autographed copy nor did Bernays ever consult with Goebbels.  Bernays was Jewish and was dismayed his work was used by Nazi’s.  http://www.sourcewatch.org/index.php?title=Edward_Bernays. However, the story illustrates that fact that public relations theory, once written, can be used by anyone.  Of course the same holds true for medicine or any other form of knowledge.  Yet when unsavory groups use public relations, the industry as a whole seems to get tainted.

The New York Times reported in late January of 2010 on a public relations operation by the Taliban in Afghanistan.  The focus was on how the Taliban were trying to build greater public support by softening its reputation.  The Taliban were using a new code of conduct that showed their gentler side.  Here are some of the changes:

• bans on suicide bombings against civilians, burning down schools, or cutting off ears, lips and tongues
• If someone is sentenced to death, he must be killed with a gun, and photographing the execution is forbidden http://www.nytimes.com/2010/01/21/world/asia/21taliban.html?pagewanted=1

There is some evidence that the new code was being used but many of the Taliban were still not abiding by these more civil rule of engagement.  However, the Taliban have a history of cruelty, drug trafficking, and extreme violence that served to create their current negative reputation.

So why the need to change a reputation. Analysts claim that the Taliban are trying to win support at home and abroad with this new reputation.  If the war is a long term affair, the Taliban will need additional support for their cause.  It is hard to win support either at home or abroad when your reputation is for violence and cruelty.   The Taliban are responsible for the vast majority of civilian deaths in Afghanistan so the old reputation is well earned.  The public relations effort is in part public diplomacy aimed at an external audience as well as an internal effort.

NATO feels they are at a public relations disadvantage when competing with the Taliban.  “The Taliban can shape the narrative about attacks sometimes before NATO public affairs even puts out a statement. Unlike the NATO press machine, the Taliban are willing to give details, and while some are patently exaggerated or wrong, others have just enough elements of truth that they cannot be entirely ignored” (http://www.nytimes.com/2010/01/21/world/asia/21taliban.html?pagewanted=1).  NATO has a time lag and a concern for accuracy that does not limit Taliban public relations.  It should be noted that being close to the truth is an effective way to spread rumors.  Good rumors (ones that spread) have some element in them that makes them seem believable.  Truth and accuracy should matter but being just believable enough can result in a message spreading and appearing to be true.

The Taliban are using a wide variety of tactics and channels in their public relations operation.  Their action have used word-of-mouth, cellphones, and the Internet, all of which are staples of viral campaigns.  Not long ago the Taliban denounced the Internet as evil but now the Taliban are posting their own videos to the Internet.  The same viral techniques used to promote products are being used to promote the Taliban’s new reputation.  It should be noted that the Taliban efforts are not the simple image projection of past public diplomacy efforts.  Oppressive regimes often hire public relations firms to win them positive media coverage without ever changing policies.  The Taliban have at least tried to make some policy changes that serve as a basis for the reputation management effort.  If civilian casualties do decrease from these changes, that is positive change.  Still there are many other reasons to dislike the Taliban, their methods, and their ideas.

Public relations has a body of knowledge that anyone can draw upon for their use.  There is no high council who decides who can and cannot use public relations.  Even though it may not be great for the field, the Taliban engaging in public relations is a reality. At least no U.S. public relations firm has agreed to represent them.  We could just claim the Taliban are engaged in propaganda not public relations.  However, that would be disingenuous bordering on ethical.  Some of the actions legitimately qualify as public relations while some are bastardizations of public relations that should be condemned (fabricating stories for instance).  One could note that the Taliban practice medicine as well as public relations.  Does that make medicine “bad?”  A profession cannot control who uses their knowledge base.

Questions to Consider

1.  Why do the Taliban’s actions qualify as public relations?  Public diplomacy?
2. From the article, what ethical concerns emerge from the Taliban public relations efforts?
3. Why might practitioners be concerned about the Taliban practicing public relations?
4. Is it fair to compare the Taliban practicing medicine to practicing public relations?  Why or why not?
5. Why is it important that the new code and changed policies to be linked to the Taliban reputation management effort?
6. What advice could you give NATO for improving their effort to combat Taliban public relations?

Fine Line between CSR and Bad Taste: Royal Caribbean returns to Haiti

The 2010 earthquake in Haiti has been a horrific humanitarian tragedy.  The loss of life and property destruction are devastating to a country that has endured an endless stream of suffering.  Haiti is in the Caribbean and tourism is a major industry in that area.  Though not the most popular tourist destination in the area, Haiti does receive tourism from cruise ships.  Tourists come ashore and but souvenirs from locals.  Haitians also work on the cruise ship and provide recreation for visitors such as jet skies. 

Royal Caribbean cruise lines returned to Haiti on January 15, 2010.  The cruise ship docks at Labadee, a private resort about 100 miles from the earthquake zone and removed from the damage and suffering.  There have been mixed reactions to Royal Caribbean’s early return to Haiti.  Here is how the statement made by CEO Adam Goldstein:

“I am proud of what our people and our ships are doing and below John Weis gives some very specific examples of great contributions being made by great Royal Caribbean people and their family members

The ships going back to Labadee, including Navigator of the Seas today, are obviously making a very valuable contribution to the relief effort by offloading supplies at Labadee. The media understand this and generally have written and spoken about the relief effort in positive terms. But in the last 24 hours, sparked by an article in the Guardian in the UK, a different and more critical view has emerged that questions how our guests can justify having a good time in Labadee when there is such misery less than 100 miles away.

My view is this — it isn’t better to replace a visit to Labadee (or for that matter, to stay on the ship while it’s docked in Labadee) with a visit to another destination for a vacation. Why? Because being on the island and generating economic activity for the straw market vendors, the hair-braiders and our 230 employees helps with relief while being somewhere else does not help. These 500 people are going to need to support a much larger network of family and friends, including many who are in (or are missing in) the earthquake zone. Also, the north is going to bear a good part of the burden of the agony of the south, and the more economic support there is to the north, the better able the north will be to bear this burden. People enjoying themselves is what we do. People enjoying themselves in Labadee helps with relief. We support our guests who choose to help in this way which is consistent with our nearly 30 year history in Haiti.” http://www.nationofwhynot.com/blog/

Goldstein argues that Royal Caribbean is motivated by social concern (CSR) not profit in this case.  The ship is carrying relief supplies to Haiti.  You can go online and watch the supplies being loading in Miami.  So the ship has to dock in Haiti to unload the supplies. By allowing visitors to go ashore, Royal Caribbean aids the economy of Haiti through sales and employment.  Royal Caribbean could easily have replaced the Labadee stop with another more desirable location.  Online, some people on board noted they were not happy stopping in an area when so much suffering continued.  Here are two select comments: 

“I agree with them bringing in relief efforts, but not sure any visitors are warranted in Haiti right now,” Cruise Log reader elitetravel says in a Cruise Log post. “I can’t imagine sitting on the beach, drinking a margarita and laughing it up while people are suffering so much in that country.” Writes another Cruise Log reader, PamelaMurphy: “I am scheduled to be on a cruise starting Jan. 31 that is stopping in Labadee, (and) I feel I do not want to be there nor do I belong there at this time … Haiti is now a land suffering from death and destruction of a huge magnitude.” http://www.usatoday.com/travel/cruises/item.aspx?type=blog&ak=15467.blog

The point is that going to Haiti is not a sales point for Royal Caribbean.  In fact, you could argue that it is a liability.  The media and online reaction has been mixed.  The Web site CruiseCritic  (www.cruisecritic.com)  is tracking the discussion among their cruise-interested visitors. (http://www.cruisecritic.com/news/news.cfm?ID=3647).  The non-scientific poll at the site is running in favor of Royal Caribbean’s actions.  In the U.S., 4,478 people responded with the following mix of poll responses:

Should ships have returned to Labadee so soon?

Yes, Haiti needs the money.:     37.23%

Yes, they’re bringing aid!:          27.71%

No, it’s in poor taste.:                 20.68%

I’m on the fence.:                        14.25%    http://www.cruisecritic.com/polls/dailypoll_archive.cfm?ID=1141

 

Questions to Consider                              

1.  What advice would you have given Royal Caribbean management on this issue and why?
2. What are the ethical implications in this action?
3. How effective would you rate Royal Caribbean’s rationale for the action and why?
4. What else could Royal Caribbean do to communicate its reasons for returning to Haiti to its stakeholders?
5. Why is this a risky form of CSR?
6. What might be the long term benefits to Royal Caribbean for these action?  Long term costs?

Can Giving to Charity be a Negative? Goldman Sachs 2009 Bonus Problem

Americans are not happy the financial company Goldman Sachs is going to pay billions in bonuses to employees for 2009 after receiving government bailouts and having contributed to financial market meltdown.  More than unhappy, people are angry.  So Goldman Sachs is looking for ways to reduce that anger yet still pay the bonus money.  One tactic has been to reduce the bonuses but we still talking billions of dollars.  Most people do not see a real different between say 20 billion and 16 billion dollars.  Another option on the table is requiring its top employees to donate X amount of the bonus to charity.  Former rival Bear Sterns required 4% donation from top employees http://economictimes.indiatimes.com/news/international-business/Goldman-hopes-more-charity-will-quell-bonus-furore/articleshow/5434955.cms

Some view the charity donation as “public relations” designed to make the bonuses more palatable to stakeholders.  Here is a common interpretation, “the firm’s executives have been looking at expanding their current charitable requirements for months and trying to understand whether such gestures would damp public anger over pay, according to a person familiar with the matter who did not want to be identified because of the delicacy of the pay issue.” http://www.nytimes.com/2010/01/11/business/economy/11goldman.html?partner=rss&emc=rss

Here is another description, “We spoke with a former senior Goldman executive and a current partner managing director who have been urging the plan and helping development. The plan is part publicity stunt, of course. Goldman fears a public and political backlash when it awards what may be record bonuses this year. It is searching for ways to mute the outcry from those who believe it is inappropriate for a firm that received billions in taxpayer support to pay its employees tens of billions in bonuses.” http://www.businessinsider.com/john-carney-is-goldman-about-to-become-one-of-the-worlds-biggest-charitable-donors-is-goldman-about-to-become-one-of-the-worlds-biggest-charitable-donors-2009-10

So philanthropy and CSR are being used to offset what most stakeholders, even government officials consider to be ill-advised to offensive bonuses?  Of course employees to do favor the bonuses and recruiters argue that failure to provide bonuses could result in top people leaving Goldman Sachs for competitors that do pay such bonuses.  Investors in Goldman Sachs think more of the profits should go to them in the form of dividends so even core stakeholders are split on the action.  An announcement about the bonuses was delayed in early January of 2010 as management tries to sort through the options

If we look just at the numbers, charities would receive a little over 500 million dollars based on bonuses of about 16 billion and 4% required for charity.  That money could do a lot of good in society.  Pragmatically, the end result of the payments would be to help society.  If employees are going to get bonuses, why shouldn’t charities benefit in some way?  Will the donation blunt anger?  Probably not.  Will the money help those in need?  The answer is yes.  Regardless of the motivation, the money will help people in some way.  Management often faces decisions about CSR and what it will return to the organization.  Such decisions must be balanced against what will be returned to or lost by society if an action is not taken.  Goldman Sachs may have started down a road that has few beneficial routes to itself.

Questions to Consider

1.  How would not using the charity option make the situation (e.g., reputational damage) worse for Goldman Sachs?
2. Is it fair to say all philanthropy and CSR efforts by organizations have a strong self-interest component to them?  Why or why not?
3. Why are so many stakeholders upset by the larger bonuses at Goldman Sachs?
4. At this point, can anything positive come out of using the charity giving option at Goldman Sachs?
5. Can you justify the argument that any contribution to charity is ultimately a good thing?
6. What advice would you give Goldman Sachs about the bonuses and why would that advice be useful?
7. What are the ethical implications for this case?

Cyber Attack Spurs Google to a Human Rights Stand

On Jan. 12, 2010, Google changed its relationship with China.  China is a massive market so it is very attractive to businesses.  There are more Internet users in China that there are people in the U.S.  So it follows that Google has been a part of the Chinese Internet market.  However, the Chinese government does have wide ranging control over businesses, including foreign businesses, that operate in China.  Google in China is not the same as Google in the rest of the world.  The Chinese language version of Google (Google.cn) was censored as per requirements of the Chinese government.  This practice dates back to 2006.  The censorship restrictions included what terms people could search and the web sites they could access.  The focus of the censorship involves issues related to governmental policies and challenges to them.  Many news and human rights sites were blocked along with information on the Tiananmen Square massacre (http://news.bbc.co.uk/2/hi/technology/4645596.stm)

So Google decide nearly four years later to stop censoring with a post to the Internet.  Here is part of that post:

“We launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results. At the time we made clear that “we will carefully monitor conditions in China, including new laws and other restrictions on our services. If we determine that we are unable to achieve the objectives outlined we will not hesitate to reconsider our approach to China.”

These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.” http://googleblog.blogspot.com/2010/01/new-approach-to-china.html

As the part of the message notes, the change was due in large part to a cyber attack on Google traced to China.  The focus of the attack was the Gmail (Google e-mail accounts) of Chinese human rights activists.  Some 20 other companies experienced similar attacks designed to access information about human rights activists.  The groups Human Rights Watch congratulated Google for finally ending censorship nd taking a stand in China saying, “Google’s resolve to avoid complicity with such flagrant violations of freedom of expression and association deserves praise.” http://www.bloomberg.com/apps/news?pid=20601080&sid=a9RFgswPERxg

Clearly this is not the end of the story.  There will be reactions from the Chinese government to these actions.  Google may well leave the Chinese market and Google.cn could be dismantled. In addition to attempts to gain information about human rights activists, the cyber attack also resulted in the theft of proprietary information from Google.  It appears the cyber attack was state-sponsored and that was finally enough for Google to take a stand in China.

Questions to Consider

1.  Does the tail of Google in China support the need for corporations to develop foreign policies (guidelines for how they will relate to foreign governments)?
2. Would you argue this case is more about business or more about human rights?
3. How might this incident help Google’s reputation?
4. How could Google justify censorship in China for so long?
5. What ethical implications do you find in this case?
6. How does this case serve as an example of public diplomacy?
7. What, if anything, has Google done previously to help promote human rights?

Green? Sustainable? At Least the Messages Are and Will Be

Reports consistently show that consumers claim to be green.  People claim to consider environmental factors, including sustainability, in their product decisions.  While a vast majority of consumers make the green claim, research shows on a minority really are moved by being green.  However, that percentage is growing and already is large enough to alter how corporations act and communicate about their actions.  In other words, corporations and their messages are becoming greener.  Part of that greening is sustainability.  Sustainability can be defined as the ability to meet today’s needs without compromising the ability of future generation to meet their needs (rough variation of the UN definition).  So being environmentally friendly dovetails with sustainability.  For instance, using fewer resources helps to ensure future generations will have access to those resources.

Communication is at the heart of being green and sustainable.  There is a simple logic:  if consumers care about being green, they must know an organization is green if their green values are to lead them to choose that particular organization.  Said another way, if consumers do not know a company is green they will seek to purchase from that company.  Hence, we have green marketing and public relations.  A recent study suggests the future for green messages is bright.  The study “Green Marketing:  What Works & What Doesn’t—A Marketing Study of Practitioners” found that 82% of firms planned to increase green marketing efforts.  Moreover, four times as many marketers believe green marketing is effective as opposed to those who view it as ineffective and the Internet is the dominant communication channel for green marketing.  http://reports.watershed-publishing.com/assets/uploads/GreenMarketingReport_ExecutiveSummaryEL.pdf

While green consumers are still more talk than action, recent trends suggest stakeholders are more interested in learning about green and sustainability information about organizations.  There is an app for the iPhone that provides a visual breakdown of information from four corporate emissions databases.  The app is joint project by SAP and the Carbon Disclosure Project.  Green consumers can also use the Carbon Tracker, a free carbon footprint app, and T-Mobile has a mobile application for getting discounts on green products http://www.environmentalleader.com/2009/12/10/sapcdp-app-for-iphone-shows-corporate-emission-levels/.  Another option is using 3^rd whale.  Here is how 3^rd whale describes itself:

“3rdWhale’s mission is to utilize emerging mobile technologies to promote a more healthy, just and sustainable world. Although there are more than 100,000 mobile applications in the iTunes app store alone, our company is the first mobile developer to join 1% for the Planet, committing 1% of our annual revenues to environmental causes. In addition, 3rdwhale has pledged 25 cents per download of our signature mobile application to five environmental NGO’s: Natural Capitalism Solutions, Earthshare, Orangutan Outreach, Heart of the World and Wiser Earth.

Find Green (formerly 3rdWhale Mobile)–Our app for the iPhone 

-is the preeminent green location based service (LBS)
-is consistently ranked among the top sustainability apps for the iPhone

-serves hundreds of North American cities and growing 
-offers 60,000 listings across dozens of categories and sub-categories
-includes content from many leading green content providers including Mother Nature Network and CSRwire, the leading source of corporate social responsibility news and information

-now features the first location-based mobile coupon service for LOHAS businesses” http://www.3rdwhale.com/node/2.

The danger is charges of greenwashing, when organizations make unsupportable environmental claims or make small environmental changes while still engaging in larger, environmentally damaging behaviors.  Green messages must come with some form of support for its claims or risk harm instead of benefits.  This goes back to the fundamental belief that public relations must be based on the actions of the organization not an exercise in symbolic action.   There is also a debate over who controls the green/sustainability messaging.  Marketing believes they control it while public relations feels it is under their domain.  The dominant green/sustainability efforts are reducing energy consumption (59%) and changing products to reflect green values (50%) http://reports.watershed-publishing.com/assets/uploads/GreenMarketingReport_ExecutiveSummaryEL.pdf.

Questions to Consider

1.  How will consumers determine is a corporate message is truly green or just greenwashing?  What are the implications for green public relations messages?
2. Why would the Internet be the dominant communication channel for green and sustainability messages?
3. What justifies the increased spending for green marketing/public relations messaging?
4. What ethical questions are raised by green marketing/public relations messaging?
5. Why might integrated communication be a good idea for green messaging?
6. What is the value of 3^rd whale and similar apps for organizations seeking to communicate their green/sustainability messages?
7. Is being green and sustainable enough to be considered socially responsible?

Social Irresponsibility: H & M and Wal-mart mutilate unsold clothes

In times when people are in need, corporate waste becomes an even bigger example of corporate irresponsibility.  In January of 2010, the story broke that clothier H&M (a Swedish company) and Wal-Mart stores in New York City were mutilating unsold clothes then throwing them away.  The clothes were mutilated to prevent someone from finding the trash and reselling the items.  It also prevent those in need from receiving donations.  The discovery was made by graduate student Cynthia Magnus who was looking through the trash from an H&M and a nearby Wal-Mart on 35^th street in New York City near Herald Square.  The bags were in plain site as she walked by on her way to a subway stop.  Here are the initial responses:

“A Wal-Mart spokeswoman, Melissa Hill, said the company normally donates all its unworn goods to charities, and would have to investigate why the items found on 35th Street were discarded.”

“This week, a manager in the H & M store on 34th Street said inquiries about its disposal practices had to be made to its United States headquarters. However, various officials did not respond to 10 inquiries made Tuesday by phone and e-mail.”

http://www.nytimes.com/2010/01/06/nyregion/06about.html?partner=rss&emc=rss

This post will focus on H&M because they make a point in their corporate social responsibility (CSR) writings about how they donate unused clothes to charity.  Oddly, just around the corner from the new York City store is a collection point for New York Cares which does collect clothes, especially coats, for those in need. The problem is intensified because of H&M’s supposed commitment to help others with unsold clothes.  Here are some of H&M’s statements about donating clothes:

“H&M donates clothes to charity

H&M is committed to taking responsibility for how our operations affect people and the environment. We donate garments that do not meet our quality requirements to organisations such as UNHCR, Caritas, the Red Cross and Helping Hands. When possible, we also donate faulty garments that have been returned to our stores. However, we do not donate clothes that do not meet our safety requirements, chemical restrictions or are damaged. We have agreements with reputable aid organisations in most of our sales countries. In total, more than 500,000 pieces of H&M garments were donated during 2009.

We are currently looking into if we can further improve our routines.”

http://www.hm.com/us/corporateresponsibility__responsability.nhtml

“Gifts in kind International

H&M’s US sales operation donates thousands of garments from its corporate facilities through Gifts In Kind International, a nonprofit organization that distributes products to community services groups that are improving the lives of people in need.

In order to be eligible to receive H&M product donations through Gifts In Kind, your organization must have 501(c) (3) status and offer programs or services that enhance education, promote healthy living, provide opportunities for women and children to reach their maximum potential or work to improve the environment.

If your organization meets these guidelines, the next step is to register with Gifts In Kind International — either directly or through a local Gifts In Kind® program located in any one of the more than 300 communities they serve around the United States.

For more information, please go to: www.giftsinkind.org/H&M”

http://www.hm.com/us/corporateresponsibility/hmsupports/projectsandcooperation/hmdonatesclothestocharity__projectsarticle5.nhtml

So the idea that H&M donates clothes to charity is not a one-time statement, but an integral part of its CSR discourse.  People expressed their anger on blogs and at the company’s Facebook site.  Here are some comments from the Facebook site:

Eva Ramey Swontek Whoever
made the decision to destroy these clothes instead of donating should
be fired! Perhaps a few months of unemployment and knowing 1st hand the
need for chairitable organizations would be a good lesson.
Irresponsible at it’s definition H&M . . . I would expect better
from your company.

Sheryl Johnston So dissapointed in you. Couldn’t you guys donate the items? This is greed of the worst kind. How low can you go?!!!! will certainly not shop there again!!!!

Anja Gesell I find this an OUTRAGE!!! Considering that we have so many less fortunate persons in our worlds society. Those clothes could have been put to better use. I will boykott H&M in germany, period. EVEN I GIVE MY CLOTHES AWAY TO LESS FORTUNATE and I dont own a multimillion Store possibility, to make a difference –

http://www.facebook.com/hm?ref=mf&_fb_noscript=1

H&M became more responsive as the reactions reached corporate ears.  However, as the story broke, there was no statement at its US web site.  However, here is an example of their response as reported in the news media:

“H&M spokeswoman Nicole Christie said: ‘It will not happen again.’

She said company policy is to donate unworn clothes and did not know why this store was instead cutting them up and throwing them out.

The company said that it gave half a million pieces of clothes to charity last year, but that not all items qualified. ‘We do not donate clothes that do not meet our safety requirements, chemical restrictions or are damaged,’ it said in a statement. ‘We are currently looking into if we can further improve our routines.’”

http://www.telegraph.co.uk/news/worldnews/northamerica/usa/6948920/HandM-destroying-and-discarding-clothes-it-cannot-sell-in-NY.html

The situation is not a crisis, it is more of a para-crisis.  A negative situation is developing that warrants a strategic response (para-crisis) but we would not need to assemble the crisis team.  Acting counter to one’s stated CSR values is a problem that cannot be ignored.

Questions to Consider

1.  How would you recommend H&M respond to this para-crisis?
2. What role is social media playing in the situation and how might H&M us it to their advantage?
3. Why is it so troubling that H&M seems to be violating its own CSR practices?
4. In general, what makes the actions taken by H&M and Wal-mart so upsetting to people?
5. Will people react differently to Wal-mart’s actions?  Why or why not?
6. Culturally, how do Sweden and the US differ in terms of valuing CSR?