Preview

Matha Stewart Lost Reputation

Powerful Essays
Open Document
Open Document
9533 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Matha Stewart Lost Reputation
International Journal of Humanities and Social Science

Vol. 1 No. 15 [Special Issue – October 2011]

A Corporate Hero with Scandal: Lessons Learned from Martha Stewart’s Insider
Trading Crisis
Shuhui Sophy Cheng
Assistant Professor
Department of Communication Arts
Chaoyang University of Technology
168 Jifeng E. Rd. Wufeng District
Taichung 41349, Taiwan
Abstract
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 “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



References: Adams, C., & Anand, G. (2002, June 7). Martha Stewart sold ImClone shares: Timing raises questions but there is no indication she knew of FDA’s decision Benoit, W. L. (1995). Accounts, excuses, and apologies: A theory of image restoration strategies. Albany: State University of New York Press. Benoit, W. L. (1997). Image repair discourse and crisis communication. Public Relations Review, 23, 177-186. Benoit, W. L., & Brinson, S. L. (1994). AT&T: Apologies are not enough. Communication Quarterly, 42, 75-88. Coombs, W. T. (1999). Ongoing crisis communication: Planning, managing, and responding (1st ed.). Thousand Oaks, CA: Sage Publications. Coombs, W. T. (2007). Ongoing crisis communication: Planning, managing, and responding (2nd ed.). Thousand Oaks, CA: Sage Publications. Carr, D. (2005, August 29). Her return from exile hinges on forgiveness on both sides. The New York Times, p. C1. Carter, B. (2005, August 26). Her TV show won’t ignore recent past, Stewart says. The New York Times, p. C1. Eichenwald, K. (2003, June 5). Prosecuting Martha Stewart: Prosecutors have reasons for stalking celebrities. The New York Times, p Fearn-Banks, K. (2007). Crisis communications: A casebook approach (3rd ed.). Mahwah, NJ: Lawrence Erlbaum Associates, Inc. Fombrun, C. J. (1996). Reputation: Realizing value from the corporate image. Boston, MA: Harvard Business School Press. Fournier, S. (2004). Marta Stewart and the ImClone scandal. Retrieved September 2, 2010, from http://mba.tuck.dartmouth.edu/pdf/2004-1-0083.pdf Galford, R., & Drapeau, A. S. (2002). The trusted leader. New York: The Free Press. Glater, J. D. (2005, March 6). Crime and punishment, the celebrity version. The New York Times, p. 4. Hays, C. L. (2002a, September 4). Company said to seek chief to succeed Martha Stewart. The New York Times, p. C1. Hays, C. L. (2002b, June 19). Martha Stewart submits plane a nd phone records. The New York Times, p. C7. Hays, C. L. (2002c, July 25). Company says Stewart’s woes are taking toll. The New York Times, p. C1. Hays, C. L. (2003a, June 5). Prosecuting Martha Stewart: The overview; Martha Stewart indicted by U.S. on obstruction Hays, C. L. (2003b, June 6). Martha Stewart uses web to tell her side of story. The New York Times, p. C1. Hays, C. L. (2003c, June 14). Poll says majority agree with indictment of Martha Stewart. The New York Times, p. C4. Hays, C. L. (2004a, March 16). Stewart quits her posts at company. The New York Times, p. C1. Hays, C. L. (2004b, July 17, 2004). 5 months in jail, and Stewart vows, “I’ll be back.” The New York Times, p. A1. Hays, C. L. (2004c, March 9). As Stewart attends hearing, company studies options. The New York Times, p. C1. Hays, C. L., & Eaton, L. (2004, January 20). Martha Stewart, near trial, arranges her image. The New York Times, p. A1. Hays, C. L., & Pollack, A. (2002, July 4). Stewart image and company built upon. The New York Times, p. C1. Hendrix, J. A. (2004). Public relations cases (6th ed.). Belmont, CA: Wadsworth/Thomson Learning. Jaques, T. (2009). Learning form past crises – Do iconic cases help or hinder? Public Relations Journal, 3(1) Jerome, A. M., Moffitt, M. A., & Knudsen, J. W. (2007). Understanding how Martha Stewart harmed her image restoration through a “micropolitics” of power Kauffman, J. (2005). Lost in space: A critique of NASA’s crisis communication in the Columbia disaster. Public Relations Review, 31, 263-275. Marra, F. J. (1998). Crisis communication plans: Poor predictors of excellent crisis public relations. Public Relations Review, 24, 461-474. (1999). 2, 2010, Martha Stewart Living Omnimedia Annual Report. (2004). Retrieved February 2, 2010, from http://ccbn.mobular.net/ccbn/7/928/985/ Masters, B. A. (2004, July 17). Martha Stewart sentenced to prison. The Washington Post, p. A1. Masters, B. A., & White, B. (2004, March 6). Stewart guilty on all charges: Businesswoman co nspired with broker, jury says Mitroff, I. I. (2002). Crisis learning: The lesson of failure. The Futurist, 36(5), 18-21. Pollack, A. (2002, June 7). Martha Stewart said to sell shares before FDA ruling. The New York Times, p. C4. Reber, R. H., Cropp, F., & Cameron, G. T. (2001). Mythic battles: Examining the lawyer-public relations counselor dynamic Roux-Dufort, C. (2000). Why organizations don’t learn from crises: The perver se power of normalization. Review of Business, 21(3/4), 25-30. Seeger, M. W., Sellnow, T. L., & Ulmer, R. R. (2003). Communication and organizational crisis. Westport, CT: Praeger. Shrivastava, P. (1998). Industrial crisis management: Learning from organiz ational failures. Journal of Management Studies, 25(4), 285-303. Sitkin, S. B. (1996). Learning through failure: The strategy of small losses. In M. D. Cohen, & L. S. Sproull (Eds.), Organizational learning (pp Slater, R. (2006). Martha on trial, in jail, and on a comeback. Upper Saddle River, NJ: Prentice Hall. Stanley, A., & Hays, C. (2002, June 23). Martha Stewart’s to-do list may include image polishing. The New York Times, p. 1. Thomas, L. (2006, August 8). Stewart deal resolves stock case. The New York Times, p. C1. Walters, B., & Stossel, J. (2003, November 7). 20/20. [Transcript]. ABC News: 20/20. Retrieved August 2, 2010, from Lexis Nexis Academic Universe. White, B. (2002, June 14). Tip on stock tips from the inside: Do nothing. The Washington Post, p. E1.

You May Also Find These Documents Helpful

  • Better Essays

    References: Chandler, R.C., Wallace, J.D., & Feinberg, S. (2007). Six points for improving crisis communication plans. Retrieved December 11, 2014 at http://its-networks. com/pdfs/White_Papers/tandberg/tandberg-whitepaper-crisis-business-communications.pdf.…

    • 937 Words
    • 3 Pages
    Better Essays
  • Good Essays

    Martha Stewart Fraud Case

    • 374 Words
    • 2 Pages

    In 2003, Martha Stewart was facing prison time and her empire in domestic art was at risk because of “nine-count federal indictment” which she was charge will “perjury and conspiracy” because of a “high profile stock trading scandal” (Hurtado, N. P. (n.d.). James Comey, a U.S. Attorney, said that “she brought trouble on herself and her company by lying to her shareholders and investors in an attempt to cover her tracks and keep her stock from plummeting” (Hurtado, N. P. (n.d.). Comey believe that the criminal case was all about lying and he said that Martha is being prosecuted for what she did and not who she is. When she went to court she plead not guilty. Stewart was also charge with “securities fraud stemming” (Hurtado, N. P. (n.d.).,…

    • 374 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    1. Collectively there are several issues affecting Ms. Graham throughout this case analysis. The first issue was managing gender-based diversity. Relinquishing control of the day-to-day operations at the Washington post after helping to steer the paper through the rough waters of adversity (breaking the water gate scandal, labor issues) was another critical decision. Maintaining the principles of integrity and honesty in a story/article regardless of the potential negative backlash on the paper was the third important issue affecting Ms. Graham…

    • 408 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    377). The narcissistic and arrogant leader may gain a nearly cult-like following during his or her time in power, but it is the unpretentious, modest, shy, and humble leader that will have true staying power (Udani and Lorenzo-Molo, 2012). The concept of a “servant leader”, putting others first, seems to be central to customer-centricity and the goals of corporate social responsibility (Udani and Lorenzo-Molo, 2012, p.…

    • 621 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Crisis Paper

    • 1102 Words
    • 5 Pages

    The differences in the communication process when it comes down to trying to communicate in a crisis situation is the process and planning as you would in a regular…

    • 1102 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    Helen in Iliad

    • 2703 Words
    • 11 Pages

    her own person, and increasingly a part of the society in which she is an…

    • 2703 Words
    • 11 Pages
    Powerful Essays
  • Best Essays

    Leadership Comparison

    • 3720 Words
    • 15 Pages

    Comparing two leaders to decide which is the more effective requires more than the textbook analysis of leader, follower and situation. It requires understanding not just the results achieved, but also the way in which the leader achieved them. This study compares Steve Jobs of Apple and Mike Lazaridis of Research in Motion discussing their differences in leadership style and philosophies, their use of power, how they engendered trust in their followers, what values they held, their emotional intelligence, business acumen and their penchant for being either egotistically driven or humbled for success. One or more of these characteristics will be critical in defining one of these CEOs as the more effective leader. This research was informed by secondary data consisting of peer reviewed journal articles, books and technology writings were used to inform this study.…

    • 3720 Words
    • 15 Pages
    Best Essays
  • Powerful Essays

    Reputation Management

    • 3457 Words
    • 14 Pages

    The cases of both Jodi Gordon and Pacific Brands demonstrate the great need for PR and reputation management and how important the role of a PR expert is.…

    • 3457 Words
    • 14 Pages
    Powerful Essays
  • Good Essays

    Product Harm Crisis

    • 986 Words
    • 3 Pages

    Vannopoulou, N., Koronis, E., & Elliott, R. (2011). Media amplification of a brand crisis and…

    • 986 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Martha is trying to be a dutiful house-wife at the same time as being a career woman. In essence, she is one big contradiction, trying to mix the roles of the traditional house-wife with the modern independent career woman and wanting to be a “super woman”, as described on page 312. Ultimately, she is forced to choose the former since Martin strongly disapproves of her putting her career before her family. This is illustrated by her sudden awareness on page 319, that she won’t be able to do any work on her work project, because all of the time has been spent on domestic duties and tending to Martin’s guests.…

    • 1115 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Although not denying that leaders have special qualities, it could be argued that focusing too much on leadership can create problems. For example, this approach may lead to the conclusion that a business without a heroic leader may not be able to function properly. Or it might suggest that the heroic leader is the most important thing to organizational effectiveness. It also perhaps devalues the role and importance of other employees. There is evidence to suggest that effective businesses are those which are more concerned with the creativity of their products…

    • 1124 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Dianna Abdala

    • 400 Words
    • 2 Pages

    -She should have used a richer channel of communication for delivering her decision to not accept the job offer. For instance, she could have scheduled a day to go by and tell Korman in person.…

    • 400 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    Corporate Reputation

    • 6528 Words
    • 27 Pages

    The first years of the 21st century have been hard on companies and their brands. It is predicted that Firestone is dead as a brand as a result of its defective tires used on Ford SUVs, which tipped over causing loss of lives. Arthur Anderson is feverishly trying to find partners for its many clients as it takes its last breath. The anti-globalization movement is targeting companies from McDonald’s to Starbucks to non-governmental organizations. Today, no organization is safe from public scrutiny of its actions and what it stands for. In many cases, it is not the product that gets organizations in trouble; often it is the action of its managers that directly causes the problem or exacerbates it. In fact, in many cases, products are not an issue at all. Customers continue purchasing from companies while other interest groups attack the company. It is naïve, however, to believe that organizational actions do not in the long run impact customer response. Both the organization and its products and services have images, and it is important that both are carefully nurtured and protected. This is true for any organization, whether for profit, non-profit or governmental sector. The relationships and concepts discussed in this chapter are complex and are based on theory from a number of disciplines, including strategy, organizational theory, psychology, sociology, and ethics, just to name a few. Some of these are explored in greater detail in other chapters. Here the point is to continue the discussion from Chapter 3 on the elements that lie behind the notion of the organization as a brand, otherwise referred to as the corporate brand and normally expressed as corporate image. The basic message here is that everything about an organization communicates. Everything.…

    • 6528 Words
    • 27 Pages
    Powerful Essays
  • Satisfactory Essays

    Surrogate Branding

    • 675 Words
    • 3 Pages

    Brands perhaps are the most valuable assets an organization can have. Brands create an image for themselves through the constant attention and nurture given to them by the organization. Over a period of time some of the brands become the bread winners for the organizations. Any damage to the reputation of these brands can really change the scenario for the organization.…

    • 675 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Goodnight, CEO of SAS, has been compared to several character theories which determined what made him into a successful manager. According to the Trait Theory (SAS HR system, 2015), Goodnight possessed all the qualities of a good leader; analytical skills, ability to motivate people, sociability, communication skill, ability to listen, aggressiveness, team building expertise and many other positive skills. Under behavioral theories, Mr. Goodnight displays both areas of consideration that are used to measure a good leader. That is, he is highly employee-oriented, a fact he demonstrates by having constant interaction with his employees and customers. He is also a person who is extremely considerate, as seen by the added perks and benefits he has provided for his employees. According to Fielder’s Contingency model, “leadership effectiveness is as a result of interaction between the style of the leader and the characteristics of the environment in which the leader works” (SAS HR system, 2015). Mr. Goodnight ensured that his employees are always comfortable in and out of the workplace. Goodnight’s employee-centered, innovative way of providing for his employees assures a great work environment and opportunities for high job satisfaction…

    • 1177 Words
    • 5 Pages
    Good Essays