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  • Subject Name : Management

Table of Contents

Abstract

Introduction

What is a crisis?

Types of crisis

Characteristics of a crisis

Examples of crisis

Lesson Learned

Crisis Management Process

Recommendations

Conclusion

References

Abstract

Corporate communication refers to the range of activities concerned in management and orchestration of all inner and outer communications intended to outline a better point of view among the clients and stakeholders of an organisation. The communication process refers to the messages entitled by an organization to its employees, stakeholders, and channel partners and the general consumers. Every organizations plan to communicate this type of message to their stakeholders, to convey unity, reliability and ethics. The corporate communication helps to identify the key stakeholders and target customers of the organisation. Moreover, it creates a healthy image of the organization; keeping the reputation high in the market.

The report will evaluate the solution strategies of different crisis and emergency threats that a organization face. Corporate responsibility is the most important part of any organization to create their footprints in the global market as well as to serve the society. The responsibilities are intended to deliver social and environmental benefits to their stakeholders (which includes their employees, partners, sponsors and consumers). Communication with the stakeholders will eventually help to surplus their responsibility for the society in a single mission.

Communication also helps in creating better media relations which can increase their promotional ventures in the market. The study will discuss on roles of managers to ensure better communication in dealing with Crisis management in an organization. The process helps organizations describe their duty; unite the visions and values into an organized communication. The idea of corporate communication in the study will be presented as an integrative communication formation involving stakeholders to the organisation.

Introduction

Crisis management is the use of strategies intended to help an organization to understand and deal with an unexpected and noteworthy negative incident. This type of crisis can take place as a consequence of a random event or as an emergency consequence of a number of incidents that had been measured as possible risk. Crises management almost consistently require that steps to be finished promptly to bind further damage to the organization. This is why an organization must incorporate an individual with the role of a crisis manager so as to effectively deal with the consequences. The study will discuss different traits of crisis; its effects and consequences and the possible plans that a manger of an organization should take to limit the harm in the organization.

What Is a Crisis?

Crisis actually refers to an unforeseen accidental state of affairs or a threat to a certain extent that unexpectedly dawns upon from a company from nowhere. It can be related as an event that threatens the constancy of an organization. These threats can harm the organization reducing their outputs. The procedure by which such actions or threats are successfully resolved and managed is termed as Crisis Management (Bundy, Pfarrer, Short & Coombs, 2017). A crisis states a condition where there is a shortage of time and an effectual judgment required immediately to deal with.

The crisis preserves an idea of deficiency in control all through the business deteriorating the entire business process. Therefore, an effective crisis management should be fast and efficient with the necessary suppleness to the plans need to be executed to meet additional threats that may appear. A crisis manager should have the ability to guide the organizations out of the adverse state of affairs by stimulating and stirring the employees towards the solutions. Crisis that an organization faces can be of different types; mainly natural crisis and human made disasters are more predominant in the context. Crisis can occur at any stage and/or at any time in a business, so it is termed as unpredictable and can lead to whole business shutdown if not managed properly within time (Laws & Prideaux, 2017).

Types of Crisis

There are different types and natures of crisis that can occur and imply diverse responses in each aspect and thus changed resources of its organization. Mainly four types of crisis are notable which are:

1. Financial Crisis

Financial Crisis takes place when the business is punched with the crisis monetarily. An instance of this type of crisis is a business lacking funds to shell out its dues; which can be paying interests, loan repayments and other debts (Chaudhri, 2016). This crisis comes up when the organization suffers losses in excess of significant periods of time and/ or when there is a lacking liability tends to lose consumers’ faith in several situations.

2. Technological Crisis

Technological crisis happens due to the break downs in the general technical and industrial equipments used in a business. Frequent technological crisis happens due to software malfunction, industrial incidents (Osadchy, & Akhmetshin, 2015). For example if the servers of Facebook or Instagram gets overloaded for an instant and all the information of the users gets deleted the whole system will go in serious issue; such a condition termed as technological crisis.

Characteristics of A Crisis

Even as every crisis is dissimilar they still sustain some general characteristics. Getting through with these characteristics will help an organization to successfully build a plan against the crisis. The main characteristics that can be identified are:

  • Presence of physical danger, the first priority of an organization. Physical dangers are unexpected and can serious issue in the organization (Haddon, Loughlin, & McNally, 2015).

  • Suffering from perplexity, resistance, pressure and anxiety can be noticed in such situations. An individual may fall under pressure while facing a crisis in the business.

  • Important and major staff might be occupied or not available.

  • Difficult or not viable to continue the daily plans in the organization. This is a very noteworthy factor in such situations.

  • Requirement of emergency support (e.g. from disaster services or next-door organizations). Financial support or physical support must be encountered to deal with the threats

  • Lack of concept on the current scenario may occur

  • Shortage of time may disrupt at the time of managing the crisis (Walker et al., 2016).

  • Interest of stakeholders, consumers and the promoting media may be concentrated

  • Gossip may pass through quickly, determining the community perception of the crisis and the process to deal it with.

Examples of Crisis

Tequila crisis – 1994:

In 1994, an unexpected deflation of the Mexican peso set off turn out to be the Tequila crisis, gains a huge crisis on paying the interest rate and ended in a tie rout. The US government helps with a US$50bn stand surety by providing it as a loan to the organization (Khan, 2018). The Mexican debt yielded up to 11% and asset business performances land to a close down across the whole region including Mexico, particularly in Argentina; where the financial yields raised up to 20%. This situation completely changes the market in the region for a period.

Asia crisis – 1997 to 1998:

Thailand’s exchange in the end of July 1997, buckled when the Thai government was strained into floating the currency openly in the share market. Thailand goes in a huge debt and yet to be paid a enormous amount to the overseas entities as debt repayment which remains unpaid earlier than the currency dropped. The crisis without doubt took a lot of surprise in it. Near about all Asian governments thought they had the exact monetary and expenses policies in consign, but however the crisis results in a requirement of US$40bn stand surety by the IMF. This is only after 1 year, that is in 1998, a almost carbon-copy crisis took place in Russia (Nasution, Trilaksana & Artono, 2018, October).

Lesson Learned

Do the monetary history intended to do again itself? It would come into view to be somewhat of a consequence of the means an organization functions in the market. An explosion raises the interest rates higher and soaring prices of the materials. The resulting break down results in a never-again approach, leads to another crisis to take place, now and then can be in the next year also. The world has had to manage with the European supreme liability crisis also; a crisis which is very hard to diminish entirely and getting worse with each resulting multi-billion dollar stand surety. It can be argued that these incidents are preventable, but in a lot of ways more vital is the process to resolve it (Muñoz, 2017). On top of all, it can be said that physically powerful political leadership can be a crucial elements, beside a proficient plan that the public will appreciate as being good quality in the future. From the above mentioned crises one thing can be noted is that strong leadership is vital. For example, any international country such as Brazil, South Korea and Turkey in 1994,1998 and 2001 respectively, the chief of state and finance ministers of the nations expressed their messages to their citizens mentioning that even as these incorporated tough method, it is well planned and would show the way to development. So it is marked that this type of strong leadership is absent in Europe.

Crisis Management Process

  • Planning: The management should ensure they have solid and efficient plans when coping with any crisis situation. This will ensure that any sort of crisis will not damage the entire progress of any work.

  • Recognize a speaker: To make sure that the company speaks with single voice and respond with a clear reliable message, a spokesperson have to be recognized as well as organized to respond media questions and contribute in the interviews.

  • Communication with the employees: Te organization should keep their employees updated with the scenario of the crisis. They should be notified with every incidents taking place in the organization (Valera, Holmes, & Hassan, 2017).

  • Social media communication: Seeking effective advices from leaders and other managerial persons would lead to relate their experiences in the situations. Social media plays an important role in gathering experiences on the incident from different individuals as well.

Recommendations

The recommendations for the managers to master the company communication function:

  • Implementations of monetary policies: Monetary policies help to create a benchmark on the organization financial status.

  • Financial crisis is managed by stocking necessary funds as a short term projection and also incorporating decisive financial approaches like reorganization, altering organisational operations are some of long term projections.

  • Effective communication in the organization will lead to identify and evaluate the risk early.

  • Organization should bulk up their structure and should have immediate support to assess the crisis.

Conclusion

Therefore, the above study can be concluded that crisis are very unpredictable and can take place in any time in an organization. Several traits of crisis are identified which can help to identify any crisis that can take place in the organizations. The most common crisis is financial and technological crisis as discussed in the report. Financial crisis can create a huge burden on the organization leading to failure of debt repayment and loosing reputation in the markets. Few examples of crisis took places years ago have been briefly reflected to provide the need of a crisis management plan for every organization. Thus proper planning, strong leadership skills, effective communication in the organization and maintaining better relations with the media and stakeholders helps to c manage crisis efficiently.

References

Bundy, J., Pfarrer, M. D., Short, C. E., & Coombs, W. T. (2017). Crises and crisis management: Integration, interpretation, and research development. Journal of Management, 43(6), 1661-1692.

Chaudhri, V. (2016). Corporate social responsibility and the communication imperative: Perspectives from CSR managers. International Journal of Business Communication, 53(4), 419-442.

Haddon, A., Loughlin, C., & McNally, C. (2015). Leadership in a time of financial crisis: what do we want from our leaders?. Leadership & Organization Development Journal, 36(5), 612-627.

Khan, S. (2018). Currency Crisis Transmission Through Trade Channel: Asian and Mexican Crises Revisited. Journal of Economic Integration, 33(4), 818-840.

Laws, E., & Prideaux, B. R. (2017). A Study of Crisis Management Strategies of Hotel Managers in the Washington, DC Metro Area. In Tourism Crises (pp. 103-118). Routledge.

Muñoz, J. (2017). Commonalities Between the ‘Bookends’ Financial Crises of Mexico 1994 and Greece 2007. In The Internal Impact and External Influence of the Greek Financial Crisis (pp. 189-206). Palgrave Macmillan, Cham.

Nasution, M., Trilaksana, A., & Artono, M. (2018, October). The Profile Of Micro Small Medium Enterprises At The Monetary Crisis Era In1997-1998 Case Study: Intako Sidoarjo. In 1st International Conference on Social Sciences (ICSS 2018). Atlantis Press.

Osadchy, E. A., & Akhmetshin, E. M. (2015). Development of the financial control system in the company in crisis. Mediterranean Journal of Social Sciences, 6(5), 390.

Valera, H. G. A., Holmes, M. J., & Hassan, G. M. (2017). How credible is inflation targeting in Asia? A quantile unit root perspective. Economic Modelling, 60, 194-210.

Walker, S. M., Earnhardt, M. P., Newcomer, J. M., Marion Jr, J. W., & Tomlinson, J. C. (2016). Crisis Leadership During the Great Recession of 2008. International Journal of Leadership and Change, 4(1), 9.

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