Knowledge Centre:
News Digests

Stay abreast of what’s happening internationally with developments in corporate public affairs. Here is news that you may find useful and interesting:

Use of YouTube for Business Communication. Analysis of the Content Management and Level of Participation of Spanish Best Reputed Companies Youtube ChannelsND


Carmen Costa-Sanchez, Corporate Reputation Review, 31st May 2017.

Companies are increasingly integrating social media into their relationships with stakeholders. The article analysed the content of 454 videos from 20 YouTube channels. It found that YouTube is used as a promotional platform, rather than a way to inform stakeholders. The videos analysed had low levels of public interaction and a general lack of interest in the contents of the videos. The platform offers companies a way of publicising corporate social responsibility undertakings which received higher levels of interaction than standard promotional material.

For more information see: Corporate Reputation Review: https://link.springer.com/journal/41299

Uber has fired 20 employees after investigating hundreds of misconduct allegationsND


Oliver Stanley and Alison Griswold, Quartz, 7th June 2017

Uber is firing 20 employees after an internal investigation into the reportedly toxic culture. The #deleteUber movement and ‘exodus’ of top level executives has been furthered by an investigation conducted by the legal firm Perkins Coie which found its integrity hotline for employees receiving 215 claims of misconduct.

The firm has approached Francis Frei to work for the Uber as senior vice president for leadership and strategy, and ultimately bring the PR nightmare CEO Travis Kalanick into line. Ubers corporate testosterone-fuelled culture is apparently similar to the now infamous video of Kalanick berating an Uber driver who dared to complain to the CEO about wages, and then as anyone else would, leaked the video of the exchange.

While hiring Frei and funding a report to be made by former US attorney general Eric Holder on paper appears to be the appropriate move, the way the results are utilised and acted upon will be the key to Ubers future.

For more information see: www.quartz.com

Funeral pricing comparison website targeted with legal threatsND


Elle Hunt, The Guardian, 30th May 2017.

Colin Wong created a website to compare the prices from more than 600 funeral homes and get user ratings to try and limit the benefits that the funeral industry gain from the lack of transparency. Wong spurned by a terrible experience set up the website to protect customers from purchasing coffins which are already marked up by 400% which could be inflated to 1,000% if the client is perceived to be willing. The website is hoping to break the ‘opportunistic pricing’ utilised by funeral agencies which is poised to become a growing industry with the price of a basic funeral increasing approximately 21 per cent between 2009 and 2016 while Australia’s ageing population creates more demand for the services. Wong aims to create transparency in the industry, while also having plans to charge companies $29 per month to get preferential treatment on the site to create revenue.

For more information see: www.theguardian.com

Why Harvard Business School is under fireND


The Economist explains, 18th of May 2017

Duff McDonalds recent book ‘The Golden Passport’ argues that Harvard Business School has lost its place as the premier business school in America, and simultaneously become a toxic environment filled with conflicts of interest. While the influence of the school is undeniable with its MBA graduates filling Wall Street and having a founding place in 10 per cent of all Silicon Valley unicorns (private start-ups worth over $1bn). However, the prices of the MBA course has consistently grown (by around 30 per cent in five years) while companies have been given the ability to promote positive case studies in the MBA course, and veto negative ones.

Harvard Business School has two options, firstly focus upon its position as an academic institution or treat itself as a business and pursue its own self-interest.

For more information see: www.economist.com

Qantas boss Alan Joyce to press charges against pie-thrower opposed to same-sex marriageND


ABC News, 11th March 2017

A former farmer assaulted Qantas chief Alan Joyce who has been vocal about his support for various social issues, most recently the gay marriage debate. Proving the effectiveness and ability for corporate leaders to influence the political debate with the sixty-seven-year-old motivated by homophobia and irritation of executives ability to ‘bulldoze’ the opinions of middle Australia. Joyce was one of twenty CEO’s including Telstra, CBA, ANZ, Holden, AGL, KPMG, PWC, Lendlease, Wesfarmers and others, who signed a letter urging Turnbull to take legislative action on same-sex marriage.

Alan Joyce’s lemon meringue pie to the face and the sacrifice of a nice suit has given the bold CEO a legitimate platform to address social issues in Australia. His position and statements after the incident suggest that he will push assault charges and will not be willing to sit back and focus on ‘knitting’.

For more information see: www.abc.com.au

The Business Case for PurposeND


EY, Harvard Business School, 2015

The EY Beacon Institute funded a global survey of 474 executives to determine company’s willingness to embed ‘sense of purpose’ in the way they make decisions or determine motivations. The survey defined organisational purpose as “an aspirational reason for being which inspires and provides a call to action for an organization and its partners and stakeholders and provides benefit to local and global society”. Eighty nine per cent of executives surveyed said a strong sense of collective purpose drives employee satisfaction, eighty four per cent said it can affect an organisations ability to transform, and eighty per cent said it can help increase customer loyalty.

The report determined that the companies surveyed fell into three categories prioritisers, companies that already have a clearly articulated and understood purpose (39 per cent); developers, companies that do not yet have a clearly articulated purpose but are working to develop one (48 per cent); and laggards, companies that have not yet begun to develop or even think about purpose (13 per cent).

For more information see: http://www.ey.com/Publication/vwLUAssets/ey-the-business-case-for-purpose/$FILE/ey-the-business-case-for-purpose.pdf

MPs slam ‘freeriding’ gig economy companiesND


Josephine Cumbo, Financial Times, 1st of May 2017

The Commons work and pensions committee in the UK have described companies who operate in the gig economy as “free riders’ on the welfare state. The committee singled out Uber and Deliveroo as drivers of the gig economy, which is seen as driving the growth of self-employment in the UK to 5 million (or 15 per cent of all British workers). This rise in self-employment has been combined with an overall reduction in the availability of benefits and tax credit income while companies operating in the gig economy contribute far less to the welfare state through national insurance contributions.

The decisions of the committee will have nock-on-affects to the continuing pressure for gig economy companies to recognise staff as employees or workers in Australia and elsewhere.

For more information see: www.ft.com

A lack of competition explains the flaws in American aviationND


The Economist Print Edition, 22nd of April 2017

Comparing US air carriers to European air carriers is clear cut with European operators gaining on average $7.84 profit per seat compared to $22.40 in the US, quality suffers as a result. Only one operator based in the USA can be found in the world’s 30 best carriers, compared to 9 European based carriers.

This is argued to be down to competition. The biggest four carriers in America control 80 per cent of the market, compared with just 48 per cent a decade ago. The top four carriers in Europe have around 45 per cent of the market. This is due to European regulators preserving competition between carriers for example blocking mergers between Ryanair and Aer Lingus and preventing single airlines from dominating airports.

Combined with the preservation of competition between EU-based carriers, the EU allows airlines with a non-EU owner that has a stake of up to 49 per cent to fly anywhere within the bloc, compared to America which caps foreign ownership at 25 per cent. The EU also encourages competitions between different airports and their operators, seen through London’s three separately owned airports.

For more information see: www.economist.com

Macron and Le Pen advance to the second round of the French electionND


The Economist, 23rd of April 2017

The French first round vote resulted in Emmanuel Macron (pro-EU centrist) and Marine Le Pen (far right member (or not) of the National Front) continuing to the final round of the French election. Macron is seen as pro-establishment serving the economy minister under Francois Hollande, but running as an independent, gaining 23.7 per cent of the vote while Marine Le Pen, the daughter of Jean-Marie Le Pen who previously made it to the final vote against Jacques Chirac and anti-immigration proponent gained 21.9 per cent of the ballot.

Macron goes into the second vote as a ‘firm favourite’ with polls predicting he will beat Le Pen by 20 points in a head-to-head contest. Although recent results (Brexit, Trump) show polls should not be trusted as an absolute.

For more information see: www.economist.com

Amazon breaks silence on Australian retail plansND


Sue Mitchell, Australian Financial Review, 20th of April 2017

Amazon will launch invitations for local retailers to join its global marketplace on Thursday, confirming the company’s goal to roll out a full retail offering in Australia over the next few years. The company is currently looking for a large distribution and fulfilment centre in Australia with the company already having close to 1000 staff within the country.

Amazon is predicted to gain a 44 per cent market share of electronics sold in Australia, 19 per cent of physical and electronic media, 11 per cent of sports and outdoors supplies, 10 per cent of clothing and apparel, 5 per cent of tools and garden supplies and 2 per cent of pharmaceutical products. The introduction of the service will disrupt prominent bricks and mortar retailers like JB Hi-Fi, Harvey Norman, Myer, Dymocks, Super Retail, Big W, Kmart and Target and online retailers who haven’t experienced as much competition like eBay, Booktopia and The Catch Group. Citigroup’s head of research Craig Woolford estimates that Amazon’s Australian sales could reach $4 billion within five years representing about 14 per cent of all online sales and 1.1 per cent of total retail sales.

For more information see: www.afr.com

India’s ID system is reshaping ties between state and citizensND


The Economist, 12th of April 2017

The Aadhaar identification system utilised in India is becoming a crucial part of everyday life for billions of people. The scheme has amassed the fingerprint and iris scans of 1.1 billion people since 2010 representing 99% of the adult population. Visibility to the government is assumed in developed nations with personal details taken for tax or other reasons being very hard to avoid for the average citizen. The fingerprints and iris scans are taken and matched to a unique 12-digit identifying number which is a massive step forward when you accept that India registers less than half of all births. India is already benefitting from its system, with ‘leakage’ in subsidy payments resulting in only 27% of the money ending up in the right hands, discovering that the electoral role in Punjab had 800,000 fictitious voters and that up to 30% of driving licences are fake (many of them duplicates to avoid driving bans). The Aadhaar system has obvious downsides, including the author’s description of a potential Orwellian panopticon and the issue of labourers chafed fingers preventing proper fingerprinting. For more information see: www.economist.com

How Amazon works - and why Aussie retailers are at risk of getting crushedND


John McDulin, Australian Financial Review, 12th of April 2017

After years of speculation it appears, again, that Amazon will make it to Australia. Watching Amazon’s rapid ascent to dominance in the UK first hand suggests that without innovation Australian retailers will struggle. The company has recently taken out 250 trademarks covering 30 classes of goods in Australia which has not gone unnoticed with Harvey Norman boss Gerry Harvey describing the US based company as ‘parasites’. Amazons success comes from its business model which prioritises low prices, loyalty and playing the long game. The CEO Jeff Bezos explicitly does not prioritise profit or profit margins instead championing an ‘intergenerational approach’, prioritising free cash flow over traditional net income. Bezos takes the cash created through Amazons retail operations and reinvests it back into Amazon's infrastructure and logistics to ensure a positive customer experience. Australia’s population has a high level of disposable income and companies which have very healthy margins that Amazon plans to undercut. For more information see: www.afr.com

The rise and fall of American leadership ND


Martin Wolf, Australian Financial Review, 31st May 2017.

Trump has undeniably changed the way we see the USA. Four months has transformed the nation builder into a relationship destabiliser. It has taken four months for Trump to damage the diplomatic position of the USA with his proposed 29 per cent cut ($12bn) to the budget of the state department and the international development agency. The prioritisation of hard power while lowering taxes are traditionally Republican, but the predominately white working class voters who placed Trump in power have little to gain from it. In fact, they have nothing to gain as they face the loss of health care coverage.

Angela Merkel’s statement that the USA can’t be depended upon is true, with growing polarisation of the American voter occurring while the media face of the country pushes a NATO prime minister out the way. The first four months of the presidency have undeniably not been positive; the refusal to accept the danger of climate change at the G7 meeting suggests the impact of the Trump presidency may not be temporary.

For more information see: www.afr.com

Video of United Airlines passenger creates furore in China, too ND


Javier C. Hernandez and Cao Li, The New York Times, 11th of April 2017

The now infamous incident of Dr David Dao being forcefully removed from a United Airlines flight has taken another, worse, turn. The hashtag ‘United forcibly removes passenger from plane’ received more than 550 million views and more than 240,000 comments on the Chinese social media platform Weibo. Chinese state broadcaster CCTV showed photographs of the passengers face with the title ‘savage’ above while People’s Daily (the ruling Communist Party’s leading newspaper) also scolded United for failing to condemn the man's treatment instantly. The event is likely to affect United’s growing business in China with 96 weekly departures from mainland China and Hong Kong. The New York Times notes that Chinese news media frequently highlights episode of violence and racism in the United States as evidence of what it perceives to be a hypocritical double standard surrounding human rights. For more information see: www.nytimes.com

Loss of coral reefs caused by rising sea temperatures could cost $1tn globally ND


Ben Doherty and Christopher Knaus, the Guardian, 12th of April 2017

The loss of coral reefs caused by rising sea temperatures could cost $1 trillion globally according to a report from Australia’s Climate Council. Queensland’s Great Barrier Reef alone could lose 1 million visitors a year, placing 10,000 jobs into question and draining $1 billion from the economy. The only way to protect the Great Barrier Reef the report argues is to reduce greenhouse emissions, which the U.S.A are currently achieving, Chinas emissions are flat-lining, while Australia has increased its emissions by 0.8% in 2016. The federal and state government planned to spend $200 million annually to protect the reef; this is however juxtaposed by their support of the Carmichael coal mine in Galilee Basin in Queensland. For more information see: www.theguardian.com

Apple faces serious penalties after anti-competitive 'error 53' repairs ND


Yolanda Redrup, Australian Financial Review, 6th of April 2017

The Australian Competition and Consumer Commission is launching a Federal Court case against Apple due to the ‘Error 53’ messages. Error 53 messages occur after a device has been serviced by a third party, which is ‘unauthorised’ by Apple. Apples closed business model prevents anyone but Apple from doing repairs to the handsets, the handsets can also essentially be ‘bricked’ if the phone is fixed by a third party while the warranty is simultaneously voided. The watchdog is seeking penalties, injunctions, declarations, compliance program orders, corrective notices and costs. This case comes at a bad time for Apple with rising competition from Android manufacturers. For more information: www.afr.com

An Australia that can say no to ChinaND


The Economist, 6th of April 2017

Australia has escaped recession for 25 years thanks partially to Chinese demand for coal from Queensland and iron ore from Western Australia. China currently is raising its stake in the Australian economy with 160,000 Chinese students studying in Australia, annual beef exports about to exceed $1bn and Australian wine exports were near $500m in 2016, and growing steadily at a rate of around 50% each year. The issue arises with Australia’s relationship with ‘the indispensable strategic power in the region’, the U.S.A. The difficult situation Australia finds itself in has been routinely seen, most recently through the detention of Feng Chongyi, the Australian based academic, receiving no statement from Malcolm Turnbull. Further to this the clear, and public rejection, of the Australian-Chinese extradition treaty by the Australian parliament shows a separation between the working parts of the Australian government and its public face. For more information see: www.economist.com

United Airlines incident: What went wrong? ND


Joel Gunter, BBC News Washington, April 2017

United Airlines has found its corporate reputation sink to a level lower than refusing to allow teenage girls from travelling in leggings. The busy CEO Oscar Munoz came out to barely apologise to the man (who claimed to be a doctor) for being assaulted on a flight for which he had bought a ticket. While overbooking is a common practice for airlines which regularly factor in the amount of people who will miss the flight, which ultimately costs the airline money. On Sunday passengers were informed that four of them would be required to give up their seats for four United Airlines staff members. The passengers were initially offered $400, a hotel room for the night and a flight the next day, this was turned down, so the offer was increased to $800, this was also turned down. Due to the rejection, four passengers were selected (with priority given to frequent fliers and higher-fare-paying customers to continue on the flight). Three passengers accepted being selected and voluntarily left the plane, while the fourth who said he was a doctor refused as he had to see patients in the morning. Due to this, he refused to comply with the airline manager, resulting in him being manhandled off the plane. Of course, in 2017 all passengers on the aircraft had phones to video and photo the bloodied man being dragged off the plane by the Chicago Department of Aviation. Being onboard the aircraft increased the poignancy of the images taken by other travellers, if United Airlines needed to remove customers it should have never occurred inside an aeroplane, but at the gate. The man who was dragged off the plane was never offered the maximum possible $1,350 compensation or had his occupation as a doctor taken into account. Mr Leocha, the founder of the passenger advocacy group Travelers United, stated "The only lesson here for passengers is when security get on throw up your hands, because otherwise, you're going down the aisle with a fat lip”. This incident is now a globally shared advert for both United Airlines and the way the Department of Aviation handle disputes. For more information see: www.bbc.com

The ROI Communication Benchmark Report 2017 ND



The 2017 communication benchmark report incorporates ROI’s experience working with Fortune 500 companies over 15 years, with the report compiled from the responses of 115 leaders representing 4.5 million employees. The benchmark report uses a framework to evaluate the effectiveness of communication organisations. The benchmark model consists of three components, Leader and Manager Communication, Open Communication Culture and, Communication Infrastructure. Findings of the benchmarking project showed a changing, and challenging environment for executive leadership. ROI found that only 27% of participant organisations provide managers with communication training, which explains why the number of employees who perceived there ‘managers as credible sources’ went down from 81% in 2015 to 68% in 2017. The changing executive climate is mirrored by employment trends with participants in the ROI benchmark report having on average 3.8 full time employees per 10,000 employees. ROI Communications developed three recommendations from the data collected, 1. Develop and implement a manager communication strategy: With manager credibility progressively getting lower supporting and enabling managers to be strong communicators is essential. 2. Create a measurement strategy that supports your goals: Measurement has to be a priority to improve practices and to predict financial performance. 3. Make your content count: Quality and consistency is essential to gain views, capture the attention of your employees to actively communicate. The full report is available at: www.roico.com

How Pharma Can Fix Its Reputation and Its Business at the Same TimeND


Damiano de Felice, Harvard Business Review, February 2017.

Pharmaceutical companies are under steadily growing pressure. Drug discoveries are becoming less commonplace with investment in R&D becoming a less rewarding proposition. To counter this profit is being found through consistent price increases, with Credit Suisse discovering 20 leading global pharma companies gained 80% of their growth in net profits in 2014 from price hikes. Due to this, public perception of pharma companies is at an all-time low with US citizens holding no other industry in lower esteem (August 2016 Gallup Poll). The mix of low potential for growth and exceptionally low levels of reputation has placed pressure on management to move away from a price-focused strategy, to facilitating higher levels of access to products. With emerging markets predicted to contribute 50% to 75% of potential growth in the next four years working with governmental bodies to allow greater accessibility to these markets and ensure sustainability of demand appears to be a win-win opportunity. This plays strongly into the requirement for the industry to stamp out unethical or exploitative practices to gain and maintain access to markets in areas with higher levels of government control. To obtain access to these markets pharmacology companies will be required to enhance their corporate reputation in both the developed and developing world, and also gain access to the best talent and regain public trust. For more information see: www.hbr.org

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