REPORT ONE

Managing Corporate Reputation of Brandix Lanka (Pvt) Ltd

December 2010 Chartered Post Graduate Diploma in Marketing (Level 7)

NEXT BUSINESS SCHOOL

Total Word count: 6441 CIM Membership no: 9690441

Table of content

Report One: Managing corporate reputation of Brandix Lanka (Pvt) Ltd

Executive Summary........................................................................................................................... ............... 1.0 Introduction .. 2.0 Advantages and Disadvantages of Managing Corporate Reputation........................................................... 3.0 The drivers of Corporate Reputation............................................................................................................ 4.0 Reputation Management Process.................................................................................... ............................. 5.0 Recommendations to improve Companys Reputation................................................................................ References..........................................................................................................................................................

03 04 05 08 11 15 20

Report Two: One brand, One team the move towards success

Executive Summary.............................................................................................................................................. 1.0 Introduction........................................................................................................................................................ 2.0 Strategic role of corporate branding in organisations........................................................................................ 3.0 Issues associated with the acquisition and how it will impact the proposed purchase...................................... 4.0 Recommendation to maximize the branding opportunities arising from the acquisition.................................. Reference.................................................................................................................... ............................................

22 23 24 26 28 30

Appendix 1............................................................................................................................................................... Appendix 2................................................................................................................... ............................................ Appendix 3................................................................................................................... ............................................

31 33 34

Page2 CIM Membership no: 9690441

Executive Summery

This report highlights how Brandix Lanka (Pvt) Ltd currently manages its corporate reputation and the recommendations to improve its current reputation. The study evaluates the advantage and disadvantages of managing corporate reputation, drivers of corporate reputation, reputation management process and recommendations of a formal process that Brandix can use to manage and maintain the company reputation. The objective of this report is to consider the outcomes arising from a strong corporate reputation and to minimise arising issues. Combination of advantages and disadvantages of corporate reputation are discussed, in order for the company to be successful in future performances. Effective key drivers are used to monitor how corporate reputation works and has measured by using key forces. Furthermore at the end of the report a formal reputation was recommended for Brandix in order to maintain corporate reputation

Page3 CIM Membership no: 9690441

1.0 Introduction

Companies have begun to identify that there is a positive relationship between business performance and corporate reputation and also it provides competitive advantage. The better the companys reputation it will become more popular in the industry and among stakeholders. The objective of this study is to review the literature in relation to corporate reputation in Brandix Lanka (Pvt) Ltd, its importance for the company, drawbacks and its relation to other concepts such as need for companies to pay increased attention to building and sustaining the company reputation for economic growth by using a formal corporate reputation management process to shape a unique identity in the industry. Set of recommendations were suggested at the end of the report on how to implement a reputation process and how KPIs can be improved due to the new process.

Page4 CIM Membership no: 9690441

2.0 Advantages and Disadvantages of Managing Corporate Reputation

2.1 What is corporate reputation? There is a great deal of evidence to show that organisations have become more interested in the benefits that management of the corporate reputation might bring (Van Riel, 1995) and the impact that a strong Corporate Brand might have on stakeholder loyalty (Balmer, 1995). Companys reputation is created by the gathering of all the contacts its various stakeholders have with it. Reputation is not build with advertising. Advertising cannot create an image or corporate name it can only communicate. A good corporate reputation has to be earned by the tangible things the company does such as higher quality products, better customer service. However, reputation can be enhanced through better management of the emotional attachment that stakeholders have with the company. People perceive the products of a company, that they respect and trust.

2.3 The Importance of Managing Corporate Reputation for Brandix Brandix Lanka (Pvt) Ltd consider their greatest asset to be is the companys good name or reputation. The company work actively through proactive strategies on sound labour practices, responsible product stewardship, eco-efficiency, cleaner technology and prudent resource consumption to build the companys good reputation.

2.4 The main Benefits which Brandix can gain through good Corporate Reputation: There are several advantages a company can gain from actively managing corporate reputation. Such as Companies can charge a premium price for their products and services, stock market equity, stakeholder support, better financial performance, competitive advantage etc. However from the above list following benefits can be achieve by Brandix if corporate reputation is managed properly. 2.4.1 Stakeholder support Brandix can achieve its objectives more easily if it has a good reputation among its stakeholders, especially key stakeholders such as its largest customers, opinion leaders in the business community, suppliers and current potential employees. With good corporate reputation customers will prefer doing business with Brandix even when the competitors products and services are available at a similar cost and quality and will influence other potential customers by word of mouth. For example, the effort to abolish child labour has helped Brandix in developing business and partnerships with many international buyers such as GAP, Marks & Spencer, and Tommy Hilfiger etc. Suppliers will be more inclined to trust the companys ability to pay and to provide fair trading terms. If any problems occur in their trading relationship with the company, the suppliers will be more inclined to give the benefit of the doubt when the company have a reputation of fair dealing. Likewise, government regulators will trust more if the company have a good reputation, and they will be less inclined to punish if the company trip up along the way. And clearly, a potential employee will be more likely to sign up with Page5 CIM Membership no: 9690441

Brandix if the company have a good reputation for good treatment of staff compared with a company who may have an equivocal reputation.

2.4.2 Better Financial performance By actively managing corporate reputation will help Brandix to financially perform well in the apparel industry. With good corporate reputation, customers will prefer to deal with Brandix ahead of others. This will help Brandix to perform well in the market. Brandix can measure its financial performance by monitoring the return on sales, return on capital employed, cost of sales, gross and net margins, and many others and compare with the previous years reports the difference between before and after managing corporate reputation the change in the financial performance. However Brandix will have to monitor financial performance quarterly to establish the link between managing corporate reputation and financial gain.

2.4.3 Ability to charge a premium price for products and services With actively managed corporate reputation, it will help to differentiate Brandix from others. This will add value to Brandix products and services and this uniqueness will allow Brandix to charge a premium price for its products and services, which in return increase profits for the company.

2.5 Disadvantages of managing corporate reputation Managing corporate reputation is an important role in achieving corporate objectives. However there are few disadvantages of managing corporate reputation that Brandix will have to be aware of.

2.5.1 Applying a model to manage corporate reputation can be costly The main disadvantage in managing reputation is that it can be costly than expected. To mange corporate reputation in Brandix, company will have to have different conceptual models to customers, investors, community leaders etc. This will be costly for Brandix. Therefore, Brandix will have to consider its Return on investment before it builds a process to enhance its corporate reputation. However, this cost can vary depending on the size of the business.

Page6 CIM Membership no: 9690441

2.5.2 Difficult to allocate separate department to manage corporate reputation If Brandix to allocate a different department to manage corporate reputation the company will have to consider space and employees which will affect the current company activities. Also Brandix will have to provide training for the existing employees regarding how to manage corporate reputation or recruit new employees who have experience in managing corporate reputation. Then again, this can be another cost for Brandix.

The disadvantages of managing corporate reputation can be overcome by the countless advantages that it offers. One thing is certain in managing corporate reputation that there is a high cost to pay for losing company reputation. Therefore even there are few disadvantages by managing corporate reputation Brandix can boost companys financial performance, Increase stake holder support and many more. Therefore Brandix should actively manage its corporate reputation.

Page7 CIM Membership no: 9690441

3.0 The drivers of Corporate Reputation

3.1 How does Corporate Reputation Work? Corporate Reputation is the set of meanings by which an organisation is known and through which stakeholders describe, remember and relate to it. Dowling (1986) For Brandix Corporate Reputation is a new way of looking at the business, and it helps to improve the financial performance of the company. This has been proven from many detailed surveys that Brandix has undertaken.

Figure 3.1.1 illustrates a constructed model which Brandix can refer to identify the relationship between corporate identity, image and which in return drives corporate reputation.

Corporate Reputation

Figure 3.1.1
How stakeholders perceive the organisation Corporate Image

How the company perceive and present it self

Corporate Identity

Visual Presentation (Symbolism)

Corporate Communication Corporate behavior

Corporate mission

3.2 What drives corporate reputation of Brandix As per Greyser (1999), Fombrun and Van Riel (2004) there are several factors that drive corporate reputation of a company. Such as competitive effectiveness, market leadership, customer focus, familiarity, corporate culture, communication, emotional appeal, products and services, vision and leadership, workplace environment, financial performance and social responsibility.

However from the above list corporate reputation drivers for Brandix are as follows:

Page8 CIM Membership no: 9690441

3.2.1 Social responsibility. Brandix have believed and practiced corporate social responsibility (CSR) for years and managed to develop a reputation as an environmental friendly ethical company by doing various projects for the community and environment. For example: Brandix has provide an internal clean water supply system for 30 newly settled families who were victims of the tsunami and was installed in a housing scheme in Atanakitha, Imaduwa Sri Lanka and donated US$25000 to the families of naval personnel who were victims of a suicide attack in Habarana in 2007. By being more social responsible it adds more value to companys current reputation. CSR evaluates and judge companys attitude towards the community (people) and the environment. By publishing CSR practices in media such as newspapers Brandix can boost up corporate reputation of the company. Therefore social responsibility is one of the reputation drivers for Brandix. The advantage in Social responsibility is it can be controlled by Brandix since the CSR agenda can be created according to the company budget and the top management can decide how many projects that the company will do for a year. On the whole Social responsibility is a controllable corporate reputation driver for Brandix.

3.2.2 Financial Performance Brandix was able to financially perform well for years. Most of the strategic Business Units (SBUs) in the company was able to reach their best performance recording nearly US$ 400 million, a 15% increase over last year. Two SBUs namely Brandix casual wear and Brandix intimates recorded stellar performances, specially Brandix casual wear with its One Team One Focus concept, recorded a phenomenal turnaround this year. If the profitability records are plus it gives strong prospects for future growth of the company and will also helps to outperform its competitors. Therefore it will help the company to have a good corporate image. Consequently a negative performance will adversely affect Brandix reputation. Therefore Brandix should manage its uncontrollable corporate reputation driver by maintaining a good financial performance constantly.

3.2.3 Corporate culture and Work place environment Another controllable corporate reputation driver for Brandix is well managed corporate culture and work place environment. Brandix ensure that the company recruits the right person to the right job therefore it will prevent unnecessary problems within the company and will not affect the company culture. Brandix corporate culture is determined by three overlapping areas, those are values, work culture and social responsibility. Brandix way of working is all about accepting and embracing the company values, and acting with social responsibility which supports to enhance corporate reputation. Brandix welcome change openness and appreciate the employees at work. In addition to the regular remuneration and benefits company rewards its employees with other benefits such as, cash awards for good service, annual bonus, transport facilities, free breakfast and lunch, staff loans and many more. Brandix takes initiative to manage the employees which in return talk good about the company and will spread to people by word of mouth.Thus maintaining a good corporate culture and a working environment automatically add value to Barndix reputation.

Page9 CIM Membership no: 9690441

3.2.4 Products and services If any company lives its vision to be the inspired solution to branded clothing, it is Brandix. Today it is the preferred solutions provider to some of the worlds best apparel retail brands including GAP, Marks & Spencer, Victorias Secret, Next and Abercrombie & Fitch. Association of big world known labels will help to drive corporate reputation for Brandix. In this highly competitive market, Brandix will have to maintain the standards of their products and services, offer high quality products, and offer products and services that are in good value to avoid customers to look for alternatives. As a result the big labels will continue to deal with Brandix which gives a global recognition for the company.

By knowing the key drivers and forces of corporate reputation it allows Brandix to identify where they stand in the industry with their corporate reputation and it helps the company to outperform and also to own a distinct advantage on a number of other operational work. It also helps Brandix to have a positive impact on corporate profitability, market and total sales.

Page10 CIM Membership no: 9690441

4.0 Reputation Management Process

4.1 How Brandix currently Manage its Corporate Reputation 4.1.1 Corporate management process A positive reputation is a key source of distinctiveness, which can differentiate it from its competitors, produce support for and trust in the organisation and its products and helps it to attract and retain quality staff, business partners and allies (Fombrun & van Riel, 2004).

4.1.2 Brandix current process Brandix currently has a reputation as an ethical eco friendly company in the apparel industry. However Brandix do not carry out a formal process to manage the company reputation. Thus Brandix have systematically built a framework that proactively manage environmental, social and ethical imperatives which helps in maintaining the company current reputation. Table 1.0 illustrates the framework Table 1.0 Environmental Agenda Sustainable consumption of natural resources Pollution prevention Protecting Bio diversity Social (ethical) Agenda Free chosen employment (no forced labour) No child labour Respect of the freedom of association and the right to collective bargaining Payment of adequate wages (living wages) No excessive working hours Clean Technology Agenda Waste minimisation Energy management Process optimisation

Management of hazardous chemicals Solid waste Management

Eliminate use of toxic chemicals

Source: Brandix Corporate Review 2007

Superior working conditions

Biochemical treatment of effluents Applications of biotechnology in the textile industry Use of eco-dyeing for yarn and textiles

Page11 CIM Membership no: 9690441

4.1.3 Managing the current process Current reputation process in the company has happened naturally over the years and Brandix has taken initiative to maintain it. As an ethical environmental company Brandix have undertaken various projects to achieve a sustainable status where economic, social, and environment facts will converge towards a common goal. The current reputation process is managed by managing the following three factors: Four key areas in Brandix apparel integration is wet processing areas in textiles, yarn dyeing, finishing and printing which lead to pollution, high energy and water consumption. Brandix as a environmental concern company is mindful of these issues and taken action to protect the environment, minimise water consumption and energy and as a result to manage the current corporate reputation process. Environmental Management All environmental policies and plans are mapped, implemented and carried through by dedicated teams, led by a Group Director, with messages cascading to all levels. Each of Brandix plants possess an Environmental Protection License issued by the Central Environmental Authority (CEA). In order to protect the environment and increase productivity the plants within the group also adhere to the standards and systems. These standards and systems are continuously reviewed and monitored internally and independent audits conducted by United Kingdom Systems and Certifications, and the CEA.

Wastewater Management Brandix works on initiatives that eliminates or minimises harm to the environment, by treating wastewater and returning treated water back to its natural habitat. Treated water discharged from Brandix Finishing wastewater treatment plant is well within the standard quality requirements of the CEA, which in in line with international standards and more stringent with the certain parameters.

Energy Management Brandix has undertaken an overcharging policy of energy management. Designed monitored and verified on USAID-SARI energy program protocols, Brandix goal is to reduce energy consumption by at least 15% in Brandix Casualwear, Lightsew and Finishing clusters.

Above mentioned factors are undertaken to manage the current corporate reputation process of Brandix and these are internally and independently monitored and reviewed to ensure that they remain continuously ahead. However by using the above factors Brandix is unable to appropriately measure the effectiveness of the current reputation process.

Page12 CIM Membership no: 9690441

4.2 Effectiveness of the current process Brandix framework (refer table 5.1.1) of operations promotes, perseverance, rewards decisions, activates the quest for improvement and encourages innovative drivers, which have resulted in managing the current reputation of the company. Measuring effectiveness of the current reputation process through Community recognition: Numerous bodies have recognised Brandix efforts in environmental and CSR projects for community development. Brandix achievements include the Most Outstanding Exporter of the Year award at the National Awards for Export Excellence in 2003. Further in 2005 Brandix Finishing plant was recognised for Environmental Excellence at the CIMA Community Leader Awards and Presidents Environmental excellence Award and in 2006 was awarded the Excellence in Social Responsiblity Award by the American Apparel and Footwear Association in the Preservation of the Environment Category. The recognitions and awards stated above have benefited Brandix to create wealth for the company. However since there are no key elements and a proper structure to measure the success, the current process is not very effective for the company to manage corporate reputation and can create gaps in the process.

Dip stick analysis was used in evaluating the current corporate reputation process through primary and secondary research. The following evaluation was given by the business magazine, Lanka Monthly Digest (LMD) that Brandix is currently holding the 13 place in the Most respected companies in Sri Lanka with a score of 282. Brandix has obtain this position scoring in quality consciousness, CSR, innovation, dynamism, corporate culture and management profile.

4.3 Gaps in the current informal process Following problems can occur due to the current reputation process 4.3.1 Unable to measure the effectiveness of the current process Current process will fail to provide proper feedback on financial performance and stakeholder support which are the main benefits that Brandix can obtain by actively managing corporate reputation 4.3.2 Production bottleneck Employees will be too busy managing the environment, wastewater, and energy and not be able to deliver the products on time. This can lead to other concerns as customer complaints which can even harm the company current reputation. 4.3.3 Unable to measure corporate communication Since Brandix do not have a formal process the corporate communication will not managed properly. As a result internal and external communication will not interconnect. For example: news paper articles about a recent achievement or award received not be communicated with the employees.

Page13 CIM Membership no: 9690441

4.4 Consequences Brandix will have to face if the reputation is not managed properly 4.4.1 If Brandix fails to manage its good corporate image, the company will have a higher tendency of losing their urrent customers. As a result company will have to spend a considerable amount of time convincing them, since consumers prefer to patronize service providers which have already established their names in their respective industries rather than going to a company which has a bad corporate image. Reputation is the companys identity. It articulates the culture of the organisation. Credibility and integrity comes with a good name. It is hard to be credible when nobody believes in the company. Relatively, it is also difficult to prove integrity when clients of Brandix talks negatively about the company services instead of recommending and promoting. Without good corporate image Brandix will never be able to establish trust, confidence, loyalty and superb client relationships. The most respectable names in the industry such a Mas Holdings did not reach the zenith of success if they did not protect their reputation. Brandix will lose good business opportunities if fail to manage corporate reputation. Corporate reputation is like a magnet. It does not only attract customers, it also catches the attention of interested investors and business partners. They will dare to invest if a company is known for management conflicts and workforce issues. Establishing a good image generates tons of possibilities for business growth and expansion

4.4.2

4.4.3

4.4.4

4.5 Why Brandix need a formal corporate reputation process By managing a formal corporate reputation process Brandix can obtain the following benefits in the future since the company will be able to measure. Improve company financial performance Can strengthen stakeholder support Competitor advantage Charge a premium price Reduce staff turnover

The current informal reputation process does not entirely support Brandix to boost the company reputation. Therefore to enhance the corporate reputation of Brandix the company should carry out a formal reputation process.

Page14 CIM Membership no: 9690441

5.0 Recommendations to improve Companys Reputation

5.1 How Brandix can improve its corporate reputation Reputation is the strongest determinant of any corporations sustainability. Stock price can always comeback. Business strategies can always be changed. But when an organisations reputation is gravely injured, its recovery is difficult, longterm, and uncertain. A risk to its reputation is a threat to the survival of the enterprise. Firestein Peter J. (2006) Brandix actually cant control its own reputation; it can only manage the company in a positive and ethical way, and work to communicate this to stakeholders. Brandix can act to strengthen the areas that the company consider important to the corporate reputation. For example: Environmental and social responsibilities, financial performance and stake holder support. Brandix should be alert on the stakeholders attitude towards the company and their relationship with the company. Brandix should always be aware that reputation is also affected by the actions and attitudes of others, for example: a competitor launching breakthrough apparel solution or making great profits, and by comments from the industry observers.

5.2 Recommended formal corporate reputation process for Brandix According to Fombrun and van Riel (2004) there is a connection between a high reputation positioning and how well companies express themselves through targeted communication. The company can make the ability to communicate well which will help the stakeholders identify the organization and the more stakeholders identify the company, the more likely they are engage in supportive behavior. With the help from Charles Fombrun reputational management process the figure 5.2.1 outlines a constructed formal reputation management process which is recommended for Brandix in managing the company reputation.

Figure 5.2.1

Identity Research: Who are we? What do we stand for? What do we want to stand for? Stakeholder Audit Assign reputation management team Corporate communication and PR Campaigns Monitoring and control

Page15 CIM Membership no: 9690441

5.3 Application of formal corporate reputation process to enhance Brandix reputation. 5.3.1 Identity research The recommended process will support Brandix to first identify three existential questions. Those three questions are: Who are we?, What do we stand for?, What do we want to stand for?. Essentially Brandix need to know themselves before the company can communicate to others. For example: The answers can be as follows Who are we? A company in apparel industry who provides solutions to apparel retail brands such as GAP, Victorias Secrets etc. What do we stand for? An ethical and environmental friendly company What do we want to stand for? An ethical and environmental friendly company which also financially performs well compared to competitors.

5.3.2 Stakeholder audit Brandix can carry out a research study designed to determine how external and internal stakeholders perceived the company. The recommended research study can be as follows: Select three stakeholder groups on the basis of their potential impact on the development of Brandix corporate reputation. Customers (150); employees (300); and senior managers (16). Responds from the stakeholders can be collected via a structured, quantitative emailed questionnaire. A quantitative approach is recommended for this research is so that a direct comparison could be made between the perceptions of the three stakeholder groups. By analyzing the quantitative data it was possible to minimize the impact of single experiences of individuals in order to obtain an overall impression of corporate reputation The findings from the above research will assist Brandix to identify which areas to be improved to enhance and maintain its current corporate reputation.

5.3.3 Reputation management team Corporate reputation management should be carried through by a dedicated team led by a group director. Their responsibilities can be identified and shown in table 2.0.

Page16 CIM Membership no: 9690441

Table 2.0 Designation Managing Director Responsibility Prudent management from strategy resource control Maintain with all laws, regulations and environmental health and safety standards Effectively communicating the management of corporate reputation both internally and externally Corporate Reputation Managers Effectively communicating to the media about CSR projects, company financial performance and community services Managing crisis communication and managing complaints.

5.3.4 Corporate communication and PR campaigns Brandix should create internal communication tools such as intranet, posters and activities within the company and in many plants just to inform all the employees about recent achievements of Brandix and the awards that company won to show how important to maintain corporate reputation and what it meant to the company. Then the company will have to integrate external communication (news paper articles about the recent achievements or awards received) with the internal communication, so that there was a common platform in everything the company do. According to the US research relating to annual Fortune 500 most admired companies which invested in corporate communication experienced a better reputation that companies which didnt. Good corporate communication functions such as media relations, speech writing, social responsibility and community affairs, donations, corporate and issues advertising, employee communication, department and counselling and spending on public relations will support Brandix to manage and maintain the corporate reputation

5.3.5 Monitoring and control Reputation process should be monitored and controlled constantly for Brandix to properly manage the company reputation. Table 3.0 illustrates a monitoring system which is recommended for Brandix. Page17 CIM Membership no: 9690441

Table 3.0 Inputs Review group performance Reputation activities New business opportunities Internal controls Human resource development Human capital allocation Financial resource allocation Physical resource allocation Further resource allocation Agenda Outputs People attending What are the KPIs Customer satisfaction Managing directors Corporate reputation Managers Corporate reputation executives Corporate reputation exposure Better financial performance Stakeholder support

Board meetings should be conducted regularly (five board meetings per annum) with an attendance record of 90%. In this board meetings as mentioned in the above table following should be discussed; Corporate reputation team should evaluate and see whether the following factors have increased and managed properly due to reputation process: Review of group performance Reputation activities New business opportunities Internal controls Human resource development

Agenda of the meeting should be the how efficiently the company should allocate resources. For example: Human capital Selecting relevant training programs for corporate reputation team Financial resources Have a separate budget to manage corporate reputation of Brandix and discuss how efficiently should it be allocated Physical resources allocation of equipments (desk tops, stationary and other materials) for the corporate reputation team.

Page18 CIM Membership no: 9690441

5.4 Types of KPIs which can be improved due to corporate reputation process Brandix can develop a structure to monitor the key performance indicators once the reputation process is implemented and can compare the difference as shown in table 4.0 Table 4.0

GOOD

MARGINAL

BAD

Key Performance Indicators Better financial performance

Target Performance

Actual Performance

Corporate reputation exposure

Customer satisfaction

Stakeholder support

Brandix target should be to increase performance and reputation by introducing a corporate reputation process. However the actual performance can be good, marginal or bad. Therefore Brandix can use the above table to monitor the effectiveness of the corporate reputation process for the company KPIs and maintain accordingly.

It is important to develop a reputation process to manage and enhance Brandix current reputation so that the company performance and image will be better. When Brandix is having a good reputation it will be easy for the company to face any challenges, which come across that affects the company revenue.

Word count: 4359

Page19 CIM Membership no: 9690441

References Balmer, J.M.T, (1995), "Corporate branding and connoisseurship", Journal of Management, Vol 21. Benefits of good corporate image. Retrieved on 30thSep10 from http://ezinearticles.com/?Five-Benefits-of-GoodCorporate-Image&id=1369432 Brandix corporate review, 2006 Brandix corporate review, 2007 Brandix Reach Issue 2, 2008 Brandix Reach Issue 1, 2009 Business Super brands (An Insight in to some of Sri Lankas Strongest B2B Brands), 2008 Corporate Reputation. Retrieved on 29thSep10 from http://www.valuebasedmanagement.net/methods_corporate_reputation_quotient.html Corporate Reputation. Retrieved on 30th Sep10 from http://www.mbs.ac.uk/research/corporatereputation/reputationchain.aspx Fombrun C.J. Reputation, Realizing Value from the Corporate Image Fombrun, C. J. and C. van Riel (2004), Fame & Fortune, How Successful Companies Build Winning Reputations . Upper Saddle River, NJ: Pearson Education. Genasi, C. (2001). Can you spin a reputation? Business Communicator Importance of Corporate Reputation. Retrieved on 25th Sep10 http://www.cuttingedgepr.com/articles/corprep_important.asp Jacobs, P. (1999). Reputation management. InfoWorld Keser, C. (2003). Experimental games for the design of reputation management systems. IBM Systems Journal Lines, V. L. (2004). Corporate reputation in Asia: Looking beyond bottom-line performance. Journal of Communication Management Marken, G.A. (2002). One-minute corporate reputation management. Public Relations Quarterly Marken, G.A. (2004). Reputation management starts at home: One day at a time. Public Relations Quarterly Mc Kinsey 7S Frame Work. Retrieved September 07, 2010, from http://www.themanager.org/models/7S%20Model.htm Van Riel, C.B.M. (1995), Principles of Corporate Communication, Prentice-Hall, Hemel Hempstead.

Page20 CIM Membership no: 9690441

REPORT TWO

One Brand One Team the move towards success Acquisitions and Corporate Branding

Page21 CIM Membership no: 9690441

Executive Summary

Organisations understand the importance of their corporate brand and realize it is essential that considerable emphasis to be placed on creating a brand. The strategic role of corporate branding should be examined to allow management to identify the importance of corporate branding to the organization. Almost every employee in the organisation should be involved in brand development decision, including all the departments, key stakeholders, and sales people. Corporate branding encompasses many fundamental elements, such as personality of the organisation, reputation, goodwill, relationships, partnerships, and culture. Time and efforts needs to be spent on each of these factors. Further, to go above and beyond competing, organisations need to be cognisant of different ways to strengthen the corporate brand. One of the methods is to acquire or merge with a competitor. However, there are certain issues organisations need to taken in to consideration when acquiring a competitor. For example: uncertainty of the power of the acquiring brand and similarity of the two corporate brands. At the end of the paper strategies were recommended to maximise the corporate branding opportunities arising from the acquisition.

Page22 CIM Membership no: 9690441

1.0 Introduction

Branding strategy is a focal issue for companies operating in todays international market place. According to (Kapferer, 1992, pp 46-7) branding means more than just giving a brand name to a product or products. Corporate Brands are a direct outcome of the strategy of market segmentation and product differentiation. Companies utilise a combination of brand attributes to meet the expectations of specific customers in various economic conditions. Corporate Branding refers to the strategy in which brand and corporate name is the same (de Chematony, 1997). The objective of this paper is to assess strategic role of the corporate branding, its importance to Brandix and the benefits that the companies can gain through corporate branding. Further it illustrates by critically evaluating the general issues of the corporate branding and how it will impact on the proposed acquisition. A list of recommendations was produced at the end of the paper to maximise branding opportunities arising from the acquisition using strategies and processes.

Page23 CIM Membership no: 9690441

2.0 Strategic role of corporate branding in organisations

2.1 What is corporate branding? A corporate brand is a product of an organisations corporate strategy, mission, image, and activities. Corpo rate brand differentiate the company from their competitors, familiarize the company in the minds of customers and employees, and create awareness of what an organisation stands for. According to (Balmer, 2003) the corporate brands is seen as a sixth identity type referred to as the covenanted identity, which is viewed as independent and distinct. (Balmer, 2001) developed the C2ITE (Cultural, intricate, tangible, ethereal and commitment), this reflects the corporate brands unique attributes and helps understand key characteristics of the corporate brand. Further (Lawer and Knox, 2004) state that a corporate brands is a way to conceive, communicate and manage corporate brand values in order to guide managerial decisions, actions and normative firm behaviour. It can then state that brands is generally the name of a product or mark of ownership

2.2 Role of corporate Branding The purpose of corporate branding is to create a distinct and lasting impression of the company. Effective branding creates uniqueness, persistent identity that people associate with quality, origin, personality and preference. Corporate branding assists the company and the management to focus on the core vision and values and corporate branding will play an important role in achieving the company objectives. However to build a corporate brand companies require considerable investment and time. However ultimately, corporate branding allows companies to improve the company image, increase performance, while boosting public perception of the companys reliability and expertise.

Strategic role of corporate branding helps companies to identify the following benefits: 2.2.1 Helps to create corporate identity Strong corporate branding involves establishing a long-term vision for the company, carving out pronounced niches in the marketplace and boosting the reach and recognition of the company and its leaders on a global scale and ensures a steady corporate identity, experience throughout an organisation. For example: Apple has established a very strong identity as a design driven and innovative company offering many types of products and services. 2.2.2 Helps to create reputation and image Corporate branding can increase the companys visibility, recognition and reputation to a greater extent than product brands. Thus one of the benefits is investors may seek deliberately for companies with better reputation and opportunities like brand alliances can take place. 2.2.3 Creates consumer credibility Credibility and trust are intertwined with one another. Strong corporate branding helps companies to create trust among consumers. When credibility is high, companies can have positive relationships with the potential customers and secure sales. As a result will help the company to increase performance. Page24 CIM Membership no: 9690441

2.2.4 Promote financial performance Strong corporate brand name will help the company to generate continuous revenue in the form of sales also with the intangible corporate brand name associated with them due to the goodwill generated by the public. 2.2.5 Differentiate Corporate branding creates a competitive edge that separates the organisation from competitors in the minds of potential customers. The more the company build the corporate brand more it will elevate above its peers, and less the company will have to convince customers. The corporate branding will help the company to articulate the company values and act as a strong competitor in the market 2.2.6 Umbrella Branding Corporate branding will act as an ultimate identifier of the organisation and will stand on top of the brand portfolio. For example: In the case of Unilever depending on the business strategy and the potential need for more than one brand approach, the company markets different brands under their umbrella. 2.2.7 Creates Brand equity Corporate branding helps create brand equity and can be transferred to other products as well. For example: Volkswagen (VW) company buying the Skoda company. Skodas sales were declining before VW took over, however Skoda has improved and company sales has gone up as well due VWs transferred its brand equity to Skoda.

It is certain that corporate branding plays an important role in the success of any business. Corporate brand name is the overall umbrella for the companys activities and encapsulates it s vision, values, personality, positioning and image among many other dimensions. Therefore, it is important for companies to know the importance of identifying the role of corporate branding.

Page25 CIM Membership no: 9690441

3.0 Issues associated with the acquisition and how it will impact the proposed purchase

3.1 Introduction Sensing the companys tremendous potential for growth, in nearby future Brandix Lanka (Pvt) Ltd is planning to acquire Kuruwita Textile plant. Kuruwita Textile Mills PLC (KTM) is a Sri Lanka based company which is currently engaged in the manufacture and sale of textiles). The fundamental objective of this move is for fast textile manufacturing process to take a leading role in the industry, also to advance and sustain the establishment as a strong player in the apparel industry.

3.2 Issues associated with acquisitions Acquisitions act as a trend in the corporate world. Unfortunately, about 75% of acquisitions are unsuccessful in the corporate world and tend to ruin the corporate image as well (Ashkenas, Ronald N. et al 1998). This failure can happen due to various reasons such as The Company not taking notice of the current situation of the market, differences in business culture, acquisition costs and changes to financial strength surrounding the corporate takeover.

3.3 Brandix branding issues associated with the acquisition and how it will influence the proposed purchase ISSUES: Similarity of the two companies One of the problems that Brandix will face is to create a common identity with KTM and align the two companies together. Brandix is currently manufacturing garments for global market whereas KTM manufactures textile for the local market. This can create a gap between the two companies and will fail to identify a common corporate goal. Cultural differences Cultural differences Brandix and KTM may de-motivate the existing staff. Thus, positions will be limited and the management will have to decide which staff to hold the position after the purchase. Both existing and KTM staff can send mixed messages, creating confusion among customers. These factors can result decline in productivity and performance of Brandix due to deteriorating morale of the employees. Thus, adversely affect on corporate brand. Unnecessary cost Profitability of Brandix can be affected due to cash flow difficulties and high investment on extensive training for untrained staff joining from the acquiring company. Brandix can ultimately face a loss and this loss of revenue can fail to create value for shareholders which can ultimately affect the overall corporate brand.

Page26 CIM Membership no: 9690441

IMPACT ON THE PROPOSE PURCHASE: As a result of the issues associated with the acquisition Brandix will fail to create a common identity with shared values, objectives, current customers will lose confidence and move to competitors and existing staff will be demotivated due to loss of recognition etc. This can lead to market value loses and share price drops. Hence, Brandix will be cautious in acquiring KTM.

However following precautions can be recommended for Brandix to overcome the issues associated with the acquisition:

Discuss and manage all acquisition related problems both internal and external Take early action and ensure that all the existing staff has a clear understanding of what is planned before, during and after the acquisition. Develop a brand strategy to determine what is achievable with the acquisition and how to extract maximum value. Identify the strengths, weaknesses and opportunities associated with two brand identities assessing their impact on the stakeholders and business in general. Brandix should decide whether to maintain only the current brand name, adopt both the names or create a new brand name, also should be aware of the cost attached to this decision. Establish brand guidelines to help employees understand, manage and communicate if Brandix decide to change the current brand name Develop a strategy and process for acquisition of the two cultures.

Acquisitions come in all shapes and sizes, and Brandix need to consider the complex issues involved in acquiring a competitor. The most helpful form of equity process involves a complete analysis of the financial resources and benefits associated with the deals. Most importantly, before any decisions are taken Brandix should consider not only the benefits, legal and financial implications, but also the human consequences. Since all these factors can ultimately affect corporate branding.

Page27 CIM Membership no: 9690441

4.0 Recommendation to maximize the branding opportunities arising from the acquisition.

Brandix expanding involved growth through upgrading manufacturing technology, and acquisitions. Acquisition will help Brandix to obtain the knowledge required to compete and sustain growth.

Brandix idea of acquiring KTM is for following reasons: Taking competitors out of the industry Scaling up in the apparel sector Acquiring in experienced staff Acquiring technology Reversing into a business that is performing better than the competitors

4.2 Branding opportunities arising from the acquisition Cost efficiency and value generation Generally acquisitions succeed in generating cost efficiency through the implementation of economies of scale. Rather than operating as two companies, as one large firm Brandix (after acquiring KTM) may be able to operate more efficiently by reducing cost. This often lead to an increase value generation for Brandix. It is also expected that the shareholder value of Brandix after the acquisition would be greater than before. Sales and market growth Immediate sales and market growth is one of the credible opportunities of acquisitions. Financial sound company like Brandix acquiring a relatively distressed one like KTM resultant Brandix to experience a substantial increase in market share.Thereby Brandix may be able to weaken the competition and create strong branding image in the apparel industry. Instant access to a new customer base Brandix will be motivated by the immediate access to a new customer base, which is required to compete and sustain growth. Access to a new customer base will benefit Brandix by reduction in cost per unit resulting from increased production identified through operational efficiency.

Page28 CIM Membership no: 9690441

Opportunities mentioned above are the main benefits that Brandix can obtain from acquiring KTM. However, Brandix also can obtain the following benefits through the acquisition. Increase Brandinx goodwill, business value and share price in the stock market. Help to upgrade the infrastructure facility Centralised warehouse facility. It will help to minimize future expansion requirement of the warehouse facility for Brandix

4.3 Recommended strategies to maximise branding opportunities Maximise economies of scale Strategy is to coordinate labour and material purchasing under bulk contracts thereby reducing unit costs. This will help Brandix to maximise economies of scale in the purchase of raw materials, supplies, manufactured inputs and labour. Brandix can maximise these benefits though purchase agreements with local vendors. Meetings to communicate with the new customer base to understand them well Increase sales for existing customers using additional sales methods. For example make use of the economies of scale as mentioned above. This will help to boost the market share. Brandix can organise a formal meeting to with the new customer base to get familiarise and understand their requirements and demands. Improve on market intelligence With the resources available Brandix should implement a market study to overcome the external factors that can affect sales and market share. Constantly being updated on market fluctuations will allow Brandix to take immediate action and turn threats in to opportunities. This will lead to sustain and maximise sales and market share of Brandix.

Opportunities of acquisitions are the main reason for companies to enter into these deals. Acquisitions create synergies and economies of scale, expanding operations and cutting cost. Investors can take comfort in the idea that acquisitions will deliver enhanced market power.

Word Count: 2082

Page29 CIM Membership no: 9690441

Reference Ackerman L.D., (2000) Identity is Destiny, Leadership and the roots of value creation, Berrett-Koelher publishers Argetni P & Druckenmiller B, (2004) Reputation and the Corporate Brand, Corporate Reputation Review Balmer J.M.T. & Greyser A.G., (2003), Revealing the Corporation, perspectives on identity, image, reputation, corporate branding and corporate-level marketing, Routledge, Cornwall Balmer J.M.T Journal of management, Corporate Branding and Connoisseurship Vol 21 no 1 autumn 1995. Balmer, John M.T., and Dinnie, Keith (1999), "Corporate identity and corporate communications: the antidote to merger madness", Corporate Communications: An International Journal , Vol. 4 Number 4 1999. Balmer, J. M. T. and Gray, E. R. (2003)Corporate brands: What are they? What ofthem?, European Journal of Marketing,Vol. 37, No. 7/8, pp. 972997.

Balmer. J (2001) ' The Three Virtues and Seven Deadly Sins of Corporate Brand Management' Journal of General Management, 27, (1), 1-17 Branding Strategy. Retrieved Oct 18, 2010, from http://www.brandingstrategyinsider.com/corporate_branding/ Corporate performance. Retrieved Oct 16 , 2010, from http://bpmmag.net/mag/integrating-branding-into-corporateperformance-management-0422/ David A. Aaker, California management review, Brand portfolio strategy vol46 no3 spring 2004. Davis S., Corporate Branding, Making the brand the strategic "driver" for the entire organisation Fairburn, James A., and Kay, John A. (1989), Mergers and Merger Policy. Oxford University Press. George, Kenneth (1989), "Do we need a merger policy?". In Mergers and Merger Policy Graeme Martin, S. H. (2006). Corporate Reputations Branding and People management. Greyser, S. A. (2003). Revealing the Corporation. Henry, David (2002), "Mergers: Why Most Big Deals Don't Pay Off", Business Week, October 14, 2002. How corporate branding is taking over the world. Retrieved Oct 18, 2010, from http://www.awid.org/eng/Issues-andAnalysis/Issues-and-Analysis/How-Corporate-Branding-is-taking-over-the-world Hughes, Alan (1989), "The Impact of Merger: a survey of empirical evidence for the UK". In Mergers and Merger Policy (see above). Ravenscraft, David J. & Scherer, F.M. (1987), Mergers, Sell-offs and Economic Efficiency. Washington, DC: The Brookings Institution. Page30 CIM Membership no: 9690441

Appendix 1

Brandix Lanka Ltd

Organisation Brandix Lanka Ltd is one of the largest exporters in the apparel industry in Sri Lanka and is supported by over 25 manufacturing facilities nationwide, plus global sourcing offices. The company was established with a single manufacturing facility in Sri Lanka in 1972 as Lux Shirts (Pvt.) Ltd. And the company was re-launched with a new identity and a new name as Brandix Lanka Ltd in 2002. Now the company has 22,000 employees supplying vertically integrated apparel solutions to the worlds fashion super brands (Victorias Secret, Gap, Next, Marks and Spencer, Liz Claiborne, Abercrombie and Fitch etc.). Its vertical integration extends from fabric manufacturing, wet and dry finishing, to accessories such as thread, buttons, and hangers. Our vision is to be the inspired solution for branded clothing and our values are Integrity, Teamwork, Customer Service, Learning & Development, Ownership and Commitment.

Products

Brandix core product is apparel and all its other pursuits are to enhance its quality levels, and add value to the groups products and services to benefit customers. Its many subsidiaries specialise in different types of apparel, textiles, accessories, finishing and timmings. Brandix casualwear is the backbone of the groups product portfolio and its seven production facilities manufacture basic pants, cargo pants, five-pocket jeans, shorts and skirts.

Market The market was proving to be challenging with an extensive oversupply of apparel and textiles around the world. Adopting an unorthodox strategy, Brandix consolidated its customer base in the wake of the elimination of the Multi Fibre Agreement (MFA). Where other manufactures were broad-basing their client portfolio, Brandix adopted a narrow and deep approach, and implemented a converse strategy, focusing on its main customers. Providing a holistic model devised to integrate every aspect of fashion, from developing the design into a final branded product for the fashion store, has seen Brandix adopt a strategy of innovation to execution.

Page31 CIM Membership no: 9690441

Brandix has gained the distinction of being the countrys largest apparel exporter by the export development board (EDB). The company had a turnover of over US$ 320 million in 2007 and has a plan to grow to $1 billion in revenue by 2010.

The company positions itself to be a high-end garment manufacturer for the premium consumer markets with differentiated products of world renowned brands such as GAP, Next, Marks & Spencer and Victoria Secret. However it must also be noted that a strong distinguishing factor of Brandix Lanka Ltd is its adherence to its strong environmental policy of manufacturing environmentally friendly garments, which are produced in their Green Plants thus providing a competitive advantage by means of consumer preference in the growing environmentally conscious market.

Achievements Brandix was presented the Presidential Award in recognition of its contribution to the national economy as the Highest Net Foreign-Exchange Earner in 2005 and the outstanding exporter of the Year award in the apparel Category 2005. In 2007, the Export Development Board of Sri Lanka identified Brandix as Sri Lankas largest apparel exporter and won the Gold Award in the Apparel Sector etc.

Key Challenges One of the key challenge is to ensure the use of the brand execution is consistent and in line with the brand strategy. Another challenge is to inspire our customers every day by being flexible to quick changes in style and trends while maintaining a high standard at a low price. So that we can provide our customers with more than just good customer service.

Brand Values Brandix lives up to the epitome of an organisation which thrives on its values. The group is inherently dynamic, forward looking and optimistic, and believes in striving for excellence and upholding transparency at all times. An ethical employer, it upholds the integrity of its employees preserves the confidentiality of its customers and works in every possible way to create sustainability in its activities as well as for its stakeholders. In line with its commitment to the environment, Brandix has launched a Green plan in 2008 and will be imbued with the tenets of carbon neutralisation, waste and energy management, alternative energy options, cleaner technology initiatives and health and safety amongst a host of measures to ensure a completely green compliant organisation

Future plans One of the companys future plans is to invest on environmental initiatives over the next few y ears. Eco-friendly manufacturing is the way of the future for Brandix Lanka Ltd.

Page32 CIM Membership no: 9690441

Appendix 2

Kuriwita Textile Mills PLC (KTM) History The KTM is a Sri Lankan based company began in 1981 and has steadily grown to become one of the manufactures for textile today.

Vision and Mission of the Company To provide quality customer service through innovation, leadership and excellence and to be responsive to changes in a competitive environment. To instill professionalism by embracing a positive spirit of enterprise within the group, with the aim of increasing market share. Focus on design to provide meticulous, high quality products that are sought after by brand conscious customers Customer driven philosophy to guide the overall decision making process, b ehaviours and culture of the company in product design, packaging and delivery. A Brand-centric approach enabling the company to build powerful lifestyle brands th at resonate with customers Islandwide and create synergistic effects. Entrepreneurial mindset to drive the workforce to deliver products with clear understanding of market requirements

Product Range KTM offers a complete textile range to manufacture garments such as casual wear to jeans, sleepwear, lounge and sports ware encompassing all demographics, womens, mens and childrens.

Page33 CIM Membership no: 9690441

Appendix 3

DECLARATION

I confirm that in forwarding this assessment for marketing, I understand and have applied the CIM policies relating to word count, plagiarism and collusion for all tasks. This assignment/project is the result of my own independent work/investigation except where otherwise stated. Other sources are acknowledged in the body of the text and/or a bibliography is appended. The work that I have submitted has not previously been accepted in substance for any other award and I further confirm that I have not shared my work with other candidates.

Page34 CIM Membership no: 9690441