3. Explain how you might involve stakeholders in the development of a corporate brand, drawing on at least two instrumental approaches to stakeholder management and incorporatingunderstandings of authenticity in your answer. How would you evaluate the success of their involvement?
“A strong corporate brand acts as a focal point for the attention, interest and activity stakeholders bring to a corporation” (Hatch and Schultz, 2001, P 1046). This essay will suggest that strategies to develop strong and sustainable relationships with stakeholders should at the heart of a brand development strategy that is focussed on enhancing reputation and ultimately the sustainability of a company. It will explain how analysis of stakeholder groups is critical to the success of this process. Two instrumental stakeholder tools will then be used to illustrate how such information may be gathered. The essay will then go on to explain that the information garnered from such an analysis could be used to inform stakeholder engagement strategies and the overall brand development strategy. The essay will conclude with a discussion about how issues with authenticity could jeopardise the development of these relationships and how, in the light of such problems, you can measure the success and strength of such relationships in order to inform future efforts.
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Although this is not an essay exploring theories around the process of brand development, it is however important to begin by defining what is meant by a corporate brand if we are to understand how relationships with stakeholders can help in its development. My understanding of corporate branding is highly influenced by the work of Hatch and Schultz (2001) and (2003) and Schultz (2005) who describe a brand as a mindset that captures the essence of an organisation’s identity and what it stands for. They promote the idea that the focus of building a successful brand should be on developing relationships with all stakeholders, engaging them in defining who the organisation is and what it aspires to be( Hatch, 2005). Corporate branding can be best described as the process of creating, nurturing and sustaining mutually rewarding relationships between company, its employees and external stakeholders (Hatch and Schultz, 2001 and Schultz, 2005).By developing these relationships an organisation will be able to understand any incoherent parts of the brand that are weakening development efforts to achieve business goals (Hatch and Schultz, 2003). “When corporate branding works, it is because it expresses the values and /or sources of desire that attract key stakeholders to the organisation and encourage them to feel as sense of belonging to it. It is this attraction and sense of belonging that affects the decisions and behaviours on which a company is built. A strong corporate brand taps into attractive force and offers symbols that help stakeholders experience and express their value and thereby keep them active” (Hatch and Schultz , 2003, p.P1046).
It not just theorists such as Hatch and Schultz (2001) that believe stakeholder relationship building activity is key is achieving a strong corporate identity. In the field of Corporate Communications Cornelissen (2004) stated that developing strong and sustainable stakeholder relationships can establish favourable corporate images and reputations will get these groups to behave in a way that furthers the organisation’s businesses objectives, such as getting customers to make a purchase or successfully convincing investors to grant financial resources.
This essay draws on the research above as a foundation for arguing that the development of relationships with stakeholders should be at the very heart of any successful brand strategy. But how should one begin developing these relationships? The start of constructing any strategy involving the development of relationships with stakeholders should begin with an analysis of who they are, the nature of their stake and the values and beliefs underlying their own decision-making processes (Friedman and Miles, 2006). “In particular, the compatibility or incompatibility of values, identities, and belief systems between managers in focal organizations and stakeholder decisions-makers, and between different stakeholder groups” (Friedman and Miles, 2006, p.133).
Starting from the point that the characteristics of stakeholders need be ascertained before any strategies for engagement pursued it is important to find the tools that allow us to do this. Cornelissen (2004) suggests two possible tools to help with this process: stakeholder mapping and reputation research. These not only uncover the identity of stakeholder groups and their relationships with the organisation but are able to display primary relationships and the patterns of interdependence between them (Cornelissen, 2004).
Let us first look at stakeholder mapping. This is an area explored by instrumental stakeholder theory, which suggests how managers should act towards stakeholders if they want to further the interests of an organisation, which can be described as profit maximization and the maximisation of stockholder value( Friedman and Miles, 2006).This type of theorising supports the ideas espoused by Hatch and Schultz (2001), Hatch and Schultz (2003) and Hatch (2005) at the beginning of the essay and for this reason we will look in depth at how two specific instrumental stakeholder theories, developed by Mitchell Angle and Wood (1997) and Frooman (1999), can help organisations get to know more about their stakeholders and how to approach them.
I would like to begin with the model developed by Mitchell Agle and Wood (1999) which suggests that different strategic responses to stakeholders can be chosen based on an analysis of the characteristics that these groups exhibit. The major contribution of this theory is its explanation of who stakeholders are and who they aren’t and why relationships with certain stakeholders should be prioritised over others (Friedman and Miles, 2006). Mitchell, Agle and Wood (1999) rate stakeholder groups using three criteria, power, legitimacy and urgency and the unique combination of these attributes then leads them to create seven different types of stakeholders, which vary in their level of importance to the organisation and therefore brand development strategy.
Frooman (1999) supplements this work by looking at what might happen when there is conflict between a stakeholder group and an organisation and his models explains the strategies employed by stakeholders who want to change corporate policy (Friedman and Miles, 2006). Frooman (1999) suggests that during conflict power is the dominant attribute that will decide the outcome of any conflict, especially when an organisation is unwilling to compromise. However, he does not define power in the same as Mitchell, Agle and Wood (1999). Instead of power through coercive, utilitarian or economic means (Mitchell, Agle and Wood, 1999), he believes power is defined by resource dependency theory (Frooman, 1999), as made famous by Pfeffer (1972) and Salancik (1979). Pfeffer (1972) and Salancik (1979), cited in Friedman and Miles (2006), suggest that that it is a companies’ dependence of external stakeholders for resources that will determine stakeholders power and how they will use it to force their claims to be addressed. Using this as the basis of his thinking Frooman (1999) created a four way model of usage (continues to provide a resource but with strings) or withholding (where a stakeholder group withholds a resource) strategies, which can be executed directly or indirectly, when dependency of the stakeholder resources is low.
Using both these two models you could start to create a picture of the identity of stakeholders, the nature of their stake, how to prioritise them and how they would behave when in conflict with the firm. But according to Cornelissen (2004) what is equally important to do at this analysis stage is to identify what reputation the organisation has with the groups you have identified. Although he doesn’t present a theoretical model to achieve this he does suggest using practical quantitative and qualitative research techniques, such as focus groups. The result of this work will give the organisation a good idea of what stakeholders think of the organisation and how this matches with the organisations own views of its identity (Cornelissen, 2004).
This would then suggest that an organisation uses the knowledge gained during the entire analysis phase to inform the development of focused stakeholder relationship programmes and the brand development strategy as a whole. Cornelissen (2004) suggests that the stakeholder analysis will help organisations understand whether current strategy is capable of dealing with the needs of current stakeholders and, if so, if the suggested direction proposed will deliver the desired results. From here the organisation can decide which stakeholders to address and develop engagement strategies that either change or consolidate their present position with them, according to any mismatches found. A similar process can be used in relation to the brand strategy. Hatch and Schultz (2001) explain that the images stakeholders have of who a company is and what it stands for can become part of what they can the’ strategic envisioning process’. They suggest that the present views, behaviour, values and identities of stakeholders are likely to effect the direction of desired change and strategic vision of the organisation. Whether the results of the stakeholder analysis support the organisation’s current identity can have serious effects on any subsequent strategy as without such alignment efforts could be perceived as inauthentic Hatch and Schultz, 2003).
At this point I would like to highlight how the issue of authenticity can affect an organisation’s assessment of its strategic options. ‘To be authentic commercially is to tap into the ‘geist’ of a particular group of people so that you, or the claims you make are accepted, trusted, and the consumers you appeal to are convinced (Fachet, 2009). Therefore, stakeholders ‘geist’, which should have been identified during the stakeholder analysis, needs to be reflected in the core elements of a brand development strategy if stakeholders are going to engage with the organisation and carry out the desired behaviours needed by the organisation. Authenticity is the opposite to counterfeit and in an increasing unreal world consumers purchase based on how genuine they perceive an offering to be (Gilmore and Pine, 2007). Without this alignment between stakeholder expectations and the brand strategy, efforts are likely to be seen as inauthentic and therefore desired behaviours not occur.
There is also a second but equally important aspect of authenticity that should be discussed at this stage within the planning process and that is whether the brand development strategy and the values promoted within it match the experience the stakeholder will have of the product, the service or the culture within the organisation. Edwards (2009) explains that authenticity is both communicated by an organisation as well as attributed by the consumers who digest this communication. Therefore, if the brand promise doesn’t match reality then an organisation may be danger of being seen as inauthentic. Representation is likely to result in communications and products and the symbols that represent them that aren’t connected to their original context and by definition inauthentic (Goldman and Papson, 1998, cited in Edwards, 2009). To give an example, if a product or service is positioned as specialist when in reality it is not and the staff are presented as specialists when in fact their knowledge is just around average then incompatibilities occur and the brand could be perceived as inauthentic.
A perceived lack of authenticity is just one of the issues that could affect a brand and therefore it is important that all stakeholder relationships and brand development strategies are continually assessed to determine their impact. Cornelisson (2004) states that tracking and evaluation should be the final element of any strategy, showing how efforts have progressed the organisation’s goals. In light of what has been discussed in this essay the suggestion is that this should be done in two parts; a brand audit to find out what the brand actually stands for and an analysis of the extent and quality of stakeholder relationships.
Keller (2008) developed a model for a brand audit which takes place in two parts; a brand inventory and the brand exploratory. The brand inventory is basically research into what a brand says it is and the exploratory finds out what stakeholders say it is. His model brings these elements together to show the difference between current brand experience and brand promise, if there is any.
But equally important is an assessment of the quality of the relationships an organisation has with its key stakeholders. Many theorists have developed criteria by which to assess quality and extent of stakeholder relations, including Strong, Ringer and Taylor (2001), Zoller (1999) and Zadek and Raynard (2002). However this essay would like to look at unusual approaches that aren’t covered by the theorists above; the principles developed by the Clarkson Center for Business Ethics (1999) and the Ladder of Stakeholder Engagement (Friedman and Miles, 2006).
Firstly to the principles set out by the Clarkson Center for Business Ethics (1999). Researchers at this centre developed a list of seven principles of good stakeholder relations, beginning with recognising stakeholders and ending with acknowledging conflicts between their roles as corporate stakeholders and their legal and moral responsibilities to stakeholders. These principles are highly respected within literature on the subject and could therefore provide a useful guidance document for businesses (Friedman and Miles, 2006). It is for this reason that this essay suggests they would be a useful day to day tool to assess quality of engagement, offering guidance for how organisations can continue to improve practice.
In contrast (Friedman and Miles, 2006) developed a 12 rung ladder of engagement that looks at the quality of stakeholder relationships from a stakeholder perspective. On the very bottom of the ladder is manipulation and at the very top is stakeholder control. “This can be used as a guide to match intention and what approach to use as well as moderating intention with the degree of influence that stakeholders have”. (Friedman and Miles, 2006).
As demonstrated in this essay strong and sustainable relationships with stakeholders should be at the core of a brand development strategy. Their views and interests should be taken into account throughout every phase of the brand development strategy process; including the analysis, goal setting, and evaluation. Such consideration and engagement will help the brand to successfully enhance its reputation with these groups increasing the likehood of them carrying out the actions desired by the company.
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