CRISIS MANAGEMENT 

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Crisis can affect all segment of society.

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INTRODUCTIONCrisis management includes the development

of plans to reduce the risk of a crisis occurring and to deal with any crises that do arise, and the implementation of these plans so as to minimize the impact of crises and assist the organization to recover from them. Crisis situations may occur as a result of external factors such as the development of a new product by a competitor or internal factors such as a product failure or faulty decision making, and often involve the need to make quick decisions.

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TYPES OF CRISIS On the Basis of Social Settings:

1. Domestic Crisis2. Industrial Crisis3. Natural Crisis4. Professional Crisis5. Social Crisis6. Financial Crisis

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Importance of PRDevelops Good relations with customers.Helps to Build and create reputation and

image of the company.Maintains Company’s Credibility.Communication Gap.PR is essential for a successful business.

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Three mainStages

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Stages in crisis managementPre-Crisis Phase• The pre-crisis phase is concerned with prevention

and preparation. • Prevention involves seeking to reduce known risks

that could lead to a crisis. This is part of an Organization’s risk management program.

• Preparation involves creating the crisis management

• Plan, selecting and training the crisis management team, and conducting exercises to test theCrisis management plan and crisis management team.

Crisis ResponseThe crisis response is what management does

and says after the crisis hits. Public relations plays a critical role in the crisis response by helping to develop the messages that are sent to various publics.

A great deal of research has examined the crisis response. That research has been divided into two sections:

(1) the initial crisis response and (2) Reputation repair and behavioral intentions

Post-Crisis Phase

In the post-crisis phase, the organization is returning to business as usual. The crisis is no longer

the focal point of management’s attention but still requires some attention.

Examples of Crisis ManagementOdwallaExxonCadbury

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Case Study-Odwalla

Odwalla (pronounced "odewalla") is the health-conscious juice company which began a couple of decades ago when Greg Stelt enpohl, Gerry Percy and Bonnie Bassett began squeezing fresh oranges on a $200 hand juicer. The company was growing strongly with annual sales rising 30% per year and approaching $90m. The company had established a strong brand with enormous customer loyalty.

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Odwalla juice e-coil outbreak in 1996Health officials in Washington state

informed the company that they had discovered a link between several cases of E. coil 0157:H7 and Odwalla fresh apple juice.

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Case Study Cont….

Case Study Cont….One child died and more than 60 people in

the Western United States and Canada became sick after drinking the juice.

Sales plummeted by 90%, Odwalla's stock price fell 34%.

Customers filed more than 20 personal-injury lawsuits and the company looked as though it could well be destroyed.

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What did the company do?

Odwalla's CEO Stephen Williamson ordered a complete recall of all products containing apple or carrot juice. This recall covered around 4,600 retail outlets in 7 states.

On all media interviews, Williamson

expressed sympathy and regret for all those affected and immediately promised that the company would pay all medical costs.

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Internal communications:-Williamson conducted regular company-

wide conference calls on a daily basis, giving employees the chance to ask questions and get the latest information.

This approach proved so popular that the practice of quarterly calls survived the crisis.

External communications:-Within 24 hours, the company had an

explanatory web site (its first) that received 20,000 hits in 48 hours.

All possible attempts were made to provide up to the minute, accurate information.

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What did the company do? cont….

Fixing the ProblemThe next step was to tackle the problem of

contamination. The company switched from unpasteurized juice to

a process called "flash pasteurization" which would guarantee that E-coli had been destroyed without compromising flavor.

Within months of the outbreak, the company had in place what some experts described as "the most comprehensive quality control and safety system in the fresh juice industry."

The new process was communicated in all advertising and public outreach campaigns

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ConclusionThe company's values spoke of nourishing people

- and when the crisis came it was an adherence to honest, straight talking and accepting responsibility that helped to get the company through.

There are critics who refuse to credit the company with any integrity whatsoever - but even these will concede that as an exercise in crisis management, Odwalla stands as an example of best practice that few can match.

The year after the crisis, Odwalla was voted "Best Brand Name in the Bay Area" by San Francisco Magazine. This was the first indication amongst many that Odwalla's reputation had survived.

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Case Study -EXXON ValdezIn 1989, the Exxon Valdez

oil tanker, entered the Prince William Sound, on its way towards California.

The ship ran aground and began spilling oil. Within a very short period of time, significant quantities of its 1,260,000 barrels had entered the environment.

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Continued……At the moment of the collision the third

mate, who was not certified to take the tanker into those waters, was at the helm.

The probable cause was established that the Captain and many of the crew had been drinking alcohol in considerable quantities.

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What did the company do?The action to contain the spill was slow to

get going.

The company refused to communicate openly and effectively to the public about the incident.

The Exxon Chairman, Lawrence Rawl, was immensely suspicious of the media, and reacted accordingly.

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Poor Crisis ManagementThe Chairman refused to

be interviewed on TV and said that he had no time for “that kind of thing.”

A company spokesman misrepresented the extent of the spill and clean-up efforts

This was in contrast to the footage of the ecological disaster shown on TV

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Failure to Fix the ProblemWhile Exxon stalled and attempted to cover up the

problem, the clean-up operation was slow to begin

Around 240,000 barrels had been spilled, with another million still on the ship.

During the first two days, when calm weather would have allowed it, little was done to contain the spillage.

This spillage spread out into a 12 square mile slick.

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The Problem CompoundsThen the bad weather struck, making further containment almost impossible.

After more than a week, the company was still giving no ground on the request for better communication.

The media clamor became so hostile that eventually Frank Larossi, the Director of Exxon Shipping, flew to Valdez to hold a press conference.

It was not a success. Small pieces of good news claimed by the company were immediately contradicted by the eyewitness accounts of the present journalists and fishermen.

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Outrage BuildsJohn Devens, the Mayor of Valdez,

commented that the community felt betrayed by Exxon's inadequate response to the crisis, in contrast to the promises that they would be quick to react exactly in this eventuality.

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Poor CommunicationEventually, Chairman Rawl was interviewed

live

He was asked about the latest plans for the clean-up.

It turned out he had neglected to read these, and cited the fact that it was not the job of the chairman to read such reports.

He placed the blame for the crisis at the feet of the world's media.

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The AftermathExxon lost market share and slipped from

being the largest oil company in the world to the third largest.

The "Exxon Valdez" entered the language as a shortcut for corporate arrogance and damage.

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What went wrong?The company failed to show that they had effective systems in place to deal with the crisis - and in particular their ability to move quickly once the problem had occurred was not in evidence

They showed little leadership after the event in ensuring such problems would never happen again

They quite simply gave no evidence that they

cared about what had happened. They appeared indifferent to the environmental destruction.

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THE WORMY CONTROVERSY

RISE OF THE CONTROVERSYState FDA Commissioner Uttam Khobragade said a group of people approached him with chocolates that had worms in them.

Sebastian Fernandez had purchased Cadbury Dairy Milk chocolate from a shop at Pick and Pay, Vile Parle.

Fernandez discovered that the chocolate (Batch No28F3I10703) had worms in it.

Fernandez complained to the shopkeeper Jitendra Shah who later informed Pravin Marve, vice-president, Andheri Vyapar Manch.

Marve then contacted the FDA and gave them the sample. FDA Joint Commissioner Hindurao Salunkhe said Cadbury's Talegaon plant will also be inspected.

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EFFECTS OF THE CONTROVERSY ON CADBURY

The state Food and Drug Administration has ordered abduction of Cadbury's Dairy Milk chocolates from all over Maharashtra after worms were found in two of them in Mumbai.

bad storage practices by retailers and distributors that had led to the worms.

Festival season sales (Cadbury sells almost 1,000 tones of chocolates during Diwali) plummeted 30 per cent.

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ROLE OF THE PUBLIC RELATIONS

NOT DENYING THE FACTMaharashtra Food and Drug

Administration had given a clean chit to the company's two plants in the state.

tell consumers about improper storageBharat Puri, Cadbury's mild-mannered

MD, went to media offices around the country

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ROLE OF THE PUBLIC RELATIONS (cont…)TAKING PRECAUTIONScompany launched Project Vishwas, a retail

education programme.(generating awareness and providing assistance in improving storage quality.) “Steps to ensure quality & regain the confidence”

new double packaging even for the smallest offering

wrapped in aluminium foil and enclosed in a poly flow pack, which was sealed on all sides.

company also carried out quality checks

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ROLE OF THE PUBLIC RELATIONS (cont…)

GAINING BACK TRUSTAB played a pivotal role in all

communication relating to Cadbury's products and brands

created a campaign which aimed for both rational and emotional appeal.

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ROLE OF THE PUBLIC RELATIONS BENEFITS OF A GOOD CAMPAIGNThe company bounced back soon after the

campaign hit the screens. Between October 2003 and January 2004, Cadbury's value share melted from 73 per cent in to 69.4 per cent. The recovery began in May 2004 when Cadbury's value share went up to 71 per cent.

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How to handle a crisis - 11 communications tips

Tip 1 :- Have A Crisis plan ready to go.Tip 2 :- Build The Crisis Support Infrastructure.Tip 3 :- Speak With One Voice.Tip 4 :- Be Prepared Before You Talk.Tip 5 :- Remembers Social Media.Tip 6 :- Be there.

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Tip 7 :-Fall On Your Sword.

Tips 8 :-Protect The Record. 

Tips 9 :-keep reading the situation.

Tips 10 :-don’t go quiet.

Tip 11 :- learn & tweak.

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Contd…..

Conclusion A crisis management plan generates order

out of chaos. It needs strong leadership by well-trained and rehearsed individuals. Everyone within an organisation should know what his or her role is in a crisis and should be prepare to deal with one. 

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