The crisis/situation, shareholder Impact, organization Response,
alternative responses in regard to Domino’s Pizza social media case
Coombs (2007) defined crises as the “perception of unpredictable events” (Coombs, 2007) which if not cushioned against would affect or alter the important expectations of shareholders. He went further to add that if not properly checked it would go a long way in impacting negatively on the organizational performance thus generating negating outcomes on several indices. Simply put, it is a process an organization would undertake when faced with a problem that dents on its image and has the potential to harm the given organization.
The effects are largely felt on several facets of the company such as a change in consumer attitudes, decline in shareholder value and a general public outcry. In any crisis, the above should be expected. All organizational crises present to the organization three major challenges within which they have to wade through. Such are the threats the crisis signify to the organization, the surprise element the crisis present and the limited time within which the management is to make decisions (Wilcox, 2006).
The above therefore is a case study of Domino’s pizza, a United States owned company that manufactures pizza. It constitutes a chain of restaurants and other international joints operating within and outside the United States. Its headquarters are located at Domino Farms Office Park campus in Michigan, Ann Arbour Township. The company started operations in 1960 and has grown over time to be America’s second largest pizza manufacturer. They are however the largest internationally given their vast network of both corporate and franchise stores.
Domino’s Pizza social media case:The crisis/ situation
This paper is a case study of Domino’s pizza’s scandalous video that was put on the media courtesy of two of its employees. They did this without the knowledge of the senior management and within 48 hours the video had created over a million views. The result, as is expected constituted the crises which, like any other had not been foreseen but was creating formidable backlash within the consumer cycles and impacting negatively on the company therefore (Coombs, 2007). The whole crisis was caused by the uploading of a prank video on YouTube by two of the organization’s employees.
In the video they are engaging in out rightly unhealthy and uncouth practices that violate all consumer protection laws especially as relate to food. They are seen inserting cheese in their nostril, they blow mucus on a sandwich and further they insert washing sponge, the one they use for washing their clients dishes in their buttocks. The videos went viral, attracting viewership up to the millions within a span of only 48 hours. It is the viewers who also double up as their clients who informed Domino’s management. The protagonists were immediately arrested, though the damage had already been done (Hogan, 2009).
The Domino’s crisis according to my understanding is the transgression type. In analyzing the situation, the videos portray that an act actually occurred and there is therefore by all means a crisis. In trying to decipher the degree of damage to the company, it was widespread and majorly touched on the organization’s image. Reactions generated included phrases such as “oh, my God. I’m never eating at Domino’s again or my children eat at Domino’s, I hope this is a bad joke” (Hogan, 2009) as was evident on the video is a clear demonstration of stakeholders’ seriousness on the same issue. Even then, given the fact that the food was never packed and sold to consumers, there are no real victims, all are hypothetical and given the fact that the company has served its clientele for decades, it could be easier to wade through such basing on their reputation.
The situation described above was definitely caused by the mischievous employees. Much as they claimed it was a prank, they should have foreseen the consequences of their actions. The management too, or the officials at the farm were also lousy on their roles in keeping the image of the company. It took them 48 hours before they removed the videos by which time it had attracted a very large number of viewers online. Aside from this, the company also initially brushed it off in the hope that it will be a storm that would cool down on itself, they were wrong in that and they had to look for ways to console and assure their irate clientele about the situation.
Domino’s Pizza social media case: Shareholder impact
Normally, the stock value of any organization during a catastrophe is affected by the crisis. According to Dr. Knight and Deborah (1996), there are three impacts on the stock value of any organization. These include complete recovery and even gains made on the stock value above the ‘pre-catastrophic’value, others he merely termed as ‘recoverers’ those that retained their value while them that lost he termed as ‘non-recoverers.’ On average, the cumulative impact gathered to about 5% additional to their stock value, in this regard a positive impact on the share value. Non-recoverers, according to his study remain unchanged in the period ranging from the fifth to the 50th day after the crisis. These, he added, go on to suffer a negative collective impact in terms of loss to the tune of almost 15% on stock price through to the first year onwards.
Domino’s pizza is ranked, according to the above rationale as a recoverer. This is due to the fact that when the catastrophe hit the total sales went low immediately but immediately the management took corrective steps to assure the public and distance themselves from these acts the sales resumed.
Domino’s Pizza social media case: Organization response
The response by the organization came in rather too late. Internally, the company worked to set up a strategy to counter the crisis, they took a whole day figuring out how to build or restore their image. Their first decision was to stay silent about the whole issue since they feared coming out publicly on the same might also create awareness among their clients who did not know about the video. As a result therefore, there was neither a press conference on the same nor any formal media release to the public explaining the situation. They also decided against hiring an external team to handle the crisis and also involving their very own marketing department. As time progressed, the situation got more serious. The company therefore decided that making a public apology over YouTube would be a must given that the social media was abuzz with irate sentiments from their clients worldwide (Hogan, 2009).
In the video was the company’s chief executive officer, Mr. Patrick Doyle. He undertook the mortification strategies and combined them with ingratiation strategy. They used the repentance tactic and bolstering tactic to reaffirm their client that he was important to them and they valued them above everything else. They also empathized with the irate consumers then informed the clients that the room where the footage had been taken had been locked and was no longer used for production.
He reiterated that it was being sanitized and as a measure to curb such menace the company would review its hiring procedures to sieve out such people. This, as was later discovered was linked t the fact that one of the arrested employees had actually been arrested once been arrested for committing a sexual offense
Immediately they noticed the video, the company management directed a search for the two employees involved. They used online media to track them down through sites such as YouTube and other independent bloggers. They also involved the police, the district attorney and the health department to assist in carrying out the investigations and bring the culprits to book.
The short coming to all their strategies was until then, as they discovered not yielding the desired outcomes. Most conversations were done online via twitter and YouTube (Hogan, 2009). They were faced with a major challenge though, that for them to delete the videos from the internet they would need the written consent of the parties involved, and at this time they had not been arrested, this was so because the account holders with YouTube were the sole copyright owners. The more the video stayed the more it created public outcry over the incident, and had the stringent procedures not been there the video would have been brought down within 24hours and the outcry would be less therefore.
Members of the management also undertook to be interviewed by the public and media houses alike, defending the company position. Mr. Tim McIntyre, the vice president in charge of communications stated that he two were a mere bunch of scoundrels who meant to pull a prank thinking it would be funny. He disassociated them from the brand, arguing that the two cannot represent the 100,000 employees who set out to work every day for the company worldwide, and neither can they the company name (Hogan, 2009).
The management also hinted at further investigating the owner of that franchise, they said on account of the fact that that the owner is solely responsible for hiring is staff, and that he operates only under license from the mother company; Domino’s pizza. Also in compliance to Coombs theory, when Domino’s discovered that the owner of the franchise had employed a sex offender which was against their standards, they distanced themselves in terms of responsibility and also defended the company to its clients by painting it as a scapegoat by the franchise owner (Coombs, 1995).
In a nutshell, the company in an attempt to quell the tension that had risen set out the following objectives; It created the impression of putting the consumer first by shutting down the tore and directing a thorough sanitation of the same. This loosely translated to putting public interest first. They also took responsibility for the actions of their employees and made haste to correct the situation. They communicated to the clients using the same channels the video had been broadcasted.
This was on both YouTube and twitter. Had they used a different means they probably would not have reached the audience that was complaining. They also used the right person to communicate and reaffirm the company’s position to the client, and much as he took blame he made sure to use the sufferer’s strategy by informing the public that those were mere actions of their employees and the company was just a victim. Such denotes the seriousness of the company in dealing with the crisis and hence consumer confidence is assured (Hogan, 2009).
Other responses the management had included doing ads with the public health officials in order to show the public that they really value sanitation. They also engaged the public more in preparation of their quinines and such public confidence was consequently restored.