Crisis Mngmt

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    Is the process by which an organization deals witha major event that threatens to harm the

    organization.Is the art of making decisions to head off mitigate

    the effects of such an event , often while the eventitself is unfolding. This often means makingdecisions about your institutions future while youare under stress and while you lack key pieces of

    information .

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    Business &Government

    familyEducational

    institutions

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    Natural crisisTechnological crisis Confrontation crisisCrisis of malevolenceCrisis of organizational misdeedsWorkplace violence

    Rumors

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    Natural crisis, typically natural disasters considered as

    'acts of God; are such environmental phenomena asearthquakes, volcanic eruptions, tornadoes andhurricanes,floods,landslides,tsunamis,storms,anddroughts that threaten life,property,and the

    environment itself.

    Example : 2004 Indian ocean earthquake (Tsunami)

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    Technological crisis are caused byhuman application of science and

    technology. Technologicalaccidents inevitably occur when

    technology becomes complex andcoupled and something goes wrong

    in the system as a whole.

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    Example: Chernobyl disaster, Exxon Valdez

    oil spill

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    Confrontation crisis occur when discounted individualsand/or groups fight businesses, government, and

    various interest groups to win acceptance of their

    demands and expectations.

    Example: Rainbow/ PUSH(People United to ServeHumanity) boycott of Nike

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    An organization faces a crisis of malevolence whenopponents or miscreant individuals use criminalmeans or other extreme tactics for the purpose of

    expressing hostility or anger toward, or seeking gainfrom, a company, country, or economic system, withthe aim of destabilizing or destroying it. Sample crisisinclude product tampering, kidnapping, malicious

    rumors, terrorism and espionage.Example: 1982 Chicago Tylenol murders.

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    Example: 1982Chicago Tylenol

    murders.

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    Crisis occur whenmanagement takes actionsit knows will harm or placestakeholders at risk withoutadequate precautions.Some crisis are caused notonly by skewed values anddeception but deliberateamorality and illegality.

    Example: Martha StewartFraud case

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    Crisis occur when an employee or former employeecommits violence against other employees on

    organizational grounds.Example: John DuPont ,a multimillionaire,

    convicted of murdering Olympic Wrestler DaveSchultz

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    Rumors

    False information about an

    organization or its products

    creates crisis hurting the

    organizations reputation.

    Sample is linking the

    organization to radical groupsor stories that their products are

    contaminated.

    Example: Procter & Gambles

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    Erica James, an organizational psychologist at theuniversity of Virginias Darden Graduate School ofBusiness, identifies two primary types of

    organizational crisis. James defines organizationalcrisis as any emotionally charged situation that, onceit become public, invites negative stakeholder reactionand thereby has the potential threaten the financialwell-being, reputation, or survival of the firm or some

    portion thereof.1. Sudden crisis

    2. Smoldering crisis

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    Sudden crisis are circumstances that occur withoutwarning and beyond an institution's control.

    Consequently, sudden crisis are most often situations forwhich the institution and its leadership are notblamed.

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    Smoldering crisis differ from sudden crisis in that theybegin as minor internal issues that, due to managersnegligence, develop to crisis status. These are situations

    when leaders are blamed for the crisis and its subsequenteffect on the institution in question.

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    Signaldetection

    Containment &damage control

    learningBusinessrecovery

    Preparation &prevention

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    Signal detection is the stage in a crisis in which leaders should,

    but do not always, sense early warning signals(red flag) that

    suggest the possibility of a crisis. The detection stages of a

    crisis include:

    Sense-making: represents an attempt to create order andmake sense, retrospectively, of what occurs.

    Perspective-taking: the ability to consider another persons or

    groups point of view.

    d

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    It is during this stage the crisis handlers beginpreparing for or averting the crisis that had beenforeshadowed in the signal detection stage.

    Organizations primary mission is to prepare for andprevent the escalation of crisis events.

    Preparation and prevention

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    When crisis hits, organizations must be able tocarry on with their business in the midst of thecrisis while simultaneously planning for how theywill recover from the damage the crisis caused.Crisis handlers not only must engage in continuityplanning( determining the people, financial, andtechnology resources needed to keep theorganization running), but will also actively

    pursue organizational resilience.

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    In the wake of crisis, organizational decision makersadopt a learning orientation and use prior experienceto develop new routines and behaviors that ultimately

    change the way the organization operates. The bestleaders recognize this and are purposeful and skillfulin finding the learning opportunities inherent in everycrisis situation.

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    Rapid response

    Stay calm

    Be visible

    Put people before business Tell the truth

    To get to business as soon as possible

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    Odwalla juice e-coil outbreak in 1996

    health officials in Washington stateinformed the company that they had discovered a link betweenseveral cases of E.coil 0157:H7 and Odwalla fresh apple juice.

    One child died and more than 60 people in the

    Western United States and Canada became sickafter 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 bedestroyed

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    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 andimmediately promised that the company wouldpay all medical costs

    Internal communication:

    Williamson conducted regular company-wide

    conference calls on a daily basis, giving employeesthe 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 explanatoryweb 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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    The next step was to tackle the problem of contamination.The company switched from unpasteurized juice to aprocess called "f lash pasteurization" which would guarantee

    that E-coli had been destroyed without compromisingflavor.

    Within months of the outbreak, the company had in placewhat some experts described as "the most comprehensivequality control and safety system in the fresh juice

    industry."The new process was communicated in all advertising andpublic outreach campaigns

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    The company's values spoke of nourishing people - andwhen the crisis came it was an adherence to honest,straight talking and accepting responsibility that helped toget the company through.

    There are critics who refuse to credit the company with anyintegrity whatsoever - but even these will concede that as

    an exercise in crisis management, Odwalla stands as anexample of best practice that few can match.

    The year after the crisis, Odwalla was voted "Best BrandName in the Bay Area" by San Francisco Magazine. This

    was the first indication amongst many that Odwalla'sreputation had survived.

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