Crisis Management Ppt

CRISIS MANAGEMENT

1

2

Crisis can affect affect all segme s egment nt of  society.

3

INTRODUCTION y

Crisis management includes inc ludes the development of  plans to reduce the risk of a crisis occurring occurrin g and to deal with any crises that do arise, and the implementation of these th ese plans so as to to minimize the impact of crises and assist the organization to recover from them. Crisis situations may occur as a result of external factors fac tors such as the development of a new product by a competitor competi tor or internal intern al factors such as a product failure or faulty decision making, and often involve the need to make quick decisions. 4

TYPES OF CRISIS y

On the Basis of Social Settings:

1. 2. 3. 4. 5. 6.

Domestic Crisis Industrial Crisis Natural Crisis Professional Crisis Social Crisis Financial Crisis

5

Importance of PR y y

y y y

Develops Good relations with customers. cu stomers. Helps to Build and create reputation and image of  the compa company ny.. Maintains Companys Credibility. Communication Gap. PR is essential for a successful business. bus iness.

6

Three mainStages

PHASES

Pre crisis

Crisis response

Postcrisis. 7

Stages Stag es in crisis managemen managementt 





 

Pre-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. crisis. This is i s part of an Organizations risk management program. Preparation involves involves creating the crisis management Plan, selecting and training the crisis management team, and conducting exercises to test theCrisis management mana gement plan and crisis management team.

Crisis Response The crisis response is what management m anagement 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 research has ha s been divided into two sections:  (1) the initial crisis response and  (2) Reputation repair and behavioral intentions 

Postt-Crisis Phase Pos y

y

In the post-crisis phase, the organization is returning to business as usual. The crisis crisi s is no longer the focal point of managements attention but still requires some attention.

Examples of Crisis Management

Odwalla

y

Exxon Cadbury 

y y

11

Case Study-Odw Study-Odwalla alla y

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

12

Case Study Cont. y

Odwalla juice e-coil outbreak in 1996 y

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

13

Case Study Cont. y

One child died and more than 60 people in the

 Western  Western United States and Canada became bec ame sick after drinking the th e 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.

y

y

14

What y

did the compan company y do?

Odwalla's CEO Stephen Williamson ordered a

complete recall of all products containing containin g apple or carrot juice. This recall covered covered around 4,600 retail outlets in 7 states. y

On all media interviews, interview s, Williamson expressed expressed

sympathy and regret for all those affected and immediately promised that the company would pay all medical costs. 15

What did the company do? cont«. Internal communications: Williamson conducted conduc ted regular company-wide company-wide conference conferen ce calls call s on a daily basis, giving givin g employees the chance to to ask questions and an d get the latest information. This approach proved so popular that the practice of quarterly qu arterly calls survived sur vived the crisis. communications: tions:External communica  Within 24 hours, the company had an explanatory   web site (its first) that received received 20,000 hits in 48 hours.  All possible po ssible attempts were made to provide up to the minute, accurate information. y

y

y

y

16

Fixing the Problem y y

y

y

The next step was to tackle the problem of contamination. contamin ation. The company company switched from f rom unpasteurized juice to a process called "flash pasteurization" which would guarantee that E-coli had been destroyed without compromising f lavor lavor..  Within months of the outbreak, the company had in place  what some experts described as "the " the most comprehensive quality control and safety system in the fresh juice industry." The new process was communica communicated ted in all advertising and public outreach campaigns 17

Conclusion y

y

y

The company's company's values values spoke spoke of nourishing 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 whatsoever - but even even these will concede that as an exercise exercise in crisis management, Odwalla stands as an example of best be st practice that few can match. The year after the crisis, Odwalla was voted "Best Brand Brand Name in the Bay Area" by San Francisco Magazine. This  was the first indication amongst many that Odwalla's reputation had survived.

18

Case Study -EXXON Valdez y

y

In 1989, the Exxon Valdez Valdez oil tanker, entered the Prince  William Sound, Sound , on its way  towards towards California. Califo rnia. The ship ran aground and began spilling oil. Within a very very short period of time, significant quantities of its 1,260,000 barrels had entered the environment .

19

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.

y

y

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

20

What y

y

y

did the compan company y do?

The action to contain the t he spill was wa s slow to get going. The company refused to communicate openly and effectively to the public about the incident. The Exxon Chairman, Chairman , Lawrence L awrence Rawl, was immensely suspicious of the media, and reacted accordingly. 21

Poor Crisis Crisis Management The Chairman refused to be interviewed on TV and said that he had no time for that kind of  o f  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  

22

Failure to Fix the Problem y

y

y

y

 While Exxon stalled and attempted to cover cover up the problem, the clean-up clean- up operation was slow to begin  Around 240,000 barrels had been spilled, with another million still on the t he ship. ship. During the t he first f irst two days, when calm weather would would have have allowed it, little was done to contain contain the th e spillage. This spillage spread spread out into in to a 12 square mile slick.

23

The Compounds Then Problem the bad weather struck, making further containment y

almost impossible. y

y

y

 After more than a week, week, the company was was still giving no ground on the request for better communication. 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. success. Small pieces pie ces of good news claimed by  the company were were immediately contradicted by the eyewitness accounts accounts of the present journalists and fishermen. 24

Outrage Outrag e Builds y

John 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 qui ck to react exactly in this eventuality eventua lity..

25

Poor Communication y

y

y

Eventually Eventually,, Chairman Chairma n Rawl R awl was interviewed inter viewed live He was asked about the latest plans for the cleanup. It turned out he had ha d 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.

y

26

The Aftermath y

y

Exxon lost market share and slipped from being the largest oil company in the t he world to the third largest. The "Exxon Valdez" entered the language as a shortcut for corporate arrogance and damage.

27

WThe hat went wrong? company compan y failed to show that they had effective y

systems in place to deal with the crisis - and in particula parti cularr their thei r ability abili ty to move move quickly quic kly once the problem had occurred was not in evidence eviden ce

y

y

They showed little leadership after the event in ensuring such suc h problems would would never happen again They The y quite simply gave no evidence evidence that they the y cared about what had happened. happene d. They appeared indifferent to the environmental environmental destruction. destru ction.

28

THE WORMY

CONTROVERSY

29

RISE OF THE CONTROVERSY State FDA Commissioner Uttam Khobragade Kho bragade said a group of 

y

y

y

y

y

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 discover discovered ed 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 tthe he FDA and gave gave them the sample. FDA  J Joint Commissioner Hindurao Salunkhe said Cadbury's Talegaon plant will also a lso be inspected. 30

EFFECTS OF THE CONTROVERSY ON CADBURY The state Food Food and Drug Administration has ha s ordered abduction of Cadbury's Dairy Milk chocolates from all over Maharashtra after worms  were found in two of them th em in Mumbai. bad storage practices by retailers and distributors that had led to the worms. Festival Festival season sales (Cadbury (Cadbu ry sells almost 1,000 tones of chocolates during Diwali) plummeted 30 per cent.

y

y

y

31

ROLE OF THE PUBLIC RELATIONS FACT Food and Drug Dru g Administration had Maharashtra Food given a clean clean chit to the company' company'ss two plants in in the state. tell consumers about improper storage Cadbur y's mild-mannered MD M D, went Bharat Puri, Cadbury's to media offices around around the country  y

NOT DENY ING THE

32

ROLE OF THE PUBLIC RELATIONS

(cont)

PR ECAUTIONS company 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 en closed in a poly   wrapped in aluminium foil and enclosed f low pack, which was sealed on all sides. ou t quality checks company also carried out y

T AKING



33

ROLE OF THE PUBLIC RELATIONS

(cont)

BACK TRUST  AB 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. y

G AINING

34

35

ROLE OF THE PUBLIC RELATIONS BENEFITS OF A GOOD CAMPAIGN

y

The company company bounced back soon after the campaign hit the screens. Between October 2003 and  January anuar y 2004, Cadbury's Cadbur y's value share melted from 73 per pe r cent in to 69.4 per cent. The recover recovery  y  began in May 2004 when Cadbury's Cadbur y's value share  went up to 71 per cent.

y

36

How

to handle a crisis 11 communications tips

y

Tip 1 :- Have A Crisis plan ready to go.

y

Tip 2 :- Build The The Crisis Support Support Infrastructu Infrastructure. re.

y

Tip 3 :- Speak With With One Voice. Voice.

y

Tip 4 :- Be Prepared Before You You Talk. Talk.

y

Tip 5 :- Remember Rememberss Social Media. Media.

y

Tip 6 :- Be ther there. e.

37

Contd..

Tip 7

:-Fall On Your Sword.

Tips 8 :-Protect :-Prote ct The Record. Tips 9 :-keep reading the situation. Tips 10 :-don¶t go quiet. Tip 11 :- learn & tweak. tweak.

38

Conclusion  A crisis management ma nagement plan generates order out of  chaos. It needs strong leadership by well-trained and rehearsed individuals. Everyone within an organisation organisati on should know k now what what his or her role role is in a crisis and should be prepare to deal with one.

39

40