• Mankind has faced crises throughout history, from natural disasters to manmade calamities. Businesses face similar crises—internal or external events can pose major threats to the organization. Unpredictable in nature, they require quick decision making and action from leaders. Globalization has increased the complexity of the business world, so an event in one country can affect businesses across the world. Digital, 24/7 communication means that news travels far and fast. The result is that crises may seem to be more prevalent than they were during the predigital age. The random nature of crises means that they can strike anywhere.
• Typical crises include:
  • technological failure (defective product);
  • employee actions, from walkouts to fraud (scandal);
  • sudden supplier loss or
  • rising prices in raw materials;
  • and environmental disasters (Act of God).
• Every crisis has the potential to damage a company’s profits and reputation. The extent to which it is able to withstand a crisis and limit the damage is determined by its ability to respond fast and appropriately. Effective crisis management involves careful planning, so that if a crisis strikes it can be addressed in a calm, professional way. This involves quickly establishing the “who, what, when, where, and how” of the crisis within the critical first few hours. Any crisis—no matter how small—is newsworthy, so a company’s public response must be fast. Public perception affects consumer trust. Leadership during a crisis is particularly important, since swift, effective decision making is critical. Every company recognizes that if it handles a crisis well, damage can be minimized and its reputation even enhanced.

Case study: Toyota: In their article “The Toyota Group and the Aisin Fire,” authors Toshihiro Nishiguchi and Alexandre Beaudet demonstrated the importance of supplier relationships during a crisis. In 1997, a fire at the plant of one of Toyota’s most trusted suppliers, Aisin Seiki, threatened to halt Toyota-group operations for weeks. Aisin Seiki was the sole source for a small but crucial part used in all Toyota vehicles. Only two or three days’ worth of stock was on hand. Toyota’s manufacturing plants shut down but were reopened after only two days. The recovery was achieved through an immediate and largely self-organized effort by companies from within and outside the Toyota group, who set up alternative production sites. The collaborative effort of more than 200 companies was orchestrated with limited direct control from Toyota and with no haggling over technical proprietary rights or financial compensation.

• Who survives?
  • They have strong leaders who have broad authority to make decisions.
  • They question conventional PR wisdom and do not worship at the altar of feel-good gurus who espose ’reputation management’
  • They are flexible, changing course when the operating climate shifts (which it usually does)
  • They commit significant resources to the resolution of a crisis with absolutely no guarantee that these resources will provide results
  • They have a high treshold for pain, recognizing that things may get worse before they get better
  • They think in terms of baby steps, no grandiose gestures, which explains Rome’s success, after all
  • They know themselves, and are honest about what kinds of actions their culture can – and cannot – sustain.
  • They believe that corporate defence is an exercise in more authority, and that their cirics are not necessarily virtuous simply because their purport to be standing up for the ’little guy’
  • They are lucky, often catching unexpected breaks delivered by God, nature, Fortune, or some other independent factor.

 Exericise 1: Communication in crises – Find suitable words to complete these examples of alliteration and grouping!

1 The new factory will be bigger, brighter and ___________________________.

2 Holidaymakers will always come to our islands in search of sea, sand and ___________________________.

3 Our goal is to become Britain’s best ___________________________.

4 The company indends to fulfil its obligations to shareholders, suppliers and ___________________________.

5 We believe better people make better _____________________________.

6 Our restaurants use only the finest and freshest __________________________ available.

7 We aim to give every child a __________________ home, a healthy family and a hopeful future.

8 The company is making every __________________________ to reduce _________________________.

 Video: The Queen

Compare the two opposite strategies of crisis management, employed by the Royal family and the newly appointed Prime Minister Tony Blair. They demonstrate different tactics used for gaining the public support.