crisis management report (1)

8/2/2019 Crisis Management Report (1)

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Acknowledgement

Perseverance, inspiration and motivation have always played a key roll in any venture. It isnot just the brain that matters most, but that which guides them: the character, the heart,generous qualities and progressive forces. What was conceived just as an idea materializedslowly into concrete facts? The metamorphosis took endless hours of toil, had its moments offrustration, but in the end everything seemed to have sense.

At this level of understanding it is often difficult to understand the wide spectrum of knowledgewithout proper guidance & advice. Hence, I would like to thankMrs. Savitachoudhary herimmense interest, valuable guidance, constant inspiration kind co-operation throughout the

period of work was undertaken, which has been instrumented in the success of this report. Iwould also express my sincere thanks to Mr.vikas shoutriya (HOD, SKIT, and DMS).

Swekchha Jain


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Contents

Introduction to crisis management 1 The primary aims or benefits of Crisis Management 7 Types of Crisis management 8 Models & Theories associated with Crisis Management 9 Management Crisis Planning- Out line 10 Crisis Management in a planned way 10 Action in the beginning of the Crisis 12 Preparing for the Crisis Management & Response 13 Crisis Management & Response 14

Organizing Continuity Plan 15 Communicating the Continuity Plan & Training 16 How to plan for potential corporate Crisis 18 Risk management 19 The Risk cycle 20 Risk management v/s Crisis management 21 Crisis management process-an overview 22 Crisis management model 22 Examples of organizational crisis 23

Example of successful crisis management 23 Government and crisis management 26 Case-study 27 Conclusion 29 Bibliography 30


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Crisis Management an introduction

A crisis is a major, unpredictable event that threatens to harm an organization and its

stakeholders.

Three elements are common to most definitions of crisis:

(a) A threat to the organization,

(b) The element of surprise, and

(c) A short decision time.

Crisis management is a relatively new field of management. Typically, proactive crisismanagement activities include forecasting potential crises and planning how to deal with them,for example, how to recover if your computer system completely fails.

Hopefully, organizations have time and resources to complete a crisismanagement plan before they experience a crisis. Crisis management in the face of a current,real crisis includes identifying the real nature of a current crisis, intervening to minimizedamage and recovering from the crisis. Crisis management often includes strong focus on

public relations to recover any damage to public image and assure stakeholders that recovery isunderway.

Crisis management is the process by which the organization manages a wider impact, such asmedia relations, and enables it to commence recovery. Irrespective of the size of an institutionaffected.

A crisis presents a risk to the assets of the establishment, putting the assets of the people, theinformation, and the property of the organization under threat. These assets can have local,national, and international significance in their function, and consequently, may be animportant consideration for the protection of a nations infrastructure. The management andresponse to crises in organizations is crucial for effective institutional functioning. Disruptionsto the operation of establishments and the influence on employees can dramatically affectcorporate productivity. Such disturbances to organizations can take many forms including

accidental and deliberate causes, initiated from within the organization, as well as from externalorganizations.


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Disasters can be categorized as natural or man made. Natural disasters include storms, floods,tsunamis, fires, pollution, and epidemics, while man made disasters can emanate fromaccidents and hostile acts, such as fires and explosions. Attacks on the people, information, and

property of organizations can be prevented or the impact minimized through a well conceivedand thoroughly tested crisis management plan. Such planning needs to leverage from qualityHRD initiatives to maximize the power of human capital available to organizations.

Figure 1.


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Expecting the Unexpected

Crises eventuate from disasters that are an unexpected event requiring specificarrangements or specific actions. Reilly stated effective crisis managementrequires organizational responses which are outside the firms ordinary repertoire of

management activities. Essentially, crisis management planning is about preparingfor events that the organization has normally not previously experienced. Crisesthrough disasters, such as the tsunamis, can occur without warning, often witheffects that are severe and sometimes catastrophic on government, business,communities, and people.

Terrorist threats and natural catastrophes are high on the agenda for these neverexperienced events, and consequently, the application of a well considered responsestrategy is a vital component of a crisis management plan. The current threat ofterrorism against government, commercial, and financial institutions enhances theneed for crisis management for the continued operation of organizations. The ability

to successfully deal with a disaster is an important management competency that hasthe capacity to avoid or reduce the consequences of the impact of the ensuring crisis.

The Quality of Crisis Management

Crisis management in all its facets is a challenging task. Smooth operation in this inherentlyhigh demanding uncertain context requires multidisciplinary teamwork between groups of

people from a variety of backgrounds. These groups rely onsolid procedures and tactics, congruent communication tools and interoperable command- andcontrol systems, throughout the chain of organizations.

Evaluation of concepts and improving crisis management staffs is widely acknowledged to bea major challenge. It is costly to bring together one group people, confront them with a goodscenario, do proper performance measurement and get good learning results. It even appears to

be impossible to conduct larger-scale exercises in real-life with all organizations involved. It istoo disruptive, takes too much time and you cannot have as much control over what happensduring the exercise as to ensure proper learning experiences for everyone present. If there isone conclusion to draw from recent national large-scale crisis management exercises, then it iscertainly that the preparation for these exercises is not optimal. There would be a lot to gain

quality-wise from a more structured approach to training and exercising. Also, the real world isnot a proper experimentation environment, in which you can arrange the situation as such as tocreate an ideal environment for trying out tactics and procedures, new equipment, new modesof operation, etc.

Therefore, there is a need for environments in which crisis management staffs can improvetheir effectiveness and efficiency with current and future ways of operation, which is not thereal world. An environment in which we can create scenarios and situations the way we believethem to be optimal to detect weaknesses in the crisis management system and the teamsoperating in it.


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Excellence comes from developing skills in 4 related areas:

Leadership Communication Human Performance

Process Improvement

Organizations should be prepared to apply these skills practically, regularly and realistically toembed the theory.

The primary aims or benefits of crisis management

1. Ability to assess the situation from inside and outside the Institution as all stakeholdersmight perceive it.

2. Techniques to direct action(s) to contain the likely or perceived damage spread.3. Better institutional resilience for all stakeholders.4. Compliance with regulatory and ethical requirements, e.g. corporate [social responsibility].5. Much better management of serious incidents or any incident that could become serious.6. Improved staff awareness of their roles and expectations within the institution.7. Increased ability, confidence and morale within the institution.8. Enhanced risk management insofar that obvious risks will be identified, mitigated (where

possible) and through crisis and business continuity management - as prepared for.

9. Protected and often enhanced reputation a much reduced risk of post event litigation.

Figure 2.

To achieve this one should use these tools:


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Training Needs Analysis Assessment Development of Training Process Enhancement/Design Teaching

Training Exercising Presentation Expert Advice Ongoing Analysis Coaching Summative Confirmation

Types of crises

Sudden crisis, such as fires, explosions, natural disasters, workplace violence.

Smoldering crisis, where problems that start out small and could be fixed developinto major issues.

Bizarre crisislike the finger in the Wendy's Restaurant Chili.

A one-of-a-kind crisis

Perceptual crisiswhere the crisis emerges from others' perceptions of activitiesrather than the activities themselves


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Models and theories associated with crisis management

Crisis Management Model

Successfully diffusing a crisis requires an understanding of how to handle a crisis before itoccurs. Gonzalez-Herrero and Pratt created a four-phase crisis management model

process that includes:

-issues management,

-Planning-prevention,

-the crisis, and

-post-crisis.

The art is to define what the crisis specifically is or could be and what has caused it or couldcause it.

Theories of crisis management

Structural-Functional Systems Theory

Providing information to an organization in a time of crisis is critical to effective crisismanagement. Structural-functional systems theory addresses the intricacies of informationnetworks and levels of command making up organizational communication. The structural-functional theory identifies information flow in organizations as "networks" made up ofmembers and "links". Information in organizations flow in patterns called networks.

Diffusion of Innovation Theory

Another theory that can be applied to the sharing of information is Diffusion of Innovation

Theory. Developed by Everett Rogers, the theory describes how innovation is disseminated andcommunicated through certain channels over a period of time. Diffusion of innovation incommunication occurs when an individual communicates a new idea to one or several others.At its most elementary form, the process involves: (1) an innovation, (2) an individual or otherunit of adoption that has knowledge of or experience with using the innovation, (3) anotherindividual or other unit that does not yet have knowledge of the innovation, and (4) acommunication channel connecting the two units. A communication channel is the means bywhich messages get from one individual to another.


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Management Crisis Planning

No corporation looks forward to facing a situation that causes a significant disruption to theirbusiness, especially one that stimulates extensive media coverage. Public scrutiny can result ina negative financial, political, legal and government impact. Crisis management planning dealswith providing the best response to a crisis.

Contingency Planning

Preparing contingency plans in advance, as part of a crisis management plan, is the first step toensuring an organization is appropriately prepared for a crisis. Crisis management teams canrehearse a crisis plan by developing a simulated scenario to use as a drill. The plan shouldclearly stipulate that the only people to speak publicly about the crisis are the designated

persons, such as the company spokesperson or crisis team members. The first hours after acrisis breaks are the most crucial, so working with speed and efficiency is important, and the

plan should indicate how quickly each function should be performed.

2. Business Continuity Planning

When a crisis will undoubtedly cause a significant disruption to an organization, a businesscontinuity plan can help minimize the disruption. First, one must identify the critical functionsand processes that are necessary to keep the organization running. Then each critical function

and or/process must have its own contingency plan in the event that one of thefunctions/processes ceases or fails. Testing these contingency plans by rehearsing the requiredactions in a simulation will allow for all involved to become more sensitive and aware of the

possibility of a crisis. As a result, in the event of an actual crisis, the team members will actmore quickly and effectively.


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Crisis management in a planned way

It is a good idea to draw a flow chart of how the beginning of the crisis will be handled. It willdefine the responsibilities and tasks of each organisation level. It might be sensible to dividethe flow chart into local measures and Group measures. The chart will also define at what stagethe local crisis management teams and the Group crisis management teams will be convened.

The crisis management team is one of the most vital parts of the continuity plan. The teammembers, their tasks and responsibilities and where they convene should be stated in the plan.

The crisis management team gives advice to the management in matters pertaining to the crisis,and will assess the needs of the parties involved in the crisis. The team will convene wheneverneeded and makes plans for all the sub-areas. The premises of the team, the crisis management

centre, have been planned and reserved in advance. All decisions and pieces of informationreceived during the crisis will be marked in the logbook.

Figure 3.


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Preparing for Crisis Management and Response

(PPRR)

A prevention,

preparation,

response, and

Recovery

Four stage model of crisis management has been adopted by many organizations to manageunforeseen events within an establishment. This PPRR approach to crisis management, shown inFigure 1, is an iterative model that provides ongoing opportunities for learning. Preparedness is

integral to crisis management and response as it forms the foundation upon which recovery of theoperation can occur. The preparation phase of the PPRR model accommodates HRD in themanagement of crises and increases understanding of precursor events leading to a crisis scenario.Figure 1 shows the iteration logically commencing from preparation, to response, to recovery, to

prevention in order to commence the cycle again with modified and improved aspects of theprocess illustrated in the PPRR Crisis Management Model.

Figure 5

The PPRR Crisis Management Model

This managerial and response approach to crises can be applied to facilities and organizations rangingfrom local enterprises to national infrastructure. In order to achieve a more professional approach tocrisis management, organizations need to effectively plan, implement and prepare, especially for

natural disaster threats, by assessing the risk to the organization and evaluating the consequence of aevent occurring.


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Crisis Management and Response

Communities and individuals have always used physical security methods to protect their valuables,which is a trend that continues in this era. However, as the tools and devices available to criminal andterrorist elements become more sophisticated, law enforcement agencies and crisis management

professionals need to have a comprehensive knowledge and understanding of the crisis managementthreats and risks principles necessary to protect corporation and societal infrastructure. Thus, as theamount of crime and terrorism continues to increase, and affects the community in financial andsocial terms, so does the need for better strategies for protecting assets In addition, organizationalcomponents of commercial, retail, and industrial organizations, as well as leisure facilities, all requirea crisis management planning to protect the assets of employees and visitors, the managerial andfinancial information of the facility, and the material contents of the organization. Consequently, aworldwide demand for high quality professional training in crisis management and response issueshas emerged commensurate with the international escalation of terrorism .

As the perceived threats increase from terrorism and major criminal activities, professional crisismanagers and consultants are in constant demand in national and international contexts. This situationreflects the demand for these services and products by business, industry and the broader community .Effective crisis management and response training has become increasingly important to industry andgovernments because of the moral and legal responsibility of a company or government to ensure thatthe employees have been provided with appropriate training to undertake their work safely, to avoidcompensation and risk liabilities.

The current high incidence of global terrorism, major criminal activities and natural disasters hasdetermined the need for high quality professional training in crisis response and management.Consequently, the demand HRD for the protection of people and assets is high in the national andinternational contexts. Resources invested in HRM initiatives to change corporate culture through thetraining and the training of crisis management components reward organizations in both ethical and

business perspectives. The next section describes an example of a world class HRD Singaporeanprogrammed and facility for crisis response and management.


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Organising a continuity plan

The continuity actions can be split into three main phases: actions before, during and after thecrisis. Before the crisis, obviously the planning must be done including also the continuity plan.The most important thing is that top management must commit itself to the project andcommunicate this to all parties. Top management will choose the planning group members,who will represent all sectors of the company at least production, IT, HR, Finance, Logisticsand PR should participate, but when needed, also maintenance, purchasing, marketing andstorage will be represented in the project.

When the planning group has been formed, a BIA (Business Impact Analysis) will be carriedout, i.e. the members of the group will discuss different crisis scenarios, imagining the impact

of those scenarios and how to deal with them. If a somewhat updated risk analysis is available,its findings will be used in the work. It is, however, important to realise, that reality is oftenmuch more amazing than what we can imagine, and it is impossible to plan for all situations.But the framework for crisis management can be built, and the processes with which the crisismanagement will proceed in a controlled way can be defined. To operate in a crisis often needssome improvising, and if that can be done based on check lists and directives prepared inadvance, it is possible to save a lot of time. In the projects where the writer of this article has

participated, the best results have been reached when the planning group really has beenenthusiastically working together from the beginning and the discussions have been lively. As aso-called spin-off effect, valuable information about other parts of the organisation has comeout that might not otherwise have been available to all participants.

Information and communication

Communication and media planning is an important part of the Continuity Plan. It has beensaid that no crisis can be so bad that it couldnt be worse through bad communication. On theother hand, a crisis can be turned into an advantage by handling the communication in anexemplary way.

The media plan defines who will inform what and to whom and in what order. One way is tosplit the information into two parts the initial information and the follow-up information. The

contents of the bulletin must be planned including who the receivers will be, what media andchannel are to be used. Generally there should only be one person and his substitute who willgive out information about the crisis, and to whom all contacts should be directed. It is mostimportant not to give out false information, and that the information is received exactly as it has

been intended to.

When the crisis is over, one generally releases a final bulletin where the final facts about thecrisis are explained, and also how the crisis finally was handled.It is advisable to use the available expert training services in crisis communication.


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Communicating the continuity plan and training

When the plan has been completed, it must be communicated to the whole staff. A good

channel for this is the companys own intranet. Staff should be trained in activating the plan.

The crisis management team could be trained by using case exercises in order to see whether

the plan would function in practice. The plan and all its appendices must be updated

continuously. This way the companys continuity plan will turn into a tool that helps and serves

the whole company and perhaps even its survival.

In a crisis, always sit down and think hard about your decision, and for as long as needed (or

allowed) about ways in which you can resolve it.

It has to be you. That applies even if somebody else has to carry the burden of action - how

you brief, direct, and control the other or others will be vital to the outcome.

In seeking a solution, look for a simple answer that you can apply, rather than a complex one

that requires many hands.

Since youre unlikely to get that answer by conventional thinking, try deliberately to be

unconventional, original, lateral.

Part of the decision is how to use yourself. In any situation where youre an unknown factor,

what people know about you is what you choose to let them know - and that can be a powerful

weapon on your side.

In a bad situation, dont hesitate to use shock as a tool. It works much better than fright. But

you must do something to bring home the urgency of the position.

Work in the knowledge that even in a good situation, operations can always be improved -

and that those who are best placed and best equipped to improve them are the operators

themselves.

In a crisis, quick and decisive action is generally much more effective than deliberate and

delayed response. Second-guessing the opinions of those in the front line is never done by good generals. If the

actions taken by subordinates are wrong, youll know soon enough.


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Figure 1


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How to Plan For Potential Corporate Crisis

Despite the new popularity of crisis management, executives who are fully ready to respond toemergencies are still in the minority. When a disaster unfolds, many corporate chiefs shaketheir heads and refuse to acknowledge the gravity of the problem. Says Gerald Meyers, formerchairman of American Motors, who teaches a course in crisis management at Carnegie-MellonUniversity: "The most frequently made mistake is denial, and it's the biggest one you can make.Denial then gives way to anger. When the crisis doesn't go away quickly, the panic sets in."Agrees Donald Deaton, a senior vice president at Hill & Knowlton, a New York-based publicrelations firm with an expertise in crisis management: "You can't sit on your hands waiting forthe problem to disappear. You have to take charge."

Company officials must next overcome a powerful impulse to run for cover from the press andthe public. "Executives often bury their heads in the sand and refuse to communicate. Butadopting a bunker mentality is always to their own detriment," says Fink. Moreover, hecontinues, "many companies go astray by lying." When that happens, the public loses faith inthe firm, and its products, which may never be restored.


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Risk Management

Security is defined as a stable, relatively predictable environment in which an individual or group may

pursue its ends without disruption or harm, and without fear of disturbance or injury (Fischer & Green2004). For government and private organizations, this means that the organization continues its

business and meets desirable goals without disruption or fear of disruption. Hence, the proliferation ofterrorist incidents in national and international contexts impinges on this state of crisis managementand response needed in organizations. Moreover, the evaluation of the risk of an event from terroristactivities or natural disasters is essential, and accordingly, a response instituted with the understandingthat the risk might be realized.

The concept of risk is foremost when considering the protection of assets. Indeed, the likelihood ofoccurrence of the threat posing the risk will determine the need for intervention in the activities withina facility. The consequence of an event occurring that will affect an organization will determine theextent of human and organizational resources dedicated to this possible event. If the event willseverely disrupt or cause dislocation to the normal operations of the organization, then a riskmanagement decision is necessary to determine the amount and type of resources deployed and themanagement of the possible event. By their very nature, crisis management and response carry someform of risk, and so the function of the personnel in this area is to conduct a risk analysis based onintelligence of the possible event and the consequences to the organization if the risk is realized. Themaintenance of risk management and risk reduction strategies for national infrastructure facilities atan enhanced level is crucial to be prepared for incidents that can occur without warning, with effectsthat are severe and sometimes catastrophic on the government, or the business community.

The components of threat and harm determine the levels of risk. Threat levels or the probability ofincidents being realized, are determined by the subjective assessment of all relevant facts and the

information derived from intelligence about the adversary. A threat level is allocated a rating of thelikelihood of the threat eventuating. Harm is the amount of damage that may occur if the threat isrealized, or considered as the criticality of the loss. Senior management, who understand theconsequential impact of an incident from a realized threat, will best determine the level of harm thatthe organization may incur.


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Crisis management-risk management

The risk cycle

The risk cycle


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Risk management v/s Crisis management

There is a vast difference between crisis management and risk management. We can understandit by this diagram.

Risk management v/s crisis management

Crisis management process

An overview


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The crisis management process

Examples of organizational crises

Extortion Bribery Hostile Takeover Terrorist Attack Last minute LARA RFC Copyright infringement Vehicular fatality Information sabotage

Product tampering Workplace bombing Natural disaster that destroys organizational office Computer tampering sexual harassment Natural disaster that disrupts product/service Confidential data loss Kidnapping, (Key person; Tiger) Product/service boycott Work-related homicide Malicious rumor

Hazardous material leak Plant explosion


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Personnel assault Assault of customers Product recall Counterfeiting Natural disaster that destroys corporate headquarters

Natural disaster that eliminates key stakeholders

Examples of successful crisis management

1. Tylenol (Johnson and Johnson)

In the fall of 1982, a murderer added 65 milligrams of cyanide to some Tylenol capsules onstore shelves, killing seven people, including three in one family. Johnson & Johnson recalled

and destroyed 31 million capsules at a cost of $100 million. The affable CEO, James Burke,appeared in television ads and at news conferences informing consumers of the company'sactions. Tamper-resistant packaging was rapidly introduced, and Tylenol sales swiftly bounced

back to near pre-crisis levels.

Johnson & Johnson was again struck by a similar crisis in 1986 when a New York woman diedon Feb. 8 after taking cyanide-laced Tylenol capsules. Johnson & Johnson was ready.Responding swiftly and smoothly to the new crisis, it immediately and indefinitely canceled alltelevision commercials for Tylenol, established a toll-free telephone hot-line to answerconsumer questions and offered refunds or exchanges to customers who had purchased Tylenolcapsules. At week's end, when another bottle of tainted Tylenol was discovered in a store, ittook only a matter of minutes for the manufacturer to issue a nationwide warning that peopleshould not use the medication in its capsule form (Rudolph, 1986).

2. Odwalla Foods

When Odwalla's apple juice was thought to be the cause of an outbreak of E. coli infection, thecompany lost a third of its market value. In October 1996, an outbreak of E. coli bacteria inWashington state, California, Colorado and British Columbia was traced to unpasteurized apple

juice manufactured by natural juice maker Odwalla Inc. Forty-nine cases were reported,including the death of a small child. Within 24 hours, Odwalla conferred with the FDA andWashington state health officials; established a schedule of daily press briefings; sent out pressreleases which announced the recall; expressed remorse, concern and apology, and tookresponsibility for anyone harmed by their products; detailed symptoms of E. coli poisoning;and explained what consumers should do with any affected products. Odwalla then developed -through the help of consultants - effective thermal processes that would not harm the products'flavors when production resumed. All of these steps were communicated through closerelations with the media and through full-page newspaper ads.


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3. Mattel

Mattel Inc., the country's biggest toy maker, has been plagued with more than 28 product

recalls and in Summer of 2007, amongst problems with exports from China, faced two productrecalls in two weeks. The company did everything it could to get its message out, earning highmarks from consumers and retailers. Though upset by the situation, they were appreciative ofthe company's response. At Mattel, just after the 7 a.m. recall announcement by federalofficials, a public relations staff of 16 was set to call reporters at the 40 biggest media outlets.They told each to check their e-mail for a news release outlining the recalls, invited them to ateleconference call with executives and scheduled TV appearances or phone conversations withMattel's chief executive. The Mattel CEO Robert Eckert did 14 TV interviews on a Tuesday inAugust and about 20 calls with individual reporters. By the week's end, Mattel had respondedto more than 300 media inquiries in the U.S. alone.

4. Pepsi

One crisis management success story revolves around the Pepsi Corporation. The crisis startedwith claims of syringes being found in cans of diet Pepsi. Pepsi, confident that the tamperingwas not their fault, urged stores nation-wide not to remove the product from shelves. Thecompany had the cans and the situation thoroughly investigated. This led to an arrest, which

Pepsi made public and then followed with their first video news release. This showed viewersthe companys steps in the factories and how it was impossible to happen within their factories.A second video news release displayed the man arrested and proved to the public that he hadcommitted the scam. A third video news release showed surveillance from a convenient storewhere a woman was caught replicating the tampering incident. The company simultaneously

publicly worked with the FDA during the crisis to get to the bottom of the scam. Basically theCorporation was completely open with the public throughout the entire ordeal. Every employeeof Pepsi everywhere in the world was completely aware of all of the details as well. This madethe internal public communications very effective throughout the crisis. Once the allegationswere finalized the corporation launched a series of special campaigns designed to thank the

public for standing by the corporation along with coupons for further compensation. This caseserved as a design for how to handle other crisis situations. The management and public

relations worked together stupendously throughout the entire organization.

5. Bhopal

The Bhopal disaster in which poor communication before, during, and after the crisis costthousands of lives, illustrates the importance of incorporating cross-cultural communication in


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crisis management plans. According to American Universitys Trade Environmental DatabaseCase Studies (1997), local residents were not sure how to react to warnings of potential threatsfrom the Union Carbide plant. Operating manuals printed only in English is an extremeexample of mismanagement but indicative of systemic barriers to information diffusion.According to Union Carbides own chronology of the incident (2006), a day after the crisis

Union Carbides upper management arrived in India but was unable to assist in the relief effortsbecause they were placed under house arrest by the Indian government. Symbolic interventioncan be counter productive; a crisis management strategy can help upper management makemore calculated decisions in how they should respond to disaster scenarios. The Bhopalincident illustrates the difficulty in consistently applying management standards to multi-national operations and the blame shifting that often results from the lack of a clearmanagement plan (Shrivastava, 1987).

6. Ford and Firestone Tire and Rubber Company

The Ford-Firestone dispute transpired in August 2000. In response to claims that their 15-inchWilderness AT, radial ATX and ATX II tire treads were separating from the tire coreleadingto grisly, spectacular crashesBridgestone/Firestone recalled 6.5 million tires. These tireswere mostly used on the Ford Explorer, the world's top-selling sport utility vehicle (SUV)

The two companies committed three major blunders early on, say crisis experts. First, theyblamed consumers for not inflating their tires properly. Then they blamed each other for faultytires and faulty vehicle design. Then they said very little about what they were doing to solve a

problem that had caused more than 100 deathsuntil they got called to Washington to testify

before Congress.

On March 24, 1989, a tanker belonging to the Exxon Corporation ran aground in the PrinceWilliam Sound in Alaska. The Exxon Valdez spilled millions of gallons of crude oil into thewaters off Valdez, killing thousands of fish, fowl, and sea otters. Hundreds of miles of coastlinewere polluted and salmon spawning runs disrupted; numerous fishermen, especially NativeAmericans, lost their livelihoods. Exxon, by contrast, did not react quickly in terms of dealingwith the media and the public; the CEO, Lawrence Rawl, did not become an active part of the

public relations effort and actually shunned public involvement; the company had neither acommunication plan nor a communication team in place to handle the eventin fact, thecompany did not appoint a public relations manager to its management team until 1993, 4 years

after the incident; Exxon established its media center in Valdez, a location too small and tooremote to handle the onslaught of media attention; and the company acted defensively in itsresponse to its publics, even laying blame, at times, on other groups such as the Coast Guard.These responses also happened within days of the incident (Pauly and Hutchison, 2005).

7. Public sector crisis management

Corporate America is not the only community that is vulnerable to the perils of a crisis.

Whether a school shooting, a public health crisis or a terrorist attack that leaves the publicseeking comfort in the calm, steady leadership of an elected official, no sector of society is


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immune to crisis. In response to that reality, crisis management policies, strategies andpractices have been developed and adapted across multiple disciplines.

Government and Crisis management

Historically, government at all levels local, state, and national has played a large role incrisis management. Indeed, many political philosophers have considered this to be one of the

primary roles of government.

Emergency services, such as fire and police departments at the local level, and the UnitedStates National Guard at the federal level, often play integral roles in crisis situations.

To help coordinate communication during the response phase of a crisis, the U.S. FederalEmergency Management Agency (FEMA) within the Department of Homeland Securityadministers the National Response Plan (NRP). This plan is intended to integrate public and

private response by providing a common language and outlining a chain-of-command whenmultiple parties are mobilized. It is based on the premise that incidences should be handled atthe lowest organizational level possible. The NRP recognizes the private sector as a key partnerin domestic incident management, particularly in the area of critical infrastructure protectionand restoration.

The NRP is a companion to the National Incidence Management System that acts as a moregeneral template for incident management regardless of cause, size, or complexity.

FEMA offers free web-based training on the National Response Plan through the EmergencyManagement Institute.

Common Alerting Protocol (CAP) is a relatively recent mechanism that facilitates crisiscommunication across different mediums and systems. CAP helps create a consistentemergency alert format to reach geographically and linguistically diverse audiences through

both audio and visual mediums.

Crisis management has become a defining feature of contemporary governance. In times ofcrisis, communities and members of organizations expect their public leaders to minimize theimpact of the crisis at hand, while critics and bureaucratic competitors try to seize the momentto blame incumbent rulers and their policies. In this extreme environment, policy makers mustsomehow establish a sense of normality, and foster collective learning from the crisis

experience.

In the face of crisis, leaders must deal with the strategic challenges they face, the political risksand opportunities they encounter, the errors they make, the pitfalls they need to avoid, and the

paths away from crisis they may pursue. The necessity for management is even moresignificant with the advent of a 24-hour news cycle and an increasingly internet-savvy audiencewith ever-changing technology at its fingertips.

Public leaders have a special responsibility to help safeguard society from the adverseconsequences of crisis. Experts in crisis management note that leaders who take thisresponsibility seriously would have to concern themselves with all crisis phases: the incubationstage, the onset, and the aftermath. Crisis leadership then involves five critical tasks: sensemaking, decision making, and meaning making, terminating, and learning.


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A brief description of the five facets of crisis leadership includes:

1) Sense making may be considered as the classical situation assessment step in decisionmaking.2) Decision making is both the act of coming to a decision as the implementation of that

decision.3) Meaning making refers to crisis management as political communication.4) Terminating a crisis is only possible if the public leader correctly handles the accountabilityquestion.5) Learning, refers to the actual learning from a crisis is limited. The authors note, a crisis oftenopens a window of opportunity for reform for better or for worse.

Case study

Companies in Crisis - What to do when it all goes wrong.

Johnson & Johnson and Tylenol

Crisis need not strike a company purely as a result of its own negligence or misadventure.Often, a situation is created which cannot be blamed on the company - but the company findsout pretty quickly that it takes a huge amount of blame if it fumbles the ball in its response.

One of the classic tales of how a company can get it right is that of Johnson & Johnson, and thecompany's response to the Tylenol poisoning.

What happened????

In 1982, Johnson & Johnson's Tylenol medication commanded 35 per cent of the US over-the-counter analgesic market - representing something like 15 per cent of the company's profits.

Unfortunately, at that point one individual succeeded in lacing the drug with cyanide. Sevenpeople died as a result, and a widespread panic ensued about how widespread thecontamination might be.

By the end of the episode, everyone knew that Tylenol was associated with the scare. Thecompany's market value fell by $1bn as a result.

When the same situation happened in 1986, the company had learned its lessons well. It actedquickly - ordering that Tylenol should be recalled from every outlet - not just those in the statewhere it had been tampered with. Not only that, but the company decided the product

would not be re-established on the shelves until something had been done to provide betterproduct protection.


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As a result, Johnson & Johnson developed the tamperproof packaging that would make it muchmore difficult for a similar incident to occur in future.

Cost and benefit

The cost was a high one. In addition to the impact on the company's share price when the crisisfirst hit, the lost production and destroyed goods as a result of the recall were considerable.

However, the company won praise for its quick and appropriate action. Having sidestepped theposition others have found themselves in - of having been slow to act in the face of consumerconcern - they achieved the status of consumer champion.

Within five months of the disaster, the company had recovered 70% of its market share for thedrug - and the fact this went on to improve over time showed that the company had succeededin preserving the long term value of the brand. Companies such as Perrier, who had beencriticised for less adept handling of a crisis, found their reputation damaged for as long as five

years after an incident.

In fact, there is some evidence that it was rewarded by consumers who were so reassured by thesteps taken that they switched from other painkillers to Tylenol.

Conclusion

The features that made Johnson & Johnson's handling of the crisis a success included the

following:

They acted quickly, with complete openness about what had happened, andimmediately sought to remove any source of danger based on the worst case scenario -not waiting for evidence to see whether the contamination might be more widespread

Having acted quickly, they then sought to ensure that measures were taken whichwould prevent as far as possible a recurrence of the problem

They showed themselves to be prepared to bear the short term cost in the name ofconsumer safety. That more than anything else established a basis for trust with theircustomers

Conclusion


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Crisis management in all its facets is a challenging task. Smooth operation in this inherentlyhigh demanding uncertain context requires multidisciplinary teamwork between groups of

people from a variety of backgrounds. These groups rely onsolid procedures and tactics, congruent communication tools and interoperable command- andcontrol systems, throughout the chain of organizations.

It is nessecery for all the organizations. Crisis management is the process by which theorganization manages a wider impact, such as media relations, and enables it to commencerecovery. Irrespective of the size of an institution affected.

It has some primary goals like Ability to assess the situation from inside and outside theInstitution as all stakeholders might perceive it. Techniques to direct action(s) to contain thelikely or perceived damage spread. Better institutional resilience for all stakeholders.

It can be said that every organization should have a crisis management plan.

Bibliography


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www.crisismanagement.com www.wikipedia.org www.crisisrisk.com www.lyken.com
http://www.crisismanagement.com/http://www.wikipedia.org/http://www.crisisrisk.com/http://www.lyken.com/http://www.crisismanagement.com/http://www.wikipedia.org/http://www.crisisrisk.com/http://www.lyken.com/

crisis management report (1)

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