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The organization I choose for this project is Chanel S.A., which is a French high fashion
house that specializes in haute couture and ready-to-wear clothes, luxury goods, and fashion
accessories.
Stakeholders
Stakeholders are the groups of people with a stake in the organization - those who are
affected by or who affect the organization. We have learned the concept of linkages of
organizations, which can best represent the stakeholders of an organization. In the organization
Chanel S.A., the most important stakeholders should be stockholders, board of directors
(Enabling linkages), employees, unions (Functional linkages - input), consumers (Functional
linkages - output), consumers of activist group, media (Diffused linkages), and association
company (Normative linkages).
Enabling linkage is used by stockholder and board of directors to communicate with the
linked organization. It is also the linkages between organization and social groups that provides
the authority and control the resources that enable the organization to exist, such as government
regulatory agencies, Congress, boards of directors, and stockholders. For the French company
Chanel S.A., stockholders are the fundraises. They invest money in the company, so that the
organization is established and operate well. Without stockholders, a company will not be able to
keep existing. As stockholders of a company, they possess the most power of authority and
control to enact rules and make important decisions. In other words, the organization belongs to
those stockholders who establish and support it by money. Stockholders themselves can also be
members in the boards of director. But in the boards of directors, most members such as chief
executive officer (CEO) are always hired by the company. They are responsible for managing the
whole company. When stockholders come up with any proposals or rules, they are responsible
for executing.
Functional linkages with organization provide inputs and take outputs. Input linkages
include relations with employees and unions, and with suppliers of raw materials. Employees are
creators of revenue for a company. First, fashion designers must be the most indispensable
employees for a fashion company. They are responsible for creating the most popular items every
season. Each of their ideas and creations would represent the whole fashion house. If those items
are welcomed by publics, they would succeed in a companys final goal making profits and
attracting more customers. If those items are critically criticized by publics or even some famous
authoritative magazines such as Vogue, not only revenue would the company lose, but also the
reputation of the brand Chanel. Therefore, those remarkable designers are equal to the house
signature for a fashion company. Likewise, designers receive great support and space to create. If
they successfully create welcomed items for Chanel, they would also achieve their own fame and
life goals. It is a win-win situation. Apart from designers, workers are also the most necessary
employees for a fashion house. If fashion designers are creators of idea, workers must be the
creator of products. They are responsible for transferring designers ideas into real products.
Most fashion houses are well known for their exquisite handmade handbags and clothing. So
does Chanel. However, this fame could not be achieved without workers ingenious handcraft.
Besides, sales assistant in each Chanel boutique are also essential for the company. They are the
group of employees who can directly touch with actual consumers. Therefore, their attitudes and
behaviors would determine the number of consumers. Similarly, company retain the right to fire

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them. In sum up, Chanel and its employees are affected by each other. Employees receive salary
from the company, but the amount would be determined by the companys achievements.
Employees working for an excellent organization would receive higher salary than those working
for a less excellent organization.
Output linkages may be with other organizations that use the organizations products, or
be with individual consumers of products and services. Chanel will offer most new arrivals to
those spokesperson who endorse the brand in every season. It is the output linkage between
Chanel and those brokerage firms. The similar relations will be happen in other model companies
or brokerage firms that are related to Chanel products. Chanel products can be publicized every
time a celebrity appear in public with Chanel apparels. Because of the effect of celebrities,
people would follow their idols to purchase the Chanel items. Likewise, as the spokesperson for
the best fashion house in the world, those celebrities would also win great reputation for
themselves in the fashion circle. In other words, spokesperson, representing their own
organization, endorses for Chanel. They help Chanel gain popularity and customers. Likewise,
Chanel help them gain fashion fame and earn large amount of endorsing money. Apart form the
linkages with other organizations, there is another output linkages with individual consumers.
Individual consumers can be considered as the most important stakeholders, since gaining
consumers and making profits are always the final goals for a company. I myself am one of the
individual purchasers. I am a big fan of Chanel and its head designer Karl Lagerfeld. Each of my
consumption would contribute to Chanels total revenue. Also, word-of-mouth is one of the
quickest ways to disseminate information. When I purchase some Chanel stuffs and talk with my
friends, they might also be influenced to purchase in Chanel. As more people like me purchase
the Chanel products, more benefits would be made for the whole company. But if Chanel do
something that annoy customers, such as changing price or release some items out of fashion,
consumers would definitely change their minds and consume in other fashion houses.
Normative linkages are with organizations that encounter similar problems or share
similar values. Organizations generally do not have formal public relations programs for these
linkages, but the linkages explain the need for associations. Associations exist to facilitate
communication between member organizations so that the members can jointly attack common
problems. According to ELLE on April 10, Chanel announced its association with luxury website
Net-a-Porter to sell the the collection Coco Crush. As it known to all, Chanel never sold their
products online, which made them lose a great many customers who were not able to shop in the
boutiques usually. Through the cooperation, both companies would gain benefits on profits and
fame. The association between Chanel and Net-a-Porter explain that normative linkage is
necessary for an organization to deal with its member relations, since the relations provide
chance to solve common problems for member organizations.
Diffuse linkages are talking about publics that arise when the organizations has
consequences on people outside the organization. According to Parons, diffused linkages also
include with public opinion that occur when the organization violates laws or standard of
good practice. For instance, in 2015, Chanel announced decreasing the price in China, while
increasing the price in Europe. At this time, some publics may perform the diffused role, such as
European customers. They would also feel annoyed because of the increasing price. Some of
them might even turn to be activist group and do some things, such as campaign or parade, to

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oppose such a price adjustment. If activist succeed in revolting, it would be a great beat on
reputation of Chanel. During the time, some media, like ELLE, Vogue, or some online fashion
blogger, plays a role in informing diffused publics about the actions of organizations.
Publics
I would like to choose one of the most important stakeholders, consumers, to begin the
process of segmenting. Grunig has developed situational theory to explain when and how people
communicate and when communications aimed at people are most likely to be effective. The
theory provides a well-developed set of variables that public relations manager can measure
through survey research to identify and classify their publics. For a nonpublic, the organization
would have no consequences on the group, while the group would have no consequences on the
organization. Latent public face a similar problem created by organizational consequences but do
not detect the problem. Aware public recognize the problem. Active public has started working
for solving the problem and creating an issue. In order to explore and segment the category into
nonpublic, latent publics, aware publics, and active publics, I am going to use situational theory
to develop question through severe research.
In March, 2015, French fashion house Chanel announced it would increase prices in
Europe on some of its prestigious handbags while slashing them in China in a bid to eliminate a
growing price gap between Europe and Asia caused by the weakened euro.
Problem Recognition
The situational theory says people do not think or communicate about an issue unless
they detect a problem. Thus, whether they stop to think about an issue would be a logical
consequence of problem recognition and an indicator of its presence. The question:
First, I would like you to consider how often you stop to think about each of the
following four issues. After I name each of these issues, please tell me whether you stop to think
about the situation often (4), sometimes (3), rarely (2), or never (1).
The seasonal fashion trends of luxury brands, such as Chanel
Seasonal new arrivals and it bags by high-priced makers Chanel
The price of those new arrivals and it bags in Chanel
*It bag is a colloquial term from the fashion industry used in the 1990s and 2000s to describe a
brand or type of high-priced designer handbag by makers such as Chanel, Herms or Fendi that
becomes a popular best-seller.
Constraint Recognition
People perceive that there are obstacles in a situation that limit their ability to do anything
about the situation. The following question, therefore, represents a simple measure of that
concept:
Now, would you think of wether you could do anything personally that would make a
difference in the way these issues are handled. If you wanted to do something, would your efforts

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make a great deal of difference (4), some difference (3), very little difference (2), or no
difference (1)?
The seasonal fashion trends of luxury brands, such as Chanel
Seasonal new arrivals and it bags by high-priced makers Chanel
The price of those new arrivals and it bags in Chanel
Involvement Recognition
The key term used to measure the extent to which people see any connection between
themselves and a problematic situation. Thus, the question asks:
Now, I have a third question about the same issues. For each of following situations, tell
me to what extent you see a connection between yourself personally, and each of these situations.
There would be a connection if you believe the issue has been affected or could affect you. Tell
me if the connection is strong (4), moderate (3), weak (2), or if you see no connection (1).
The seasonal fashion trends of luxury brands, such as Chanel
Seasonal new arrivals and it bags by high-priced makers Chanel
The price of those new arrivals and it bags in Chanel
Demography
I have the last question about your demographic information. Please indicate your
gender:
Male/Female
With the questionnaire above, I surveyed 20 students (10 males and 10 females) at
Purdue University by using simple random sample (random major, random nationality, random
background). Here is my conclusion:
Among 10 males, nine people, who ranked 1 to all three questions, are nonpublic to the
questions above. Only one male is active public to all the questions, since he ranked 4 to all
three questions. Among 10 females, five are active or even activist public to the questions above
by ranking 3 or 4 to all three questions. Four people, who rank 3 or 4 to the question
The seasonal fashion trends of luxury brands, but 1 or 2 to the other two questions, are
latent public. Only one female is aware public, for she ranked 4 to questions Seasonal new
arrivals and it bags by high-priced makers Chanel, and The price of those new arrivals and it
bags in Chanel, but ranked 2 to question The seasonal fashion trends of luxury brands.
In general, most males are nonpublic to all the questions above. A part of females are
active or even activist public to questions above, and another part of females are are latent or
aware public. To sum up, we can see females are more concerned about fashion trends and
luxury brands than males. Also, people who are interested in fashion may not be interested in
luxury articles. What they care about most are the fashion trends and chic ideas. In specific, there
is one male (active public) showed his great interest in all fashion and luxury questions above,
and one female (aware public) said she only cared about the luxury articles but didn't mind
fashion trends. Both of them are considered as outliers in the survey.

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Based on the survey above and more discussion with my fiends about Chanel products, I
found there are some major consequences that Chanel would have on its important stakeholders,
consumers.
# Consequence 1 - Fluctuated price of Chanel prestigious bags. Articles of luxury is well
known for its high price and luxuriousness. Wealthy people are used to purchasing these luxury
articles to show their financial capability and their difference from others, while a large group of
people, especially young women, work hard for the whole year and earn money to purchase a
prestigious bag at Chanel. However, for different kinds of people, price is always the most
crucial determinant for their purchasing. The amount of customers would be affected greatly by
fluctuation of the price. Most regular Chanel customers who have strong affordability are
accustomed to pursuing luxury and rarity. For them, the price of Chanel products should be more
expensive than any other fashion stores. Thus they would be disgruntled by decreasing price of
Chanel, which means more and more people are able to afford so-called luxury. However, for
those who save money to buy a Chanel bag, increasing price might annoy them badly. Price
increasing means that luxury only belong to extremely wealthy people and most people would
not be able to afford. It is not a good news for Chanel either. The number of wealthy people are
limited in this society. They are also venerably affected by other brands, such as Hermes, Fendi,
and Louis Vuitton. Despite the fact that wealthy people can contribute a lot to the total revenue
for a fashion house, wealthy people are still minority group in the society. It is also necessary for
Chanel to set some affordable price for normal publics, who are no so wealthy but willing to buy
Chanel products.
# Consequence 2 - Quality of a luxury product. When we spend a great deal of money in
purchasing an article, we definitely expect the value for money. No one would want inferior
quality with the fancy stuff. Superior quality is so expected especially for an article of luxury.
The quality includes the raw material of products, details of needlework, and durability. For a
piece of luxury article, the raw material is the best representation of its quality. For instance, a
piece of scarf with great raw material and with poor raw material would be totally different on
both appearance and protection against the cold. Apart from raw materials, details of needlework
can also affect the quality of luxury articles. I have mentioned the workers are ones of the most
indispensable employees in input linkages, since they are the stakeholders who are responsible
for the details of an article. Most fashion houses, including Chanel, are well known for their
exquisite handmade handbags and clothing. Thus details of needlework would be the best way to
prove its exquisite handcraft. Who wants a luxury outwear with thread residue? Except for raw
material and details of needlework, durability can help test the quality of the article. We must
hope that the luxury article can be kept for a long period of time, as the price of a piece of article
from fashion house Chanel is almost equal to three pieces of articles from a normal store. Based
on the best raw materials and needlework, super-standard process of producing an articles are
also required.
# Consequence 3 - Service in Chanels boutiques. Sales assistants are the group of
employees who can directly touch and communicate with actual consumers. Each of their
behaviors and words may determine customers decisions. No one would like to receive
inhospitable service during shopping, especially in a boutique where we need to spend a large
amount of dollars. In other words, shopping luxury articles is almost like shopping luxury

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service. If a fashion designer is the brain of a fashion company, then the sales assistant in a
boutique must be the face of it. One of my friends told me that she has shopped at Chanel
Chicago. She was warmly welcomed by a sales assistant. Thus she excitedly purchased a
handbag. However, she didn't receive any shipping information after purchasing and wasnt able
to contact with the sales since the sales went out for her vacation. The issue has not been solved
until the manager came to apologize. My friend said she felt so angry that she would not be so
willing to shop at Chanel after that time. Therefore, we can see that good service is not only
necessary during shopping. After-sales services are also important. Lack of any part of services
may lead a company to lose certain potential consumers.
Issues
Activist public has organized to discuss about the problem and do something about it
with others. Such group is often small and cohesive. The group members often create issue of
problems. Because of the price increasing only in Europe, those European consumers who are
able to and used to purchase Chanel luxury bags would feel annoyed. Chanel representative said,
This measure is intended to reduce price differentials across countries, which have widened
considerably further to the recent depreciation of the euro. But it can not easily console the
European purchasers, since they ever had the lowest price all over the world. As a result, a part
of European customers might be activist public and create issues of problems for Chanel, in
order to make some change on the decisions that they don't like. Some of them might sent
complaint letters to Chanel head office, arguing about the price increment, while others might
even hold campaign or parade to oppose the price reform. Also, there would be a group of
customers would change their supportive attitude toward Chanel into hatred. For the purpose of
publicizing their hatred, they might do some press release, or disseminate terrible even unreal
information online. Social media would be one of the most powerful way to disseminate those
information, such as hashtag (e.g. #sleazyChanel) on instagram and twitter, or opposing press
release on Facebook. If that happen, Chanel might be in an extreme troublesome situation, since
public opinion is much swifter and more overwhelming than any other publicizing ways.
In order to efficiently communicate with activist publics, Chanel S.A. need to
systematically monitor and classify problems, activist publics, and issues identified first. After
classifying, the company should do some qualitative research on major activists and their
personal contacts. Then it is necessary to set up advisory boards and send employee envoys to
meeting with key activists. Through face-to-face meeting, Chanel representatives will be able to
communicate with those activist publics, thus making them know that they are respected and
everything could be conferred. If activist publics are successfully being consoled, it is much
easier for Chanel to negotiate with them. When meeting with activist groups, symmetrical
communication approach would be the only and best way for Chanel representatives to
communicate with them. According to the symmetric communication principle of crisis
communication, an organization must consider the public interest to be as least as important as
its own interest. Therefore, the organization has no choice other than to engage in true dialogue
with publics and to practice socially responsible behavior when a crisis occurs. When negotiating
with European activist publics, House of Chanel could refer to their proposal and appropriately
adopt some in order to comfort them. Otherwise, the organization selves can make some

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concession. For example, Chanel could negotiate with European activist publics by releasing
more Chanel new arrivals and styles at the same time than other countries. In this case, European
consumers would be able to have priority and more options. For Chanel itself, the solution can
not only calm activist groups down, but also help gain more profits.
Apart from European consumers, workers employed by Chanel might also be the activist
groups. Workers are responsible for producing products. However, they are never paid as much
as other employees, such as fashion designers. Besides, they need to work much longer than
other employees, such as sales assistants. Therefore, it is extremely possible that some workers
feel unsatisfactory with their working conditions and become activist groups to fight for their
own benefits. In order to increase salary for their labor force, workers can ask labor unions for
help. In the early 1990s, workers in fashion circle formed two principal unions to organize and
improve their wages and working conditions. The main duty for unions is to fight for workers
benefits as much as possible. When workers are treated unequally, unions would communicate
and negotiate with the organizations. If the negotiation fails, they would think of other ways to
affect the organizations, such as campaign, parade, or sent complaint to fashion supervision
bureau. Unions actions can alway relate to the reputation of an organization tightly. If any
authoritative news slightly stand at Unions side, Chanel might be criticized as maltreating
employees among public opinions. With news swiftly spreading, more and more detrimental
history might be discovered because of this issue. Except for unions, workers themselves might
also do something to demonstrate, such as going on strike. Going on strike would severely affect
the whole company, since the cycle chain of production is cut off. As one day workers keep
striking, more loss of the company would be accumulated.
Consequently, Chanel S.A would have to react strategically so as to control adverse
opinions disseminating, and compensate for loss and damage as much as possible. The first step
should be systematically monitoring and classifying problems, activist publics, and issues
identified. Then, the company should do some qualitative research on major activists and their
personal contacts. After researching, scheduling a meeting with activists to hear their voice face
to face is quite essential. Only when negotiating directly can activist show their opinions and can
organizations think of ways to solve problems. According to the symmetric communication
principle of crisis communication, an organization must consider the public interest to be as least
as important as its own interest. As the main goal of workers is wage revolution, Chanel can
appropriately consider workers interest in increasing salary. During meeting, it would be better
for Chanel representatives to listen to more opinions that workers have, including wages and
other working conditions. Workers are indispensable for a fashion company. They would
dedicate to working for the company only when they receive what they should deserve. An
organization should not only establish and keep a long good relationship with its customers, but
with its employees as well.