The importance of character and personality of an organisation on corporate reputation – Sports Direct Case Study

The importance of character and personality of an organisation on corporate reputation – Sports Direct Case Study

The report will critically examine the concepts and theories pertaining to corporate character, culture and identity and assess to what extent these principals influence Sports Direct’s corporate reputation and make recommendations on future campaigns.

1.1 Character and its impact on Corporate Reputation

“A corporate reputation is a collective representation of a firm’s past actions and results that describes the firm’s ability to deliver valued outcomes to multiple stakeholders.” Fombrun (p6., 1996)

Corporate reputation (CR) is earned over time through stakeholder interactions and touch-points with an organisation; preconceptions and expectations; messages in media and word-of-mouth (Bernstein, 1984). It can be argued that corporate reputation is governed more by uncontrollable external forces than internal drivers.

Corporate reputation is directly proportional to the relationship between stakeholder expectations and organisation action (Fombrun, 1996). Corporations must strive to ensure that their actions meet or exceed stakeholder expectations across six key drivers (Greyser, 1996).

It is corporate personality, according to Roper and Fill (2012) which is the building block which governs how companies will create their communication strategy and how they will aim to meet or exceed stakeholder expectation. Therefore, an organisation is going to manage its corporate reputation, they must understand their own personality first.

Figure 1 Building blocks of corporate reputation – (Roper & Fill, 2012)

1.2.1 Character

To understand how character impacts on corporate reputation, two areas must be considered, the role that character plays in the organisation and in the brand.

1.2.2 Character in the organisation

Organisational personality according to Markwick and Fill (1997), comprises of two core factors; organisation culture and the strategic purpose. These elements dictate how the company will operate and conduct its affairs:

  • Organisation culture – ‘the way things work round here’
  • The strategic purpose – ‘long-term planning, goal setting’

Pros- The model encapsulates Fomburn’s view that the organisation is governed by its past actions (Organisation culture) and its ability to deliver future aims (strategic purpose).

Con- Fails to address the impact of Greyser’s drivers on corporate personality

1.2.3 Character in the brand

Organisational culture and strategic purpose steer the decisions made within the business and define the company’s character.

corporate personalityFigure 2 - Corporate personality traits (Keller & Richey, 2006)

Keller and Richey (2006) developed a framework for discussing corporate personality traits which relate to Thurstone’s ‘Measurements of social attitudes’ (1931) and is backed up with empirical evidence from Balmer and Soenen (1999) and Hatch and Majken (2001) [See figure 4]. The model is broken down into three components with two subset personality traits each:

  • Heart – Passionate and Compassionate
  • Mind – Creative and Disciplined
  • Body – Agile and Collaborative

It is important that businesses carefully manage their corporate brand personality as these traits are fed throughout the organisation and can ‘attain sustainable success against’ competitors and ‘drive employee behaviours’ (Keller and Richey, 2006).

‘Corporate brand personality reflects the values, actions, and words of all employees of the corporation’ (Keller and Richey, 2006).

1.2.4 Conclusion

‘Personality is embodied in the way that the organisation carries out its business, the logic of its activities, the degree of persistence and aggression it displays in the markets in which it operates in and the standards that are expected of all stakeholders’ (Fill, 2002)

Corporate personality governs how an organisation will work and the strategies it employs. The culture and strategic vision of the company (which creates corporate personality) influence the corporate identity. These are considered the only controllable elements of corporate reputation with external factors such as environment and campaign outcomes feeding back into the decision chain.

The biggest impact that corporate personality has though on corporate reputation is the influence it has over employees’ heart, mind and body traits. Their decisions, sales interactions with the market, marketing’s campaigns, customer supports interaction with customers and the organisation’s interactions with stakeholders will be governed by the company’s character.

‘Corporate personality is what an organisation actually is.’ (Fill, 2002)

1.3 Sports Direct character and its impact on its corporate reputation

1.3.1 Current Market Position

Sports Direct’s handling of the PR crisis and difficult trading conditions highlighted that the company can benefit from its senior management’s entrepreneurial style of leadership. It can quickly alter its strategy to changing market conditions. The company has been built on a combination of two of Porter’s Generic Strategies, Differentiation and Cost Leadership.

1.3.1.1 SWOT [1]

 Strengths   Weaknesses 
 Wide range of specialist brands (owned and suppliers)  Over-reliance on the UK sector
 Strong online and offline UK distribution  Poor relationship with major brands
 Market leading brand with strong past financial performance  
 Opportunities  Threats
 Expanding reach and offerings through acquisitions  Increased competition from JD Sports and Brands directly (Nike and Adidas)
 Increasing preferences from consumers towards digital purchase trends  Decreasing number of zero-hours contracts and more employee rights will increase labour costs
 Growth in digital can increase brand’s audience reach  BREXIT could decrease the number of low-skilled employees
 Growth in the European footwear market  

Below is a review of how the Sports Direct currently performs based on the 5 S model (Chaffey and Smith, 2013) prior to the PR scandal and 2016:

 Sell   Serve   Sizzle   Speak   Save 
Sports Direct has been witnessing growth in online revenue which has increased by 14.4% from £335.4 million to £383.8 million in FY2015

The company generated 79.5% of its revenues from the UK

Attempting to increase European Presence

Owns named brands which allow it to offer premium brand names at low prices 

Focused on discount and low-end value chain

Entering new markets thanks to acquisition strategy

The operating profit margin increased from 9.2% in FY2014 to 10.4% in FY2015, whereas the net profit margin increased from 6.7% to 8.5% during the same period

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