Crisis Communication

Practical PR strategies for reputation

management and company survival

Presented to

Sriparna Basu, Ph.D. Professor

(Communication Area)

FORE School of Management, Delhi

Prepared by

Rahil Mehta (271152)

FMG 27 C
FORE School of Management, Delhi

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 Case Guidelines

We’ll try to assess and address these deliverables in form of a WAC report.

I. How institutional differences can create unintended cnonsequances for a multinational

enterprise in an emerging market

II. Critical role of a country manager in mobilising the local organisation and respond to a crisis

III. To understand the inevitable role of local press in an organisational crisis

IV. Need for business leaders to deal with the press effectively

Terms: Employee behaviour, Crisis management, Event evaluation

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 About the company
Uber strategy analysis

Uber almost single handed created what we now call the “gig” economy paying
independent contractors through an app for a service (cleaning homes, delivering food or
being a chauffeur).

As the academic competitive mindset would have suggested, Uber firstly set its priority on
the creation and the nurturing of its platform environment. Conscious that the real value of
its platform was not lying in the technology behind it (easily replicable for itself), but rather
on the extent of its active users, the company made a huge effort in order to create a wide
customer base and leverage the direct network effects generated. To achieve this result,
Uber not only operated “internally”, incentivizing both drivers and riders, but it also
managed to go beyond its borders.

Uber to integrate itself into third parties’ mobile applications. This turning point made it
possible for Uber to leverage their already existing customer base and creating valuable
relations with external partners. Still not satisfied with that, the company decided to go
even further, starting to invent new, diversified platforms such as Uber Eats and Uber Rush.

While Uber’s concept of platform evolution and ecosystem creation can be seen as
compliant to strategy theory, the expansion strategy adopted by the company can be
considered all but conventional. The urgency of its expansion prevented Uber from signing
any alliance with any competitor of the ride-sharing industry, leaving the company to fight
alone against powerful international coalitions and a possible common enemy: legislation.
The reasons for this peculiar behaviour were individuated into two main factors. The first
one is that Uber wanted to gain a significant first mover advantage over competition, hence
really hard to be overcome. The second factor is related to the hostile attitude of public
institution toward the ride-sharing company. The objective of Uber is in fact to gain as fast
as possible a critical customer base, thus becoming just “too big to ban”.

Business model

To determine the cost of the transportation, Uber addressed the high prices by using a
demand algorithm based on the availability of Uber cars and the number of requested rides
(Leber, 2015). According to TaxiFareFinder.com, the cost of a three-mile ride in five of the
nation’s largest cities was less expensive with Uber than a taxicab during July 2014. Second,
Uber offered superior service by building an app that was simple and easy to use.
Passengers only had to download the Uber app, set up a profile, and provide a payment
method. A passenger then requested and selected a car and driver he/she desired. The app
tracked the car’s progress using GPS technology while the passenger waited for the car to
arrive. Thus, Uber passengers never had to wonder if the car would be on time. Uber also
provided an estimated cost to passengers when a ride was requested and automatically
compensated the driver 80 percent of the fare (Huet, 2015), eliminating the need for
awkward tipping. Finally, Uber increased the amount of accountability by providing a two-

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way rating system for passengers and drivers. After each ride, both parties rated each other
on a five-star scale. The rating system also allowed Uber to monitor and evaluate its drivers
and determine if and when driver contracts needed to be terminated, and provided
information to passengers and drivers to decide if they wanted to choose a different
driver/passenger before the ride began. Existing taxicab customers quickly switched to
Uber.

Data support the claim that Uber is growing its customer base at the expense of the
traditional taxi industry. Only 13% of the growth in Uber rides has added to prior demand,
while the remaining 87% has replaced trips that would have otherwise gone to taxis. The
consequences of Uber’s advent can be clearly noticed in the decrease of the price of taxi
licenses in different locations. The average price of New York city’s medallions (licenses to
drive taxis) has fallen from an average of $1 million to $690,000, which represents an
aggregate loss of $4 billion in revenues (Local Taxis vs Uber- Complements or substitutes?)

However, as citizens are those who benefit the most from the disruption of a cartel,
shouldn’t Uber’s entrance in the market be considered as a good thing? (Worstall, 2016). In
fact, through this aggressive strategy Uber is attempting to “democratize” a market where
the incumbents were artificially inflating the prices and did not pay so much attention to
customer experience

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 Case synopsis

An extremely difficult situation arose for Uber Cab, a US-based company operating in India,
on December 8, 2014, when its taxi services were banned by the Delhi Government due to
growing anger over the suspected rape of a 27-year-old female executive by one of its
drivers. Uber Cab claims that it offers the “safest rides on the road”, but this episode proved
otherwise, as the accused was identified as a repeat offender.

Initial interrogation by the police highlighted the negligence of the company regarding
background checks and police verification while recruiting driver partners. The police
further revealed that the driver did not have a Delhi Transport Authority-issued license.
Furthermore, the company was not able to provide a call log to police, as such information
was said to be gathered at the company’s headquarters in New York. To handle this
situation, Uber Cab suspended its operations until the company could apply for a fresh
registration and trade license.

What was the significance of this incident to a brand like Uber Cab? Could its effect on the
regulation of taxi services have been anticipated? How and when should the brand have
reacted? Looking forward, what contingency planning would be appropriate? Should brand
management, customer service management, or the human resource department have
been held accountable, or did the responsibility lie elsewhere in the organization?

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 Situation Analysis

Reasons for quick success of Uber

Apart from a very able leadership team, the success of the company can be attributed to the
use of the medallion system. According to this system, the period of the great depression
led to the loss of many jobs. This resulted in a surge in the number of taxi drivers; this
lowered the prices of a taxi ride. As a combat measure, the taxi industry developed the
medallion system. They fixed the numbers of medallions issued, and all taxis were required
to own a medallion, this move limited the number of taxis on the roads and drove the fares
up. This system maintained high fares and created a dynamic that Uber used to get new
ways to give substitute services and undercut the artificially high fares which were standard
with taxis. This was the first win for the management team. The team then came up with
the no flagging model where users could only request rides through a phone application as
opposed to flagging down taxis on the streets. They also registered an impressive win when
they let investors utilize fixed assets.

Uber’s success owing to the strengths of its leadership team

The company was finding it difficult to find enough drivers to meet the demand for rides.
The company had tried many ways to boost thei0r numbers to no avail (Gilbert, 2016).
However, a breakthrough came when Uber's leadership team entered into an agreement
with car manufacturers which made it possible for Uber partners to acquire vehicles with
low prices. Under the new deal, current drivers were able to get an upgrade (Matherne,
2017). With this deal, creative minds in the Uber Leadership team were able to plant seeds
for future projects such as entering an agreement with manufacturers of wheelchair-
accessible vehicles and changing the application in a way which made it easier for deaf
drivers to use.

The leadership team also boasts of being able to get millions of business accounts through
business management juggernaut concur. Additionally, the leadership team opened China
to the sharing economy. The goals of Uber are global although the company is biased
toward focusing on growing their business in China.

The leadership team also boasts of making it possible for drivers to buy cheaper cars. The
leadership team at Uber brokered the biggest regulatory successes in Washington, D.C
which led to the creation and passing of a regulatory framework, with this the company was
comfortable. Despite such major achievements, UBER got caught up in a muddle of
controversies.

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Timeline

Emil Michael, senior vice president and a close Kalanick ally, has left the company. More
than 20 employees were terminated as a result of the internal investigation. The company
cited sexual harassment and an array of other behaviours, such as bullying and retaliation,
as reasons for the firings.

Eric Alexander, UBER’s president of business in the Asia-Pacific region, was fired after it was
learned that he obtained the medical records of an UBER passenger who was raped by her
driver in India three years ago. Alexander reportedly showed the passenger’s medical
records to Uber CEO Travis Kalanick, senior vice president Emil Michael, and other
executives.

UBER hired Frances Frei, a professor and an associate dean at Harvard Business School, as
its first senior vice president of leadership and strategy.

Problems at hand
 Safety records remain patchy
Lack of clear background checks currently absent in Uber’s commercial transportation
licesing program. The police investigator shared with media that the commercial driver’s
badge, legally required to drive a cab in the National Capital Region, was not available with
the driver. The company’s problems increased after the victimized passenger said that she
had not had a response from Uber Cab despite complaining about the driver

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  Patriarchical society
Most of the young drivers come from a patriarchial mindset. Hence a thorough
gender sensitisation check is necessary. Drivers do not understand their do’s and
don’ts

 Perpetrators avoid persecution

Survivors do not want to go through a process of dealing with police – a long trial
and a likely stigma. Hence the judicial system lacks swift and stringent measures to
tackle such situations also ensuring image of the survivor remains intact

 Cybersecurity holes: Hackers stole data on 57mn Uber users and drivers in 2016
(CNBC report). The board has had to deal with cases where personal information of
their drivers and customers have been stolen to be later sold in dark corners of the
internet (Americaninno, 2017). The company may be willing to compensate those
whose personal information has been lost but the numbers are too high, and the
leaders may find it too risky to present these numbers to the world

 Uber's leadership Structure and their individual contribution

Despite their success, the leadership team has also encountered some low moments
including administrative errors. Among the main reasons why Uber needed a facelift
in public relations was because its image had some problems with the public and
with the government (Azmeh & Foster, 2016). For example, former CEO Travis told a
group of mayors from the US that his company would not wait on their cities making
regulations before operating (Azmeh & Foster, 2016). Additionally, the board has
had to deal with lawsuit losses. Taxi unions in parts of Texas have the potential to set
up a negative precedent for ride-hailing apps. Although the company could
eventually win in court, their competitors could subsequently be taking notes in the
courts, and this could be a major problem for the board in future. The leadership
team has also had to deal with a physical safety record which is blemished

 Rachel Whetstone (lead PR strategist) departed the company amid a stunning array
of scandals and controversies, including allegations of sexual harassment, a video of
Kalanick berating an Uber driver, a legal battle with Google over the alleged theft of
driverless car technology, the revelation that Uber used secret “Greyball” software
to deceive city regulators, and allegations that the company had another program
called “Hell” designed to spy on its arch-rival Lyft

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 Generation of Alternatives
 Corporate Crisis Communication: Why psychological distance and responsibility
attribution matters a lot
 Strong evaluation of Leadership style at Uber
 “Safety net” feature to share trip details and their location with as many as five other
people. For daily management, Uber should propose creating a local team to
respond to the notifications issued by riders through pressing the panic button while
riding
 Drones to keep an eye on desolate streets of North Delhi
 Follow the new rule where cab service providers will be held responsible if driver is
found involved in any crime (complete responsibility of company of driver’s
behaviour)

Evaluation of Alternatives

 Establish an effective Risk management strategy and crisis communication as follows

Risk Communication
Initiation  Define problem at hand
 Hire an external PR specialist interested
in handling tough situations
 Identify and appoint risk management
team
 Assign responsibility, authority and
resources(risk fund)
Preliminary analysis  Identify hazards of risk scenarios
 Begin stakeholder analysis
 Start the risk information gathering
Risk estimation  Define methodology for estimating
frequency and consequences
 Estimate frequency of risk scenarios
 Estimate consequences of risk
scenarios
Risk evaluation  Estimate and integrate benefits and
costs
 Assess stakeholder’s acceptance of risk
Risk Control  Identify feasible risk control options
 Evaluate risk control options for
effectiveness, costs, risks

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  Assess stakeholder’s acceptance of
proposed actions
 Assess stakeholder’s acceptance of
residual risk
Action/Monitoring  Develop an implementation plan
 Implement control, financing and
communication strategies
 Establish monitoring and termination
processes where applicable

 Develop an effective PR strategy: Make sure a robust communication strategy is in

place such as follows

Goal: To capitalize on existing brand awareness or better the image and create
additional brand awareness among target audience to assist the company during
controversies without creating additional ones.

Communications Goals: To create awareness about organisation’s mission for public

good and its mission to serve the society. To position the company as a successful
developer of caring community

Audiences
Direct impact Indirect impact
Local media/bloggers Peer organisations
Local communities Local and state organisations
Potential/current sponsors
Past/current clients
Potential clients

Strategy:

I. Develop key messages- differentiate in the eyes of the communiations targets

II. Prioritize key audiences-From this develop a plan
III. Capitalize on key events/fundraising/donations investing in social causes
IV. Conduct ongoing media/blogger outreach program – maintain key local media comm

Promise: Integrity, caring, accountability, non-discrimination

Desired Outcomes: Establish Uber as premier service provider of caring communities,

increase repeat donors, regain he lost image

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  Make compulsory for all the Uber drivers to carry NCR permitted license rather than
easily available All India national license. In a way, database of all the drivers would
be verified again, they’ll have to again go through stringent driving tests and the
Delhi Police can exercise better control over the streets with new data

 As a Contingency Plan, Uber can bring about a large fleet of cars that will be fully
owned by the company. This will ensure that there is more standardisation provided
by the company in terms of the different classes of services. This will require a large
outflow of cash in the short-term but it shall also be a facilitator towards continued
success and development of the company on the road ahead

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 Conclusion
It should be mentioned that Uber’s aggressive tactics have paid off so far and it is unlikely that
analogous results would have been obtained with a softer, under-the-radar strategy. However, this
kind of approach has occasionally also generated counter-productive effects and the chickens will
possibly come home to roost. Aside from the increasing menace of competitors, regulatory issues
still represent the biggest concern for the company. In the end, Uber will have to come to terms with
it.

Uber should focus on developing a more ethical employee-employer symbiotic relationship at a cost
of renewal of its current business model. Lack of emotional connect and supervision in an
organisation such as Uber has given rise to questions pertaining to

Other Recommendations:

I. Changes to senior leadership

 Review and reallocate the responsibilities of Travis Kalanick
 Use COO search to identify candidates who can help address these
recommendations
 Hold performance reviews to hold senior employees accountable
 Employment actions monitoring

II. Enhance Board oversight

 Enhance the independence of board
 Install an independent chairperson of the board
 Create an oversight committee
 Use compensation to hold senior leaders accountable

Under four overarching themes: tone at the top, trust, transformation, and
accountability. It is recommended that the company:

 Review and reallocate Travis Kalanick’s responsibilities

 Adopt a zero-tolerance policy for substantiated complaints of discrimination and
harassment, without regard to whether an employee is a “high performer” or a long-
term employee
 Regularly publish diversity statistics to judge how the company is meeting its goals.
 Use performance reviews to hold senior leaders accountable. The reviews should
include metrics tied to improving diversity, responsiveness to employee complaints,
employee satisfaction, and compliance
 Restructure the board to include additional independent board seats who can
exercise oversight of Uber’s management
 Require senior leaders at Uber to receive mandatory leadership coaching. Hold er
also recommended that new or first-time managers receive significant training.
 Develop clear guidance on appropriate workplace relationships, including making
clear that any type of romantic or intimate relationship between individuals in a
reporting relationship is prohibited

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 References

(O'Toole, 2017)
(Pollard, 2017)
(SCHEIBER, 2017)
(Lee, 2017)
(Gender sensitisation programme for taxi drivers ,
2014)
(Nidhi Maheshwari, 2017)
(Comcowich, 2017)
(Punit, 2018)
(Said, 2017)
(Rana, 2017)
(Wong, 2017)
(Ward, n.d.)

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