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Which are the risks for BBVA in rebranding its subsidiaries?

The main objective of rebranding is to change the perception of your brand in front of the public, seeking a differentiation from your competitors and at the same time be relevant for your audience. With a new global positioning strategy, BBVA announced the unification of its brand throughout the world, which is why “Bancomer” is eliminated within the subsidiary in Mexico. The Spanish giant made the announcement of the unification, as well as a change of logo, and reiterated its commitment to the digitization of financial services.

“In a world where digitalization and globalization are already a reality, the customer experience is the most important factor for the success of any company. BBVA has been a pioneer in its commitment to digitalization and in seeking solutions that help customers make the best decisions in their lives and businesses “said Carlos Torre Vila, president of BBVA. Thus, with the name BBVA the group will be known all over the world.

For this reason, local designations will be eliminated in the coming months: the term “French” in Argentina; “Compass”, in the United States; “Bancomer” in Mexico and “Continental” in Peru. Garanti, the group’s Turkish franchise, will switch to Garanti BBVA. In Mexico, the Bancomer brand is almost 90 years old, which means that the brand is rooted among the population. In this sense, the transition to BBVA should be a smooth process, with efficient communication towards employees and customers. “They have to be very careful, because the Bancomer brand is a very important equity in Mexico. When people tell you what their bank is, they tell you: Bancomer “says Isabel Blasco, director of Interbrand Mexico.

According to specialists, it is expected that there will be initial confusion regarding the name of the bank for the clients, so the external communication has to be very well taken care of where it is mentioned that they are still the bank of always and the money of its users does not run any risk. However, although a rebranding strategy can be a good resource to integrate into the global market, the competition can take advantage of any mistake to capitalize on the situation and try to win more customers. Some experts believe that Banorte can benefit from the rebranding of BBVA Bancomer by being known as one of the few Mexican banks.

 

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AIR EUROPE, A DISCRIMINATION CRISIS?

In 2013, a Spanish airline known as Air Europa had an incident with a wheelchair passenger after denying access for not carrying a passenger. The passenger Mara Zabala, of Spanish origin, complained to the employees of the airline for not allowing her to board the plane. The employees of the airline argued that, due to security policy, it was necessary for the passenger to have a companion who could assist her in case of an emergency.
Zabala, who by the way is an expert in social communication, used Twitter to denounce the company that forbade her to travel unaccompanied when other companies do. Under the hashtags “#denuncia #discapacidad #denuncia”, in a short time reached thousands of retweets, so the message of denunciation quickly gained popularity.
The tweet generated many criticisms of the company not only for denying the service to Zabala – when she had previously traveled alone with Air Europa – but also for not having facilities for people with reduced mobility that other airlines offered. The mistake of Air Europa was to ignore the damage to its image that comments on social networks were causing. The company chose to ignore the incident. The most he did was to reiterate to Zabala what his internal policy stipulated about passengers in need of additional assistance. In the absence of a communication strategy focused on mitigating the crisis, comments on social networks continued to escalate. Eventually, a problem in customer service escalated to touch a much larger issue: that of discrimination.
The problem escalated to attract the attention of Spanish legislators and, eventually, the European Commission. The Popular Party of Spain asked Air Europa to hold a meeting to discuss the incident. Given the refusal of Air Europa, the Spanish Popular Party presented the case to the European Commission through the Group of the European People’s Party.
Soon, the European Commission published a report on current legislation that allows airlines to request a passenger in a wheelchair to travel with a companion. The report stated that the legislation helps airlines benefit from forcing users with disabilities to buy another plane ticket. Based on this report, Zabala appealed to various organizations for the protection of persons with disabilities, stating that the legislation is clearly discriminatory. One of these bodies, the Spanish Committee of Representatives of Persons with Disabilities, demanded that Air Europa change its internal policy on its own initiative, since the current regulation does not guarantee them. For its part, the European Commission announced that the regulation of airlines in terms of security would be reviewed in order to address problems such as Zabala, but to date there have been no changes.
The case of Air Europa demonstrates that the omission of a problem is a problem in itself, sometimes just as damaging to reputation as making an equivocal decision about it. Starting with a tweet, the magnitude of the crisis escalated to reach the halls of national and supranational governmental instances. A strategy of silence before the problem contributed to increase the crisis since, for many users, it seemed that the company was not doing anything to solve the problem.

Do you have doubts about how to handle reputation crises? Write to info@riesgospoliticos.com.mx to provide you with the advice you need.

 

 

Photo by Doug Maloney on Unsplash

SEA OF SOUTH CHINA, A DANGER FOR WORLD TRADE

Currently, maritime trade is regulated by the United Nations Convention on the Law of the Sea (UNCLOS). This regime was established after the First World War under the premise that taxes and blockages to free trade interfere with world peace.

This means that, except for a certain number of nautical miles that gives countries exclusive economic rights over their seas, the seas are international waters in which no State exercises sovereignty. This regime promotes cooperation between governments to protect merchant ships and guarantees the right of way. If there is less uncertainty, the risks are lower, which encourages the creation of more exchange networks and cheapens international trade.

However, since 1947, China has declared that it has right over waters in the “Line of the nine points”. This line demarcates most of the South China Sea, a sea in which the exclusive economic zones of six countries adjoin and through which approximately one third of international trade flows, valued at 3.4 billion dollars annually, according to a study of the Center for Strategic and International Studies.

The Chinese government argues that it has the historical right over these waters. This means that, if it manages to impose its own regime above the UNCLOS, it could impose taxes on merchant ships. In this sense, it is known that China is building artificial islands with military infrastructure in the South China Sea.

China’s claims present a risk because, if implemented, they constitute a precedent for other coastal countries that are highly dependent on trade to seek to increase their profits by imposing controls on the passage of ships in strategic ports or ports. This in turn entails the risk of militarization since, in the absence of a shared protection regime, each country and each transport company must ensure the protection of their vessels.

These are global risks, but there are also risks that affect companies in the short term. An example is the risk of raising transport costs. The main reason why trade in the South China Sea transits is because it has natural narrows that facilitate intercontinental trade. The busiest is the Strait of Malacca, since it is the fastest route to connect the Pacific and Indian oceans. This strait is the most economical route to move goods between Asia, India, Africa and the Arabian Peninsula. If a military or political event forced merchant ships to look for new routes, transport costs and piracy risks would increase considerably.

It is estimated that taking the second cheapest route (through the Sunda Strait) would raise transportation costs by approximately 65 million dollars, which would represent huge losses for companies that trade via this route. Any eventuality that forces ships to encircle Indonesia or even Australia would raise costs even more. In addition, these disruptions to trade in the short term can translate into uncertainty for financial markets in the medium and long term.

There is evidence that, since 2015, China is interested in maintaining a military presence in the South China Sea. And, in 2016, an international arbitration between China and the Philippines determined, under UNCLOS, that China’s historical claim has no basis in international law. These two contrasting cases show that the tension in the region is rising and there seems to be no middle ground between China’s historical claims and the prevailing trade regime.

 

Do you need advice on the possible effects on world trade and how would it impact the business objectives of your company? Write to info@riesgospoliticos.com.mx to help you.

 

Photo by Kyle Ryan on Unsplash

IS THE HOTEL SECTOR PREPARED FOR CLIMATE CHANGE?

The impact of climate change on the operations of organizations and companies is one of the main risks to be considered. The hotel industry, however, is particularly vulnerable to the effects of global warming. Recently, the University of Notre Dame, in EE. UU., Published a study in which it concludes that Mexico is one of the countries most vulnerable to climate change.

Since 2015, the coasts of the Mexican Caribbean began to suffer some of the consequences of climate change. An atypical amount of brown marine macroalgae from the Bahamas began arriving at Mexican beaches, preventing tourists from entering the sea. The presence of these algae, known as sargassum, has increased by 40%, with 2018 being the year of greatest accumulation and negative effects for tourism.

The consequences it has had on the hotel industry go beyond the effects on the landscape or the bad smell caused by the accumulation of sargassum, but there have been millionaire losses for the sector. During 2018 these economic effects amounted to:

  • 80 million pesos, for the state government of Quintana Roo and for the federal government.
  • It is estimated that hotels in Quintana Roo spend one million pesos a month to remove sargassum from beaches, practically manually.
  • During the season of December 2018, only 55% of the expected reservations were reached .
  • Losses in the aquatic activities industry, since it is impossible to perform activities such as wave runners   or   flyboards for the amount of sargassum found in the area and for the damage it causes to the teams.

Climate change is a current risk that companies must consider because it represents challenges in their business model, which translates into obstacles to meet their business and investment goals. Thus, the decision makers of companies, particularly those in the hotel sector, must adapt to the new reality caused by global warming.

It is important that the hotel sector can have action plans, as it can be the implementation of a containment project involving fences at sea to divert the sargassum and prevent it from reaching the beaches. This project would mitigate the impact that sargasso can have on the hotel industry. Inclusively, sargasso could be used in the production of cosmetics, as a feed for livestock, in the production of fertilizers, in biofuel, or in construction material.

However, it is essential that actions to mitigate crises caused by climate change involve individuals, local organizations, the three levels of government and the business sector, who must consider that climate change is a multiplier of risks.

Riesgos Políticos, SC, can support that your company is better prepared for crises caused by environmental risks by accompanying the resolution of issues such as can you reduce this risk? How can you limit the damage? Are they adequate? Are research mechanisms being developed to mitigate the damage? Contact us at info@riesgospoliticos.com.mx . 

 

Photo by Ben White on Unsplash