Trusted and Respected U.S. Companies – Such As Starbucks, Apple, Coca-Cola, and Google – Are Not Globally Trusted and Respected

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Some leading, high profile U.S. companies have major reputation and image exposure outside of the U.S. Apple, Google, and Starbucks have all come under scrutiny, and public backlash, in the United Kingdom for paying very little corporate tax despite having a strong presence there. There are legal loopholes which enable them to avoid large tax bills. The U.K. government is cracking down, and there have even been very visible public protests and boycotts – particularly against Starbucks. Here’s why:

– Starbucks has reported taxable profit for only one of the over 15 years it has operated in the U.K., despite having significant sales there

– The company transferred some money from its U.K. revenues to a Dutch sister company in royalty payments

– They purchased coffee beans from Switzerland

Starbucks has been closing unprofitable stores in the U.K., and their sales are down, in part because of negative public sentiment. In the meantime, sales from Costa Coffee, its major competitor are on the rise (up over 20% in the past year). Customers want coffee from coffee shops, and they want it from purveyors they trust and respect. For the moment, at least, that isn’t Starbucks.

Starbucks’ public luster is also taking some hits in China. The company increased coffee prices in early 2012, and Chinese customers took to the Internet to complain. The Chinese government even became involved, openly criticizing Starbucks by saying that the company charges as much as 50% more for its products in China compared to the U.S., U.K. and India. Speaking of India, Coca-Cola has come under intense criticism there because it is extracting such a large volume of water to make its soft drinks. The company recently opened its 58th Indian bottling plant, and there are university protests against the company for draining needed water sources.

Apple has received image blows for its Chinese ‘sweatshop’ factories where workers, some as young as 16, earn under $2 an hour to make iPhones and iPads for customers in the West. Apple and Nestle were also put under pressure to review their product prices in China. Walmart, no stranger to controversy and criticism in the U.S., has been accused of paying millions of dollars in bribes to officials in Mexico, hurting its reputation in that country. The company is also dealing with financial mismanagement issues in India.

These companies certainly can – and do – exercise fiscal, sourcing, and manufacturing flexibility around the world, when laws and opportunities work to their advantage. (In India, Coca-Cola publicly labels its bottling plant growth as ‘investment’, while Indian environmental groups have a more negative point of view) But, in their dealings, they would also be well-advised to remember that customer trust is a core value, essential to both goodwill and sales, that no organization can afford to jeopardize – – and, once impaired or lost, it takes a long time to recover.

Michael Lowenstein, PhD CMC
Michael Lowenstein, PhD CMC, specializes in customer and employee experience research/strategy consulting, and brand, customer, and employee commitment and advocacy behavior research, consulting, and training. He has authored seven stakeholder-centric strategy books and 400+ articles, white papers and blogs. In 2018, he was named to CustomerThink's Hall of Fame.

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