Natural Disaster
In August 2016, the state of Louisiana experienced catastrophic flooding, specifically at Baton Rouge and Lafayette areas. The flooding, rated as the most terrible natural disaster since the 2012 Hurricane Sandy, resulted in 10 deaths and destruction of property worth billions of dollars, leaving thousands of residents homeless. The situation presented a major crisis for organizations mandated with disaster response, particularly the Federal Emergency Management Authority (FEMA). Many agencies and people have criticized FEMA for not attending to the disaster with adequate urgency, as well as for its failure to warn the residents adequately prior to the storm. Such criticism often puts the reputation of disaster response organizations at stake. FEMA may be subject to greater public pressure, leading to internal reorganization and even dismissal of some officials.
Public Health and Safety
In February 2016, Johnson & Johnson, a multinational firm involved in manufacturing medical devices as well as pharmaceutical and consumer packaged products, attracted the attention of the public following the verdict of a case involving one of its products with talcum powder. The judiciary ordered the firm was to pay $72 million in damages to the family of a woman whose death was linked to ovarian cancer caused by the powder. Following intense condemnation on social media, the firm faced a major public relations crisis. The verdict has immense potential to change public attitudes towards the firm's products, which could have dire consequences on the firm in terms of not only revenue loss, but also reputational damage. More importantly, the firm could face severe regulatory action due to public health and safety concerns. This is particularly true given that the verdict was the third major ruling against the firm regarding its products. There are also other similar cases in court awaiting ruling.
Public Perception
Towards the end of August 2016, owners reported incidences of its latest version of the Galaxy Note smartphone series, the Samsung Galaxy Note 7, exploding or catching fire due to battery defects. A recurrence of the incidences led to a recall of the devices and complete discontinuation of the product. The crisis has significantly affected Samsung in terms of not only revenue loss, but also public reputation. Consumers may start perceiving Samsung phones as less safe. The negative perceptions may even trickle down to the firm's other products such as fridges, washing machines, and televisions. Indeed, the reputational damage suffered by Samsung can be seen as an advantage for the firm's major rivals, especially Apple Inc.
Financial
Wells Fargo, an American financial services firm, found itself embroiled in a major financial scandal recently. On September 8, 2016, federal authorities revealed that the firm's employees secretly created millions of illegitimate bank and credit card accounts between May 2011 and July 2015. Through the phony accounts, which have been largely attributed to the firm's over-ambitious sales program, the employees were able to hit sales targets and make the bank unwarranted fees revenue, thereby making more money. In the wake of the revelations, the firm paid fines amounting to $185 million, one of the largest corporate fines in the last five years. The scandal could significantly injury the reputation of the firm, particularly given that the firm operates in an industry where public confidence is crucial. Though the firm has since fired the 5,300 employees involved, the scandal could make both current and prospective customers consider other alternatives.
2nd Assignment
In the wake…
