Reputation analysis identifies a firm’s or industry’s perceptual image among key stakeholders based on a given set of factors. This is to enable it to improve its relations with them in the future, ultimately increasing the firm’s performance.
According to Grahame Dowling: “When strategy involves either growth or innovation, a company puts its corporate reputation into play. Growth involves stretching the company’s operations, sometimes to the breaking point. Innovation involves doing something new.”
While the particular reputation factors examined in a given analysis may vary, they all relate to the reputation of the firm in the eyes of stakeholders and should give an indication of the success or otherwise of the firm’s reputation management strategies.
Dowling suggests that the major sources of corporate reputation risk fall into six broad areas:
- 1. The industry in which a firm operates.
- 2. Identifying strategies.
- 3. The culture and daily operations of the firm.
- 4. The comments and behavior of senior executives.
- 5. Managing stakeholder relationships.
- 6. Response to a crisis.
Firms that can effectively monitor their reputation among selected stakeholders across the six board areas mentioned previously will have a useful view of what type of strategic initiatives might be required to enhance their image. It will give the firm direct feedback of its reputation as perceived by stakeholders after the affects of public relations and advertising, media exposure etc.
The image a firm communicates can heavily influence the actions of key stakeholders of the firm, including customers, employees, investors, and so on. The result of this is that the firm’s reputation also has an impact on the overall value of the business, in dollar terms and also in terms of its value as a potential business partner in strategic alliances. The management of corporate reputation, then, can be seen to be an important part of the successful management of a firm overall.