Martha Stewart's Case

Published: 2021-06-29 06:33:26
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Category: Business

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Companies can measure the reputation with the stakeholders through custom research and published rankings. Research reveals that good reputation has a direct relationship with companies profit and stock price. Companies that do have a great reputation do perform really well financially. However, companies can perform very well and yet have a generally poor reputation. Harris Interactive research clearly shows that the public would rather buy products and services from companies with good reputation, and investors would rather invest there too. Good corporate reputation can enhance the business in good times and can protect the business in a crisis (Yoon, 2004).
Martha Stewart's case was a great example of what the reputation can do to a business. Before the scandal revealed in June 2002, Martha's business was blooming but did she had a great reputation? To a great extent her reputation prior to 2002 was a superficial image of perfection. It was not a secret that many people did not like her personally, even though Martha Stewart's products were associate with quality products. The lack of great reputation was based partially on the fact that she and her company were not involved in any major philanthropic or social activities (Yoon, 2004). The quality of company's products and services can contribute to a great corporate reputation, but that alone is not enough to build a business- the core of a good reputation is to create a bond between people and the company, to be able to give something back to the society. Even though Martha Stewart Living Omnimedia (MSLO) products are stylish and distinctive and with consistently high level of quality, the corporation lost its reputation after the Martha Stewart's conviction.
Let see how the company reached its pick and the plunge it took after the 2002 scandal. Though Martha Stewart bought the company bearing her name from Time Warner and incorporated it in 1997, her business started two decades earlier. In 1976 Stewart founded her own business in Connecticut- a catering company that by the late 1970's was a successful, upscale business on the East Coast. At the same time Martha Stewart began contributing articles to The New York Times and House Beautiful. In 1982, Stewart published her first book, Entertaining, which established her as an authority on taste and by mid 1990s the book has sold over half million a copies. That book proved to a blueprint for how Steward would build her image and she continued to think big while maintaining a perfectionist's attention to detail. The next step in making Martha Stewart a nationally known brand name was when in 1987 she signed a $5 million five-year consulting contract with Kmart to create home products, paint, bath and bedding products. It turned out that, Kmart did not need her as consultant but needed only to use her name.
Another big step was the beginning Martha Stewart Living magazine in 1990, which by 1995 was selling over a million copies per issues and was voted "Magazine of the Year" by Ad Age. In 1993 Steward convinced Time to fund a television show based on the magazine, also called Martha Stewart Living. The weekly show covered home decorating, entertaining, gardening, cooking, and featured Stewart as a host and was broadcasted in 84 percent of the nation's markets. The new ventures and the growing popularity of her magazine led Stewart to renegotiate her relationship with Time and in 1997 she bought the company bearing her name from Time Warner. The circulation of her magazine by the time had grown to 2.3 million a 30 percent higher than in 1996, and the total year company revenue for 1997 was $132.8 million, with earnings of $13.9 million.

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