Martha Stewart Lost Reputation Essay Example for Free

Martha Stewart Lost Reputation Essay Martha Stewart places her name on her products. She becomes the face of her company and the voice of her brand. When her personal misconduct occurred, she made her company vulnerable and risky as well. This case study examines how Martha Stewart managed her corporate communication when her public image and reputation were tarnished on trial for alleged insider trading scandal. The trial not only led her to prison but also hurt her brand equity. The study shows that Stewart’s early response to her crisis demonstrated lack of situation awareness. In the beginning of her investigation, she kept her public persona intact, ignoring or downplaying her role in it. As a result, what Stewart called â€Å"a small personal matter† later became a full -blown crisis. If she had managed her communication in a more timely manner, the magnitude of her crisis might have been minimized. This article also provides detailed insights for organizations to learn from her crisis response strategies. Keywords: Organizational crisis, Crisis communication, Image restoration 1. Introduction The personalities of strong business leaders can help shape and enhance their corporate image. In some cases, the leaders become the virtual icon of the corporate brand, lendi ng their personal prestige to the brand and personifying the company. They can also threaten the company when they are involved in a scandal. In this situation, the consequences for the company can be critical as in the Martha Stewart’s insider trading crisis in the United States. The crisis management scholar, Roux-Dufort (2000) points out that corporate crises as â€Å"a privileged moment during which to understand things differently† (p. 26). As such, there is a growing body of literature on organizational learning in the wake of corporate crisis (Mitroff, 2002; Shrivastava, 1998). The Stewart case, in particular, drew the attention of media for years. The crisis of Martha Stewart’s insider trading raised the issue about the Martha Stewart’s multiplatform franchise; that is, the media world and homemaking business are intricately interwoven with her persona. Stewart’s empire has an impressive business synergy as shown by her TV programs that promote her magazines, her website which sells her products, and her p roducts which are a link to her TV programs. She is the face, voice and personality behind the brand and, thus, the two – Stewart and the brand – are inseparable. After Stewart’s personal misconduct, the interlocking nature of her business proved to be vulnerable and risky. Moreover, Stewart’s crisis had both legal and public relations components (Jerome, Moffitt, Knudsen, 2007). Allegations of insider trading against Martha Stewart led to her imprisonment. Her strategic plan in response to the insider trading accusations and the media attention su rrounding this crisis left Stewart trying to take action to restore her image. In a sense, it is important to understand how Stewart herself and her company managed their corporate communication when her public image and reputation were tarnished under the investigation of the insider trading scandal. This article explores how the high profile iconic Martha Stewart responded when confronted with an organizational crisis that threatened existence. It also provides detailed insights for organizations to learn from her crisis response strategies. 2. Background of Martha Stewart’s Insider Trading Beginning with the 1982 publication of her book Entertaining, Martha Stewart made a name for herself as a homemaking diva. In September 1997, Stewart became chairperson, president, and CEO of her new company, Martha Stewart Living Omnimedia. Martha Stewart Living Omnimedia has been listed on the New York Stock Exchange under the ticker symbol MSO since 1999. As the chief of MSO, Stewart used her name and face to make connections with various businesses including a line of housewares, television shows, radio channels, magazines and a series of books on entertaining. On December 27, 2001, Stewart sold 3,928 shares of her ImClone stock worth US$228,000 the day before the U.S. Food and Drug Administration (FDA) rejected approval of Erbitux, ImClone’s anti -cancer drug. By selling ahead of the FDA rejection, Stewart received about US$45,000 more than if she had sold the stocks later. Compared to her wealth, it was certainly an insignificant sum and in fact, during her Larry King Live interview, she said it was â€Å"miniscule, really, about 0.006 percent of my net worth† (Four nier, 2004). Stewart had denied any wrongdoing, insisting she did not receive any advance knowledge from Sam Waksal, the founder and CEO of ImClone about the decision on Erbitux (Pollack, 2002). Instead, her sale of ImClone stock was part of a predetermined plan to sell if shares fell below US$60. Later, Stewart was officially indicted on charges of securities fraud and obstructing justice related to her sale of ImClone stock on March 5, 2004. Judge Cedarbaum dismissed the securities fraud charge against S tewart, saying prosecutors had failed to present enough evidence on the issue (Masters White, 2004). However, obstruction of justice, charges of conspiracy, and making false statements remained. Stewart served a five-month prison sentence between October 8, 2004 and March 4, 2005 for these charges. On August 7, 2006, Martha Stewart reached an agreement with the securities’ regulators over the insider-trading civil charges and agreed to pay US$195,000 to settle a five-year legal battle. 3. Literature Review Crisis events can and do strike organizations of all types. Every kind of organization, from larger organizations to small family owned businesses, have the potential of being a victim of crisis (Seeger, Sellnow, Ulmer, 2003). In many circumstances, crisis immediately raises questions from an organization’s many different publics (Marra, 1998). In this view, for an organization to manage the effects of a crisis it must communicate to both internal and external stakeholders. Ulmer, Sellnow, and Seeger (2007) suggest all crises involve the general communication strategies of reducing uncertainty, responding to the crisis, resolving it, and learning from it. The ability to communicate quickly and effectively is clearly an important component of successfu l crisis management. Effective crisis communication can not only defuse or eliminate crisis, but it can sometimes bring an organization a more positive reputation than before the crisis occurred (Kauffman, 2005). On the other hand, Marra (1998) argues if an organization fails to respond to a crisis in the correct manner, a bad situation can be made worse. Hence, crisis communication strategies can substantially diminish the harm caused by a crisis or magnify the harm if mismanaged. In this study, the stream of crisis response models from communication scholars and public relations professionals (Benoit, 1995; Coombs, 1999, 2007) are utilized as the theoretical framework to interpret the crisis response strategies that Martha Stewart employed in her insider trading crisis. According to Benoit (1995), firms or individuals may take preventative and restorative approaches to image problems. Five strategies (i.e., denial, evasion of responsibility, reduction of the offensiveness of the act , corrective action, and mortification) make up the rhetoric or image repair discourse. Each of these strategies has a set of tactics within them. Denial is the strategy employed when the rhetor simply chooses to deny the actions he is being accused of or shift the blame from the organization to outside individuals or agencies. The second strategy is evasion of responsibility is the strategy that the rhetor can blame circumstances beyond his control. It consists of four possible tactics: provocation, defeasibility, accident and good intentions. Benoit’s third major image restoration strategy, occurs when the rhetor attempts to reduce the degree of offensiveness experienced by the accuser. To this end, Benoit includes six tactics: bolstering, minimization, differentiation, transcendence, attacking the accuser, and compensation. The fourth category of the typology is corrective action, which attempts to correct the situation rather than counterbalance it. The final image restoration strategy, mortification, requires the rhetor to take responsibility for the action and to issue an apology. Benoit and colleagues have applied the model to a variety of different crisis situations. For instance, Benoit and Brinson (1994) analyzed ATT’s defense following an interruption of its long-distance service in New York in September of 1991. Initially, ATT tried to shift blame to low-level workers. As the complete story emerged, however, ATT apologized for the interruption (mortification) and began to bolster its image by stressing its commitment to excellence, the billions of dollars invested in service, and the quality of its employees. Finally, ATT promised corrective action and introduced a comprehensive review of its operations to anticipate and prevent further problems. It also stressed its commitment to providing excellent service and its willingness to spend billions of dollars to do so. Given these corrective action strategies, ATT’s finally restored its image. Benoit (1995) also examined Union Carbide’s response to the Bhopal, India, gas leak that kille d thousands and injured hundreds of thousands. Union Carbide’s primary strategies, bolstering and corrective action, were focused on four specific actions: a relief fund, an orphanage, medical supplies, and medical personnel. Although these strategies were appropriate and timely, Benoit claimed that Union Carbide failed to address the most important question: What were they doing to prevent another tragedy? Coombs (1999, 2007) develops situational crisis communication theory, creating 10 categories of basic organizational crisis communication strategies. These strategies are further grouped into four posture: 1) â€Å"denial posture† including attack the accuser (confronting person claiming a crisis occurred), denial ( asserting no crisis), and scapegoat (shifting the blame to others outside the organization), with an attempt to eliminate the crisis by denying its existence or the organization’s responsibility for the crisis; 2) â€Å"diminishment posture† which takes the forms of excuse (denying intend to do harm or claiming inability to control) and justification (minimizing severity of damage) with the purpose of weakening the link between the crisis and the organization by claiming the crisis is not the organization’s fault; 3) â€Å"rebuilding posture† of compensation (providing money or other gifts to the victims) and apology (taking full responsibility), which strives to restore legitimacy by seeking public approval and forgiveness; and 4) â€Å"bolstering posture† which includes reminder (telling stakeholders about its past good works), ingratiation (praising stakeholders and/or reminds them of past good works) and victimage (reminding stakeholders that the organization is a victim of the crisis, too). Using Coombs’s typology of crisis response strategies, Wilcox and Cameron (2006) examined the case of Intel. In 1993, Intel initially denied there was a problem with its Pentium 586 chip. As the crisis was covered in the mainstream press, Intel used the justification strategy by assuring that the problem was not serious enough to warrant replacing the chips. It minimized the concerns of consumers. In fact, Intel mismanaged the handling of its crisis communication. First, it did not disclose to the public the information about the Pentium flaw when they initially realized there was a problem. Then when the problem finally did come out into the open, they downplayed it instead of helping the users who had purchased the flawed chips. After considerable damage had been done to Intel’s reputation and IBM had suspended orders for the chip, Intel took corrective action to replace the chips. Subsequently, Andy Grove, Intel’s president, issued a full apology. Based on Benoit’s image repair theory and Coombs’s typology of crisis response st rategies, the following research questions are posited: RQ 1. What strategies did Martha Stewart use to manage her insider trading crisis? RQ 2. Were these strategies effective or ineffective? RQ 3. What can we learn from Martha Stewart case? 4. Methodology The case study is employed in this study, as it is effective in illustrating public relations management in real situations (Hendrix, 2004). According to Yin (1994), the six sources of evidence that are typically associated with the case study include documents, archival records, interviews, direct observation, participant -observation, and physical artifacts. In this study, texts documenting Stewart’s discourse in response to incidents that threatened her image were collected from multiple sources. Specifically, this study used predominantly two types of data: documents and archival records. It began with gathering data and finding facts related to cases and defining the specific tasks. The actions and communication strategies used by Martha Stewart wer e reviewed with information from her corporate websites, press releases and media coverage. MSO is a publicly traded company. A look at the organizational archival records (e.g., stock prices, sales and annual reports) and official government records (e.g. , court records and commission reports) contributed to understand the impact of corporate scandals have had on the companies’ financial performance and their stakeholders. The media coverage on the Martha Stewart case was found through Lexis Nexis Academi c keyword search of â€Å"Martha Stewart insider trading† in The New York Times and The Washington Post. These newspapers were selected because of their large circulation, prominence and influence on public opinion. For the purpose of the valance of news narration in this study, the period of analysis covered two time frames (during the crisis and post crisis). The first time frame started from the trading day to the verdict, beginning in December, 2001 and running through March, 2004. The second time frame started from the day of sentencing to her release from prison, beginning on July 16, 2004 and running t hrough March 2005. Since the research questions of this study were related to crisis communication strategies, the unit of analysis of this case study was Martha Stewart’s response to stakeholders during and post crisis. Thus, the strategies were apparent through the types of evide nce. 14 By examining corporate communication employed by Martha Stewart during the crisis and post -crisis period, the procedures for analysis involved three steps. First, after the data were collected from multiple sources, a detailed timeline of relevant events leading up to the crisis itself, and the post-crisis process was created. For example, the chronological order of the Martha Stewart case was constructed in the following manner: 1) the investigation (January, 2002 June, 2003); 2) indictment (June – December, 2003); 3) verdict (January May, 2004); 4) sentencing (June – July, 2004); 5) in prison (October, 2004); and 6) release from prison (March, 2005). Second, after the chronological order of actual events was refined, a narrative description and process analysis of each event was thus constructed. A worksheet served as an organizing tool for evaluating each event. All data collected were analyzed using the typology of crisis response strategy. Finally, a thick descript ion and analysis of the findings of each research question was conducted. 5. Analysis of Martha Stewart’s Crisis Response Strategies 5. 1 Investigation The story about Martha Stewart’s ImClone stock sale was broken to the public in the Wall Street Journal on June 7, 2002 (Adams Anand, 2002). In the article, her lawyer, John Savarese, indicated that Stewart had set the price at US$60 for selling the stock but in fact, as of June 7, 2002, the stock price of ImClone sank to a low US$8.45 a share. Using the strategy of differentiation, Savarese further was trying to put distance between Stewart and Sam Waksal. There is absolutely no evidence whatsoever that she spoke to Sam, or had any information from anybody from ImClone during that week †¦ I am absolutely sure that there was no communication of any kind between her and Sam, no passing of any information from him to her. (Adams Anand, 2002, p. B2) On June 12, 2002, Waksal was arrested for insider trading and soon after, the stock price of MSO plunged 12 percent, closing at US$15. From June 6, 2002, when congressional investigators started looking into Stewart’s sale of ImClone shares, the stock price of MSO had dropped 22 percent. Stewart immediately denied any insider trading or wrongdoing and, in a public statement, she said she knew nothing about the pending FDA announcement. She claimed that when the share price dropped below US$60 – the level at which she had agreed with her broker – she returned a call from her broker and sold the s hares on December 27, 2001. She acknowledged that after the trade, she immediately called Waksal but could not reach him, and he did not call her back. The message she left read: â€Å"Martha Stewart called. Something is going on with ImClone and she wants to know what† (Hays, 2002a, p. C1). She proclaimed her innocence in her statement: â€Å"In placing my trade, I had no improper information. My transaction was entirely lawful† (White, 2002, p. E1). However, the congressional investigator questioned Stewart’s sale, noting that ImClone dropped below $60 at least once before while Stewart owned it (White, 2002). On June 18, 2002, Stewart tried to resolve concerns about her sale of ImClone shares and hired a new lawyer, James F. Fitzpatrick, who submitted several documents to congressional investigators. This was the first time Stewart used a strategy of corrective action as a response to the inquiries. On June 19, 2002, MSO stock rebounded sharply, climbing from US$2.05, to US$14.4 and then to US$16.45, suggesting that her corrective action was working. However, Ken Johnson, a spokesman for the House Energy and Commerce Committee, said the documents would help answer some questions but â€Å"we still don’t have an answer to the most nagging one: was Ms. Stewart’s pre-existing agreement to sell reached in late November, as she says, or in mid-December as some reports have indicated?† (Hays, 2002b, p. C7). On June 25, 2002, she appeared on CBS’s The Early Show, and when asked by the host, Jane Clayson, about the ImClone shares during a cooking segment, she replied while slicing a cabbage with a big knife. I’m involved in an investigation that has very serious implications. I have nothing to say on the matter. I’m really not at liberty to say. And as I said, I think this will be resolved in the very near future and I will be exonerated of any ridiculousness. And I just want to focus on my salad because that is why we’re here. (Clayson, 2002) Apparently, Stewart had no idea how to handle the situation and was unwilling to respond to the questions. She continued to dodge public inquiries and ignored the increasing outcry for answers about her role in the insider trading scandal.

My Uncle Killed Himself Essay -- Death, Suicide

As I grumbled and griped about having an honors band rehersal only hours before the concert - as i complained about the growing callus on my thumb, about the gay kid with the neckstrap who was first chair clarinet, as i lamented the fact I could NEVER play this music, that i wouldn't get any better in that small practice, so WHY bother- my uncle killed himself. in the basement of his very own house at that, with a gun. his two little girls and pregnant wife left him, and he took his own life. at the memorial, our pastor spoke of God, of how even "Jesus wept" at a friend's death (excuse my ignorance, i know not much of religion.). he said that he knew we were angry, that he knew we would harbor hate and such for a long time, that we would always struggle to understand what happened. i was fine until that point. because i had never really thought about it. I hadn't grieved, I hadn't cried, I wasn't even able to find a friend to cry to. it's our new dark family secret. A promising, handsome, charming young man, with two beautiful daughters, a third on the wa...

The Hunchback in the Park

The Hunchback in the Park My life makes me want to run away. I’ve got no place to go. No family, no house, no anything. All wiped out by a fire in 2001. I did not get any money paid out by the insurance company because they said the fire was an â€Å"act of God† caused by a lightning strike, which my insurance did not cover. Since then, I’ve been walking this park, alone and joked about by everyone who walks past me. Now I guess you’re wondering, why don’t I get a job? Why does everyone joke about me? Why do I not ask my family for help?Well, I have been applying for jobs, it’s just that no-one accepts me. I studied hard at school and I got decent grades, but no jobs are available to me. The answer to the second question is something that I just have to live with. During the fire, My face was horribly burned. This, added to the fact that I am short and have a hunchback, makes people fear me and run away or just shout abuse at me. Finally, the answer to the third question is that I simply do not have any. My parents died when I was two years old. I have no aunties, no uncles, nobody.There is one person in my life though. If there is anyone who could be â€Å"that special someone†, it’s her. She’s beautiful. Despite never talking to her, our eyes have met many times and it’s love at first sight. I just wish I could gather up the courage to finally talk to her. It has been a while since I’ve approached a woman without being slapped or ran away from. In fact, it has been a while since I have approached anyone. Any social interaction with the world feels awkward and scary because it has been so long.The only interaction I have with the outside world is through the local children who torment me each day. Each day, I sit on this bench starving. The only meals I eat are leftovers I manage to find in the bin. It is a miracle how I survive. How I have not died from dehydration, starvation or hyp othermia is a miracle. I have not had a shower in months. I just wish someone would take me home. Look – there's the woman! The woman which takes my breath away every time I see her. Maybe she could be the one to take me off the streets.Only if I could gather up the courage to approach her my life would not be as much of a mess and I could get my life moving in the right direction. OK, I'm going to do it this time. I'm going to talk to her! As I get off the bench, I spot the local children! Quick, hide! Those pesky local children are coming. Look at them, with their hoods up; with their phones playing out their angry music; with their hands in the shape of a gun. They make my life hell – even though I don’t provoke them.I can't run very fast due to my disability (which is my hunchback) so when the children chase me I can not get away. They circle me and torment me. One day, they pushed me over. It hurt and many people seen this, but no-one came to help me. I was shocked that no-one asked me if I was OK, this is one of the reasons I give up on the world. People are selfish and do not care about anyone else. Eventually, the children grew tiresome of mocking me and left – either that or they left because it was getting dark. So, here I am once again.Another lonely night, propped up against a tree, with no-one to hold. No family to wish goodnight. Oh, what I would give to feel loved again. Each day is a recurring nightmare, except I can't wake up. I'm going to make a promise to myself now, and it is that tomorrow I'm going to try turn my life around. I'm going to apply for a job and I'm going to ask the girl of my dreams to dinner. Oh, how wonderful life could become with those two simple things. â€Å"You! †, the park keeper says, as he pokes me with his pointed stick used for picking up leaves, â€Å"Time to move along. †.So my day begins, and I'm feeling slightly optimistic for once – knowing that today I will be once again attempting to sort out my life. You may be thinking, â€Å"Why do you think this attempt will be any different to your others? †, well I'm not too sure myself. All I know is that today I'm going to come across as a confident individual. I think this is what I have been lacking, but it is hard for me to be confident when I have the likes of those pesky children always tormenting me, insulting me and abusing me. Anyway, the first step in getting back on my feet is to get a job. The Hunchback in the Park The Hunchback in the Park My life makes me want to run away. I’ve got no place to go. No family, no house, no anything. All wiped out by a fire in 2001. I did not get any money paid out by the insurance company because they said the fire was an â€Å"act of God† caused by a lightning strike, which my insurance did not cover. Since then, I’ve been walking this park, alone and joked about by everyone who walks past me. Now I guess you’re wondering, why don’t I get a job? Why does everyone joke about me? Why do I not ask my family for help?Well, I have been applying for jobs, it’s just that no-one accepts me. I studied hard at school and I got decent grades, but no jobs are available to me. The answer to the second question is something that I just have to live with. During the fire, My face was horribly burned. This, added to the fact that I am short and have a hunchback, makes people fear me and run away or just shout abuse at me. Finally, the answer to the third question is that I simply do not have any. My parents died when I was two years old. I have no aunties, no uncles, nobody.There is one person in my life though. If there is anyone who could be â€Å"that special someone†, it’s her. She’s beautiful. Despite never talking to her, our eyes have met many times and it’s love at first sight. I just wish I could gather up the courage to finally talk to her. It has been a while since I’ve approached a woman without being slapped or ran away from. In fact, it has been a while since I have approached anyone. Any social interaction with the world feels awkward and scary because it has been so long.The only interaction I have with the outside world is through the local children who torment me each day. Each day, I sit on this bench starving. The only meals I eat are leftovers I manage to find in the bin. It is a miracle how I survive. How I have not died from dehydration, starvation or hyp othermia is a miracle. I have not had a shower in months. I just wish someone would take me home. Look – there's the woman! The woman which takes my breath away every time I see her. Maybe she could be the one to take me off the streets.Only if I could gather up the courage to approach her my life would not be as much of a mess and I could get my life moving in the right direction. OK, I'm going to do it this time. I'm going to talk to her! As I get off the bench, I spot the local children! Quick, hide! Those pesky local children are coming. Look at them, with their hoods up; with their phones playing out their angry music; with their hands in the shape of a gun. They make my life hell – even though I don’t provoke them.I can't run very fast due to my disability (which is my hunchback) so when the children chase me I can not get away. They circle me and torment me. One day, they pushed me over. It hurt and many people seen this, but no-one came to help me. I was shocked that no-one asked me if I was OK, this is one of the reasons I give up on the world. People are selfish and do not care about anyone else. Eventually, the children grew tiresome of mocking me and left – either that or they left because it was getting dark. So, here I am once again.Another lonely night, propped up against a tree, with no-one to hold. No family to wish goodnight. Oh, what I would give to feel loved again. Each day is a recurring nightmare, except I can't wake up. I'm going to make a promise to myself now, and it is that tomorrow I'm going to try turn my life around. I'm going to apply for a job and I'm going to ask the girl of my dreams to dinner. Oh, how wonderful life could become with those two simple things. â€Å"You! †, the park keeper says, as he pokes me with his pointed stick used for picking up leaves, â€Å"Time to move along. †.So my day begins, and I'm feeling slightly optimistic for once – knowing that today I will be once again attempting to sort out my life. You may be thinking, â€Å"Why do you think this attempt will be any different to your others? †, well I'm not too sure myself. All I know is that today I'm going to come across as a confident individual. I think this is what I have been lacking, but it is hard for me to be confident when I have the likes of those pesky children always tormenting me, insulting me and abusing me. Anyway, the first step in getting back on my feet is to get a job.

The Charater of Shylock in Shakespeare’s The Merchant of...

The Charater of Shylock in Shakespeare’s The Merchant of Venice In his chapter â€Å"Shakespeare and Dissident Reading,† Alan Sinfield argues that viewing Shylock as anything but an evil villain is â€Å"achieved only by leaning, tendentiously, on the text† (Sinfield 1994, 6). This is an oversimplification of Shylock’s character as portrayed in The Merchant of Venice. Sinfield portrays Shylock as static and unchanging. However, emotions and portrayal of Shylock are not as forward as Sinfield claims. Constantly evolving, Shylock goes from being described as a human, with emotional pitfalls and grief, to being angry and vindictive, and portrayed as an animal. Shylock’s emotional changes inflate and add dimension to his character, challenging the†¦show more content†¦Antonio’s business of loaning money without interest is hence an insult to Jews as a whole, Shylock’s â€Å" sacred nation.† This religious assertion is repeated several times throughout this particular scene, especially when Sh ylock alludes to stories of the Old Testament to justify his use of interest. This strong intertwining of religion and money emphasizes the importance Shylock places on both and helps define his outspoken and passionate character that is seen through the course of the play. Another, more striking emotion seen in Shylock is shock and grief. When his daughter, Jessica, leaves him to marry Lorenzo (a Christian), Shylock shows longing for both the loss of his daughter and his material possessions (‘ducats’). Salanio’s speech in Act II recalls Shylock’s reaction to the news hand he seems surprised at the response â€Å" I never heard a passion so confused, so strange, outrageous and so variable† (II.8.12-13) His recantation of Shylock’s speech shows a confused and upset father indeed. Shylock repeats the words ‘ducats’ and daughter’ multiple times, in an attempt to sort out what exactly has just transpired â€Å" My daughter! O my ducats! O my daughter! Fled with a Christian! O my Christian ducats! Justice! The law! My ducats and my daughter!† (II.8.15-17). Here we see Shylock confused, angry,