Presentation.

Topic.
Crisis
Management
Ilyas Ahmad
Farooqi
Zulqurnain
shafeeq
Umar Akram
Arooj Gilani
Farah Rizvi
Aysha Shahaid

Presented By.

Presented
To.
Prof Farhan
Sarwar

Crisis
Management.

Contents.

Crisis management.
Introduction.
Types of crisis.
1. Natural disaster.
2. Technological crises.
3. Confrontation.
4. Malevolence.
5. Crises of organizational misdeeds.
Crisis of skewed management value.
Crisis of deception.
Crisis of management misconduct .
6. Workplace violence.
7. Rumors.
Crisis Leadership.
Models and theories associated with crisis management.
Examples of successful crisis management.
Examples of unsuccessful crisis management.
Lessons learned in crisis management.
1. Impact of catastrophes on shareholder value.
2. Crisis as Opportunity.

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Contents.
Public sector crisis management.
1. Schools and crisis management.
2. Government and crisis management.
3. Elected officials and crisis management.
Professional Organizations .
References.

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Definition.

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Crisis management.

Crisis management is the process by which an

organization deals
with a major event that threatens to harm the organization, its
stakeholders, or the general public.
Three elements are common to most definitions of crisis:
1. A threat to the organization.
2.The element of surprise.
3. A short decision time.

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Introduction.
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Crisis management consists of:
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Methods used to respond to both the reality and perception of .
crises.
Establishing metrics to define what scenarios constitute a crisis
and should consequently trigger
the necessary response mechanisms.
Communication that occurs within the response phase of
emergency management scenarios.
Crisis management methods of a business or an organization are
called
Crisis Management Plan.
Crisis management is occasionally
referred to as incident management, although several industry
specialists such as Peter Power argue that the term crisis
management is more accurate.
The credibility

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Types of crisis.
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During the crisis management process, it is important to identify
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types of
crises in that different crises necessitate the use of different crisis t.
management strategies.

Types of crisis.
These are the basic types of crises.
1.
2.
3.
4.
5.

Natural crises.
Technological crises.
Confrontation.
Malevolence.
Crises of organizational misdeeds
Crisis of skewed management value.
Crisis of deception.
Crisis of management misconduct .
6. Workplace violence.
7. Rumors.

Natural
crises.

Outline.
Definition of Natural disaster.
Main Points of Natural disaster.
As 'acts of God
Environmental phenomena.
Threaten life, and the environment itself.
Example of Natural disaster.
2005 Kashmir Earthquake.

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Natural Crises.
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Definition.
t.
Typically natural disasters considered as 'acts of
God,' are such environmental phenomena as earthquakes,
volcanic eruptions, tornadoes and hurricanes, floods, landslides,
tsunamis, storms, and droughts that threaten life, property, and
the environment itself.
Main Points of definition about Natural crisis:
1. As 'acts of God.
2.Environmental phenomena.
3. Threaten life, and the environment itself.

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Example.
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2005 Kashmir Earthquake.
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The 2005 Kashmir Earthquake was a t
.
major earthquake centered in Pakistan-administered Kashmir
known as Azad Kashmir, near the city of Muzaffarabad, affecting
Gilgit-Baltistan and Khyber-Pakhtunkhwa province of Pakistan. It
occurred at 08:52:37 Pakistan Standard Time (03:52:37 GMT) on 8
October 2005.
It registered a moment magnitude of 7.6 .
As of 8 November,
the government of Pakistan's official death toll was 75,000. The
earthquake also affected countries in the surrounding region
where tremors were felt in Tajikistan, western China; while officials
say nearly 1,400 people also died in Indian-administered Kashmir
and 4 people in Afghanistan. The severity of the damage caused
by the earthquake is attributed to severe up thrust, coupled with
poor construction.

Technological
Crises.

Outline.
Definition of Technological crises.
Main Points of Definition.
Technological breakdowns.
Human breakdowns.
Categorized as mega damage.
Samples include software failures.
Example of Technological crises.
Exxon Valdez Oil Spill.

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Technological Crises. age risi
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Definition.
t.
Technological crises are caused by human
application of science and technology. Technological accidents
inevitably occur when technology becomes complex and coupled
and something goes wrong in the system as a whole
(Technological breakdowns). Some technological crises occur when
human error causes disruptions (Human breakdowns). People tend
to assign blame for a technological disaster because technology is
subject to human manipulation whereas they do not hold anyone
responsible for natural disaster. When an accident creates
significant environmental damage, the crisis is categorized as
mega damage. Samples include software failures, industrial
accidents, and oil spills..
Main Points of definition about Technological crises:
1.Technological breakdowns.
2.Human breakdowns.
3. Categorized as mega damage.
4.Samples include software failures.

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Example.
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Exxon Valdez Oil Spill, March 24, 1989.
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The Exxon Valdez oil spill
t.
occurred in Prince William Sound, Alaska, on March 24, 1989,
when the Exxon Valdez, an oil tanker bound for Long Beach,
California, struck Prince William Sound's Bligh Reef and spilled
260,000 to 750,000 barrels (41,000 to 119,000 m3) of crude oil. It
is considered to be one of the most devastating human-caused
environmental disasters. As significant as the Valdez spill was the
largest ever in U.S. waters until the 2010 Deepwater Horizon oil
spill it ranks well down on the list of the world's largest oil spills in
terms of volume released. However, Prince William Sound's
remote location, accessible only by helicopter, plane and boat,
made government and industry response efforts difficult and
severely taxed existing plans for response. The oil, originally
extracted at the Prudhoe Bay oil field, eventually covered
1,300miles (2,100 km) of coastline, and 11,000square miles
(28,000 km2)
of ocean. Then Exxon CEO, Lawrence G. Rawl, shaped the
company's response.

Confrontation
Crises.

Outline.

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Definition of Confrontation crises.

Main Points of Definition.
Discontented individuals.
Groups fight businesses.
Win acceptance of their demands.
Common type of confrontation crises is boycotts.
Example of Confrontation crises.
Rainbow/PUSHs (People United to Serve Humanity) boycott of Nike.

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Confrontation Crises. age risi
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Definition.
t.
Confrontation crises occur when discontented
individuals and/or groups fight businesses, government, and
various interest groups to win acceptance of their demands and
expectations. The common type of confrontation crises is
boycotts, and other types are picketing, sit-ins, ultimatums to
those in authority, blockade or occupation of buildings, and
resisting or disobeying police.
Main Points of definition about Confrontation crises:
1.Discontented individuals.
2.Groups fight businesses.
3.Win acceptance of their demands.
4.Common type of confrontation crises is boycotts.

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Example.
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Rainbow/PUSHs (People United to Serve Humanity) boycott e
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of Nike.
.
Rainbow/PUSH is a non-profit organization formed as a
merger of two non-profit organizations Operation PUSH
(People United to Save Humanity) and the National Rainbow
Coalition founded by Jesse Jackson. The organizations pursue
social justice, civil rights and political activism.
In December 1971, Jackson resigned from Operation
Breadbasket after clashing with Rev. Ralph Abernathy and founded
Operation PUSH. Jackson founded the National Rainbow Coalition
in 1984 which merged with PUSH in 1996. The combined
organization keeps its national headquarters on the South Side of
Chicago and has branches in Washington, D.C., New York City, Los
Angeles, Detroit, Houston, Atlanta, the Silicon Valley, and New
Orleans.
Operation PUSH was successful at raising public awareness
to initiate corporate action and government sponsorship. The
National Rainbow coalition became a prominent political
organization that raised public

Crises of
Malevolence.

Outline.
Definition of Malevolence crises.
Main Points of Definition.
Opponents use criminal means .
Expressing hostility.
Seeking gain.
Terrorism, kidnapping, Product tampering.
Example of Malevolence crises.
Chicago Tylenol murders 1982.

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Crises of Malevolence. age risi
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Definition.
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An organization faces a crisis of malevolence when .
opponents or miscreant individuals use criminal means or other
extreme tactics for the purpose of expressing hostility or anger
toward, or seeking gain from, a company, country, or economic
system, perhaps with the aim of destabilizing or destroying it.
Sample crises include product tampering, kidnapping, malicious
rumors, terrorism, and espionage.
Main Points of definition about Malevolence crises:
1.Opponents use criminal means .
2.Expressing hostility.
3.Seeking gain.
4.Terrorism, kidnapping, Product tampering.

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Example.
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Chicago Tylenol murders 1982.
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The Chicago Tylenol murders
t
occurred when seven people died after taking pain-relief capsules .
that had been poisoned. The Tylenol poisonings, code-named
TYMURS by the FBI, took place in the autumn of 1982 in the
Chicago area of the United States. These poisonings involved
Extra-Strength Tylenol medicine capsules which had been laced
with potassium cyanide. The incident led to reforms in the
packaging of over-the-counter substances and to federal antitampering laws. The case remains unsolved and no suspects have
been charged. A $100,000 reward, offered by Johnson & Johnson
for the capture and conviction of the "Tylenol Killer," has never
been claimed.

Organizational
Misdeeds Crises.

Outline.
Definition of Crises of organizational misdeeds.
Main Points of Definition.

Management takes actions.

Place stakeholders at risk.

Without adequate precautions.

Example of Crises of organizational misdeeds.
...
Types of Crises of organizational misdeeds.
Crisis of skewed management value.
Crisis of deception.
Crisis of management misconduct .

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Crises of
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Definition.
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Crises occur when management takes actions it
knows will harm or place stakeholders at risk for harm without
adequate precautions.Lerbinger specified three different types of
crises of organizational misdeeds: crises of skewed management
values, crises of deception, and crises of management
misconduct.
Main Points of definition about Crises of organizational misdeeds:
1.Management takes actions.
2.Place stakeholders at risk.
3.Without adequate precautions.

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Types of
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Types of Organizational Misdeeds.
These are basic three
types of crises.
1.
2.
3.

Crisis of skewed management value.

Crisis of deception.
Crisis of management misconduct .

Skewed Management
Values.

Outline.

Definition of Crises of skewed management values .

Main Points of Definition.
Short-term economic gain.
Neglect broader social values.
Rooted in the classical business creed.
Focuses on the interests of stockholders.
Example of Crises of skewed management values .
Sears sacrifices customer trust.

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Skewed Management
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Values.
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Definition.
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Crises of skewed management values are caused
when managers
favor short-term economic gain and neglect broader social
values and stakeholders other than investors. This state of
lopsided values is rooted in the classical business creed that
focuses on the interests of stockholders and tends to view the
interests of its other stakeholders such as customers, employees,
and the community.
Main Points of definition about Crises of skewed management
values :
1.Short-term economic gain.
2.Neglect broader social values.
3.Rooted in the classical business creed.
4.Focuses on the interests of stockholders.

Crisis of
Deception.

Outline.
Definition of Crises of deception.
Main Points of Definition.
Crises of deception occur.
Management conceals.
Misrepresents information.
In its dealing with consumers.
Example of Crises of Crises of deception.
Dow Cornings silicone-gel breast implant.

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Definition.

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Crisis of Deception.
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Crises of deception occur when management

conceals or misrepresents information about itself and its products

in its dealing with consumers and others.
Main Points of definition about Crises of deception:
1.Crises of deception occur.
2.Management conceals.
3.Misrepresents information.
4.In its dealing with consumers.

Example.
Dow Cornings silicone-gel breast implant.

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Throughout the

1980s and 1990s, class-action lawsuits claimed that Dow

Corning's silicone breast implants caused systemic health
problems. The claims first centered around breast cancer, and
then migrated to a range of autoimmune diseases, including
lupus, rheumatoid arthritis and various neurological problems. This
led to numerous lawsuits beginning in 1984 and culminating in a
1998 multi-billion dollar class action settlement. As a result, Dow
Corning was in bankruptcy protection for nine years, ending in
June 2004.
A number of large, independent reviews of the scientific
literature, including the U.S. Institute of Medicine, have
subsequently found that silicone breast implants do not appear to
cause breast cancers or any
identifiable systemic disease.

Crises of Management
Misconduct.

Outline.
Definition of Crises of Management Misconduct.
Main Points of Definition.
Some crises are caused
Skewed values.
Deception.
Deliberate amorality and illegality.
Example of Crises of Management Misconduct.
Martha Stewart fraud case.

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Crises of
Definition.

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Management Misconduct.
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Some crises are caused not only by skewed values

and deception but deliberate amorality and illegality.

Main Points of definition about Crises of Management
Misconduct:
1.Some crises are caused
2.Skewed values.
3.Deception.
4.Deliberate amorality and illegality.

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Example.
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Martha Stewart fraud case.
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According to U.S. Securities and
t
Exchange Commission (SEC), Stewart avoided a loss of $45,673 by .
selling all 3,928 shares of her ImClone Systems stock on
December 27, 2001, after receiving material, nonpublic
information from Peter Bacanovic, who was Stewart's broker at
Merrill Lynch. The day following her sale, the stock value fell 16%.
In the
months that followed, Stewart drew heavy media scrutiny,
including a Newsweek cover headlined "Martha's Mess". Notably,
on June 25, 2002, CBS anchor Jane Clayson grilled Stewart on the
air about ImClone during her regular segment on The Early Show.
Stewart tensely continued chopping cabbage and famously
quipped, "I just want to focus on my salad".
On October 3, 2002, Martha Stewart
resigned her
position, held for four months, on the board of directors of the
New York Stock Exchange, following a deal prosecutors had made
with Douglas Faneuil, an assistant to Bacanovic.

Workplace
violence.

Outline.
Definition of Crises of Workplace violence.
Main Points of Definition.
1.Crises occur .
2.Employee or former employee.
3.Commits violence against other employees.
4.On organizational grounds.
. Example of Crises of Crises of Workplace violence.
DuPonts Lycra.

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Crises of Workplace
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Definition.
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Crises occur when an employee or former employee .
commits violence against other employees on organizational
grounds.
Main Points of definition about Crises of Workplace violence :
1.Crises occur .
2.Employee or former employee.
3.Commits violence against other employees.
4.On organizational grounds.

Rumors.

Outline.
Definition of Crises of Rumors.
Main Points of Definition.
1.False information about an organization.
2.Products creates crises.
3.Hurting the organizations reputation.
4.Radical groups.
5.Stories.
6.Products are contaminated.
. Example of Crises of Crises of Rumors.
Procter & Gamble's Logo controversy.

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Crises of Rumors.
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Definition.
t.
False information about an organization or its
products creates crises hurting the organizations reputation.
Sample is linking the organization to radical groups or stories that
their products are contaminated.
Main Points of definition about Crises of Rumors :
1.False information about an organization.
2.Products creates crises.
3.Hurting the organizations reputation.
4.Radical groups.
5.Stories.
6.Products are contaminated.

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Example.
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Procter & Gamble's Logo controversy.
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P&G's former logo originated in 1851 as a

crude cross that barge

workers on the Ohio River painted on cases of P&G star candles to identify them.
P&G later altered this symbol into a trademark that showed a man in the moon
overlooking 13 stars, said to commemorate the original 13 colonies.
Former P&G logo
The company received unwanted media publicity in the 1980s
when rumors spread that the moon-and-stars logo was a satanic symbol. The
accusation was based on a particular passage in the Bible, specifically Revelation
12:1, which states: "And there appeared a great wonder in heaven; a woman clothed
with the sun, and the moon under her feet, and upon her head a crown of 12 stars."
P&G's logo consisted of a man's face on the moon surrounded by 13 stars, and some
claimed that the logo was a mockery of the heavenly symbol alluded to in the
aforementioned verse, thus construing the logo to be satanic. Where the flowing
beard meets the surrounding circle, three curls were said to be a mirror image of the
number 666, or the reflected number of the beast. At the top and bottom, the hair
curls in on itself, and was said to be the two horns like those of a lamb that
represented the false prophet.
These interpretations have been denied by company officials, and no
evidence linking the company to the Church
of Satan or any other occult organization has ever been presented. The company

End of
Types.

Crisis
Leadership.

Outline.
Crisis Leadership.
Introduction.
Types of Crisis Leadership.
1. Sudden crisis.
2. Smoldering crises.
Signal detection
Preparation and prevention
Containment and damage control
Business recovery
Learning

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Crisis Leadership.
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Crisis Leadership.
t.
Erika Hayes James, an organizational psychologist at
the University of Virginias Darden Graduate School of Business,
identifies two primary types of organizational crisis. James defines
organizational crisis as any emotionally charged situation that,
once it becomes public, invites negative stakeholder reaction and
thereby has the potential to threaten the financial well-being,
reputation, or survival of the firm or some portion thereof..
Types Of Crisis Leadership:
1. Sudden crisis.
2. Smoldering crises.
Signal detection
Preparation and prevention
Containment and damage control
Business recovery
Learning

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Crisis Leadership.
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Sudden crisis.
t.
Sudden crises are circumstances that occur without
warning and beyond an institutions control. Consequently, sudden
crises are most often situations for which the institution and its
leadership are not blamed.
Smoldering crises.
Smoldering crises differ from sudden crises in
that they begin as minor internal issues that, due to managers
negligence, develop to crisis status. These are situations when
leaders are blamed for the crisis and its subsequent effect on the
institution in question.
James categorizes five
phases of crisis that require specific crisis leadership
competencies.
1. Signal detection
2. Preparation and prevention

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Crisis Leadership.
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Signal detection.
t.
Signal detection is the stage in a crisis in which
leaders should, but do not always, sense early warning signals
(red flags) that suggest the possibility of a crisis. The detection
stages of a crisis include: Sense-making: represents an attempt to
create order and make sense, retrospectively, of what occurs.
Perspective-taking: the ability to consider another person's or
group's point of view.
Preparation and prevention.
It is during this stage that crisis handlers begin
preparing for or averting the crisis that had been foreshadowed in
the signal detection stage. Organizations such as the Red Cross's
primary mission is to prepare for and prevent the escalation of
crisis events. Wal-Mart has been described as an emergency relief
standard bearer after having witnessed the incredibly speedy and
well-coordinated effort to get supplies to the Gulf Coast of the
United States in anticipation of Hurricane Katrina..

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Containment and damage control.
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Usually the most vivid stage, t
.
the goal of crisis containment and damage control is to limit the
reputational, financial, safety, and other threats to firm survival.
Crisis handlers work diligently during this stage to bring the crisis
to an end as quickly as possible to limit the negative publicity to
the organization, and move into the business recovery phase.
Business recovery.
When crisis hits, organizations must be able
to carry on with their business in the midst of the crisis while
simultaneously planning for how they will recover from the
damage the crisis caused. Crisis handlers not only must engage in
continuity planning (determining the people, financial, and
technology resources needed to keep the organization running),
but will also actively pursue organizational resilience.
Learning.
In the wake of a crisis, organizational decision makers
adopt a learning orientation and use prior experience to develop
new routines and behaviors that ultimately change the way the

End of Crisis
Leadership.

Models and
Theories
Associated
With Crisis

Outline.
Models and theories associated with crisis management.

Crisis Management Model.

Management Crisis Planning.
Contingency planning.
Business continuity planning.
Structural-functional systems theory.
Diffusion of innovation theory.
Role of apologies in crisis management.
Crisis leadership.
Unequal human capital theory.

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Models
Theories.
Crisis Management Model.

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Successfully defusing a crisis

requires an understanding of how to handle a crisis before they

occur. Gonzalez-Herrero and Pratt found the different phases of Crisis
Management.
There are 3 phases in any Crisis Management are as below
1. The diagnosis of the impending trouble or the danger signals
2. Choosing appropriate Turnaround Strategy
3. Implementation of the change process and its monitoring.
Management Crisis Planning.
No corporation looks forward to
facing a situation that causes a significant disruption to their
business, especially one that stimulates extensive media
coverage. Public scrutiny can result in a negative financial,
political, legal and government impact. Crisis management
planning deals with providing the best response to a crisis.

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Contingency planning.
t.
Preparing contingency plans in advance,
as part of a crisis management plan, is the first step to ensuring
an organization is appropriately prepared for a crisis. Crisis
management teams can rehearse a crisis plan by developing a
simulated scenario to use as a drill. The plan should clearly
stipulate that the only people to speak publicly about the crisis are
the designated persons, such as the company spokesperson or
crisis team members.
Business continuity planning.
When a crisis will undoubtedly cause
a significant disruption to an organization, a business continuity
plan can help minimize the disruption. First, one must identify the
critical functions and 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 the
functions/processes ceases or fails. Testing these contingency
plans by rehearsing the required actions in a simulation will allow

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Structural-functional systems theory.
t.
Providing information to an
organization in a time of crisis is critical to effective crisis
management. Structural-functional systems theory addresses the
intricacies of information networks and levels of command making
up organizational communication. The structural-functional theory
identifies information flow in organizations as "networks" made up
of members and "links". Information in organizations flow in
patterns called networks.
Diffusion of innovation theory.
At its most elementary form, the process involves:
(1) an innovation,
(2) an individual or other unit of adoption that has knowledge of
or experience
with using the innovation,
(3) another individual or other unit that does not yet have
knowledge of the innovation, and
(4) a communication channel connecting the two units. A
communication channel is the means by which messages get from

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Role of apologies in crisis management.
t.
There has been debate
about the role of apologies in crisis management, and some argue
that apology opens an organization up for possible legal
consequences. "However some evidence indicates that
compensation and sympathy, two less expensive strategies, are as
effective as an apology in shaping peoples perceptions of the
organization taking responsibility for the crisis because these
strategies focus on the victims needs. The sympathy response
expresses concern for victims while compensation offers victims
something to offset the suffering.
Crisis leadership.
James identifies six leadership competencies
which facilitate
organizational restructuring during and after
a crisis.
1. Building an environment of trust
2. Reforming the organizations mindset
3. Identifying obvious and obscure vulnerabilities of the
organization

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Unequal human capital theory.
t.
James postulates that
organizational crisis can result from discrimination lawsuits.
Jamess theory of unequal human capital and social position
derives from economic theories of human and social capital
concluding that minority employees receive fewer organizational
rewards than those with access to executive management. In a
recent study of managers in a Fortune 500 company, race was
found to be a predictor of promotion opportunity or lack thereof.
Thus, discrimination lawsuits can invite negative stakeholder
reaction, damage the company's reputation, and threaten
corporate survival.

End of Models and

Theories.

Examples of
Successful
Crisis Management.

Examples.

There are Many examples some them are.

Pepsi.
Mattel
Odwalla Foods
Tylenol (Johnson and Johnson)

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Pepsi
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The Pepsi Corporation faced a crisis in 1993 which started with claimst
.
of syringes being found in cans of diet Pepsi. Pepsi urged stores
not to remove the product from shelves while it had the cans and
the situation investigated. This led to an arrest, which Pepsi made
public and then followed with their first video news release,
showing the production process to demonstrate that such
tampering was impossible within their factories. A second video
news release displayed the man arrested. A third video news
release showed surveillance from a convenience store where a
woman was caught replicating the tampering incident. The
company simultaneously publicly worked with the FDA during the
crisis. The corporation was completely open with the public
throughout, and every employee of Pepsi was kept aware of the
details. This made public communications effective throughout the
crisis. After the crisis had been resolved, the corporation ran a
series of special campaigns designed to thank the public for
standing by the corporation, along with coupons for further
compensation.
This case served as a design for how to handle other crisis

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Mattel
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Mattel Inc., the toy maker, has been plagued with more than 28
t.
product recalls
and in Summer of 2007, amongst problems with exports from China,
faced two
product recall in two weeks. The company "did everything it could to
get its message
out, earning high marks from consumers and retailers. Though upset
by the situation,
they were appreciative of the company's response. At Mattel, just
after the 7 a.m.
recall announcement by federal officials, 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 a teleconference
call with
executives and scheduled TV appearances or phone conversations
with Mattel's chief

M
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Tylenol
ag ris
em i s
(Johnson and Johnson)
en
In the fall of 1982, a murderer added 65 milligrams of cyanide to
t.
some Tylenol capsules on store 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's actions. Tamperresistant packaging was rapidly introduced, and Tylenol sales swiftly
bounced back to near pre-crisis levels.
When another bottle of tainted Tylenol was discovered in a store, it
took only a matter of minutes for the manufacturer to issue a
nationwide warning that people should not use the medication in its
capsule form.

Examples of
Unsuccessful
Crisis Management.

Examples.
There are Many examples some them are.
Bhopal.
Ford and Firestone Tire and Rubber Company.
Exxon.

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t.

M
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ris
a
g
Bhopal.
em i s
en
The Bhopal disaster in which poor communication before, during, and t
.
after the
crisis cost thousands of lives, illustrates the importance of
incorporating cross-cultural communication in crisis management
plans. According to American Universitys Trade Environmental
Database Case Studies (1997), local residents were not sure how to
react to warnings of potential threats from the Union Carbide plant.
Operating manuals printed only in English is an extreme example 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
efforts because they were placed under house arrest by the Indian
government. Symbolic intervention can be counter productive; a
crisis management strategy can help upper management make more
calculated decisions in how they should respond to disaster
scenarios. The Bhopal incident illustrates the difficulty in consistently
applying management standards to multi-national operations and the
blame shifting

Ford and Firestone

Tire and
Rubber Company.

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t.

The Ford-Firestone Tire and Rubber Company dispute transpired in

August 2000. In response to claims that their 15-inch Wilderness AT,
radial ATX and ATX II tire treads were separating from the tire core
leading to grisly, spectacular crashesBridgestone/Firestone recalled
6.5 million tires. These tires were 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, they blamed consumers for not inflating their
tires properly. Then they blamed each other for faulty tires 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.

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ris
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Exxon.
em i s
en
On March 24, 1989, a tanker belonging to the Exxon Corporation ran t
.
aground in
the Prince William Sound in Alaska. The Exxon Valdez spilled millions
of gallons of crude oil into the waters off Valdez, killing thousands of
fish, fowl, and sea otters. Hundreds of miles of coastline were
polluted and salmon spawning runs disrupted; numerous fishermen,
especially Native Americans, lost their livelihoods. Exxon, by contrast,
did not react quickly in terms of dealing with 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 a communication plan nor a communication
team in place to handle the eventin fact, the company 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 too remote to handle the
onslaught of media attention;
and the company acted defensively in its response
to its publics, even laying blame, at times, on other
groups such as the Coast Guard. These responses

End of Examples.

Lessons Learned in
Crisis Management.

Lessons learned

essons learned in crisis management.

Impact of catastrophes on shareholder value.
Crisis as Opportunity.

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Lessons learned. e is
m
en
Impact of catastrophes on shareholder value.
t.
One of the
foremost recognized studies conducted on the impact of a
catastrophe on the stock value of an organization was completed by
Dr Rory Knight and Dr Deborah Pretty (1995), Templeton College,
University of Oxford - commissioned by the Sedgewick Group). This
study undertook a detailed analysis of the stock price (post impact)
of organizations that had experienced catastrophes. The study
identified organizations that recovered and even exceeded precatastrophe stock price, (Recoveries), and those that did not recover
on stock price, (Non-recoverers). The average cumulative impact on
shareholder value for the recoveries was 5% plus on their original
stock value. So the net impact on shareholder value by this stage
was actually positive. The non-recoverers remained more or less
unchanged between days 5 and 50 after the catastrophe, but
suffered a net negative cumulative impact of almost 15% on their
stock price up to one year afterwards.
One of the key conclusions of this study is that "Effective
management of the consequences of catastrophes would appear to

M
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Lessons learned. e is
m
en
Crisis as Opportunity.
t.
To address such shareholder impact,
management must move from a mindset that manages crisis to one
that generates crisis leadership. Research shows that organizational
contributory factors affect the tendency of executives to adopt an
effective "crisis as opportunity" mindset. Since pressure is both a
precipitator and consequence of crisis, leaders who perform well
under pressure can effectively guide the organization through such
crisis.
James contends that most
executives focus on communications and public relations as a
reactive strategy. While the companys reputation with shareholders,
financial well-being, and survival are all at stake, potential damage to
reputation can result from the actual management of the crisis issue.
Additionally, companies may stagnate as their risk management
group identifies whether a crisis is sufficiently statistically
significant. Crisis leadership, on the other hand, immediately
addresses both the damage and implications for the companys
present and future conditions, as well as opportunities for

End of Lessons
Learned .

References.

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References.
em i s
e
wikipedia.org (Crisis management) From Wikipedia, the free encyclopedia.n
t.
http://en.wikipedia.org/wiki/Crisis_management#Crises_of_organizational_m
isdeeds

managementhelp.org (Crisis management) From managementhelp, the free

management help site.
http://managementhelp.org/crisis/crisis.htm
books.google.com.pk (Crisis management) Crisis Management: Master
the Skills to Prevent Disasters By Richard Luecke, Harvard Business
School.
http://books.google.com.pk/books?
id=MF0RLD8dukcC&printsec=frontcover&dq=Crisis+management