• News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
BW Businessworld

Importance Of Corporate Image

Corporate image is one of the most important assets of an organisation. It acts as a comfort factor for customers and assures them that they are buying from the best

Photo Credit : Shutterstock


A lot of startup enthusiasts think and talk about starting businesses, building products, acquiring customers and beating competition. It is very important to get inspired and learn on how to start and scale businesses, but at the same time, it is equally important to understand the importance of corporate image.

Corporate image is one of the most important assets of an organisation. It acts as a comfort factor for customers and assures them that they are buying from the best. Moreover, it influences attitudes of not only customers but also employees, media, analysts, influencers etc. towards an organization. It is difficult to build a strong corporate image in a highly crowded and competitive environment, and it is much more difficult to regain it, if image has got tarnished due to certain reasons.

Actions of leaders and employees, performance of products and financial success of organizations make huge impact on image of organizations and create market perceptions & sentiments - what people think and feel about them.

Let's have a look at a few examples where corporate image of highly recognized businesses got negatively impacted due to various reasons:

Impact of leadership actions: The recent removal of Cyrus Mistry from the post of Chairman of Tata group has negatively impacted the image of one of India's most respected and largest conglomerate Tata group. Tata group companies lost a huge market value after ouster of Cyrus Mistry. Media coverage on Cyrus Mistry vs Ratan Tata has created invisible and long term damages to the organization, such as the negative impact on brand trust and reputation, customer sentiments, employee morale and so on.

Impact of product performance: When Samsung Galaxy Note 7 was released, it received overwhelming praise for its design and features. It was in high demand at the time of its launch and broke pre-order records in South Korea and faced delays in international releases due to supply shortages. However, in September 2016, Samsung suspended sales of the Galaxy Note 7 and announced a voluntary recall after it was found that a manufacturing defect in the phones' batteries had caused some of them to generate excessive heat, resulting in fires and explosions. The defect in this product led to negative media coverage, a costly product recall, and pressure on revenues and profits.

Impact of business performance: Flipkart had been a darling of investors and used to be recognized as the most valuable startups in India, in fact the poster boy of Indian startup ecosystem. But then investors began to wonder about its valuations, analysts and influencers questioned its business model, a few key leaders left the organization and the company couldn't give on time joining to new hires from the top institutes. Additionally, unhappy customers from 2014 Big Billion Day sale and tough competition from Amazon and Paytm added to pressure on business performance.

Impact of employee actions: Though different discussions have been happening around whether Uber drivers are self-employed contractors or Uber employees, for customers these drivers are like employees as they represent Uber and customers travel with them due to trust on Uber. In Dec 2014, one of the Uber's driver Shiv Kumar Yadav accused of raping a woman in his taxi in Delhi. This incidence caused a lot of damage to brand image of Uber in India.

The above examples show that organizations have to be paranoid as a few incidences could damage their hard earned corporate image.

As we have looked at the importance of corporate image and a few examples of how it could get impacted, let's have a look at a few of the factors that help in building the corporate image:

1. Management team: If an organization has well known and respected leaders in its board and executive team then they add on to its image. Additionally, if a company is funded by well-known investors, then also people consider it as one of the upcoming leaders. But, just by having big names in management would not help, proper collaboration and mutual respect among them is very much necessary.
2. History: Previous performance of the company in terms of factors such as rising market share, rising profits, rising alliances, rising distributors, rising vendors, rising customers, successful products, customer testimonials etc. adds on to the image of organization.
3. Products market recognition: Previous successful products add on to the positive image of an organization and create positive customer perceptions about the abilities of a company.
4. Financial Success: Financial results play a very important role in building corporate image. Everybody wants to know and write about success story of profitable companies, financial analysts recommend them to investors and customers feel secure about buying from a company with substantial financial base.
5. Top notch customers: Quality of customers is more important than quantity of customers. An impressive customer list can enhance image of a company as an innovator and leader in its industry. Moreover, word of mouth from top notch customers create pull for many other customers.
6. Employee loyalty: Employees' alignment with the purpose of company and loyalty towards its customers and management adds a lot of value in terms of corporate image.

Corporate Image is fragile and every action by organization, its leaders and employees matters in terms of creating people's sentiments. If sentiments are positive, people do positive word of mouth about the company that helps in lower customer acquisition and retention cost, better margins, employee loyalty, shareholder value and positive media attention. But if sentiments are negative, organizations could get into negative performance spirals.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
corporate image employees leadership flipkart opinion

Harsh Pamnani

The author is a Marketer & Author. He is an alumnus of XLRI, Jamshedpur

More From The Author >>