CORPORATE IMAGE. Corporate image is the reputation of the firm with the various audiences that are important to it. These groups that have a stake in the company are known as stakeholders. Stakeholders are affected by the actions of the company and, in turn, their actions can affect the company. Consequently, its image in the eyes of its stakeholders is important to the company.

The principal stakeholders with which most large corporations must be concerned are:

• customers
• distributors and retailers
• financial institutions and analysts
• shareholders
• government regulatory agencies
• social action organizations
• general public
• employees

The image that stakeholders have of the company will influence their willingness to either provide or withhold support. Thus, if customers develop a negative perception of a company or its products, its sales and profits assuredly will decline.

Several factors have contributed to the increasing importance of corporate image in recent years. For example, the business climate in the United States has become one of environmental complexity and change. This has forced many business enterprises to significantly alter their strategies to better compete and survive. The acceleration of product life cycles is another vital dimension of the turbulent business environment. Globalization has been still another catalyst in the rise of corporate image programs, as companies have sought ways to spread their reputations to distant markets. A related factor is that as a corporation expands its operations internationally, or even domestically, through acquisitions, there is a danger that its geographically dispersed business units will project dissimilar or contrary images to the detriment of corporate synergy.

A final factor stimulating the current interest in corporate image is society's growing expectation that corporations be socially responsible. Many of today's consumers consider the environmental and social image of firms in making their purchasing decisions. Some companies have recognized this reality and reaped tremendous benefits by conducting themselves in a socially and environmentally responsible manner. Some of these companies act out of genuine altruism, while others act out of a simple recognition of the business benefits of such behavior.