CRISIS MANAGEMENT

Sebin Sebastian 1st MBA A Batch

INTRODUCTION
Crisis 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 can affect all segment of society.

TYPES OF CRISIS

On the Basis of Social Settings:

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

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

Three Main Stages

PHASES

Pre crisis

Crisis response

Postcrisis.

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. This is part of an Organizations risk management program. Preparation involves creating the crisis management plan, selecting and training the crisis management team, and conducting exercises to test the Crisis management plan and crisis management team.

Crisis Response
The 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:
The initial crisis response and

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 managements attention but still requires some attention.

Examples of Crisis Management

Odwalla
Cadbury

Case Study-Odwalla
Odwalla 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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Case Study Cont.

Odwalla juice e-coil outbreak in 1996 Health 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.

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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What did the company do? (cont..)

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

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Fixing the Problem

The 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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Conclusion
The 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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Diary Milk THE WORMYThe Worm Controversy CONTROVERSY

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RISE OF THE CONTROVERSY

State FDA Commissioner Uttam

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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.

EFFECTS OF THE CONTROVERSY ON CADBURY

The state Food and

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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.

ROLE OF THE PUBLIC RELATIONS

NOT DENYING THE FACT

Maharashtra Food and Drug Administration

had given a clean chit to the company's two plants in the state. tell consumers about improper storage Bharat Puri, Cadbury's mild-mannered MD, went to media offices around the country

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ROLE OF THE PUBLIC RELATIONS

(cont) TAKING PRECAUTIONS 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 wrapped in aluminium foil and enclosed in a poly flow pack, which was sealed on all sides. 21 company also carried out quality checks

ROLE OF THE PUBLIC RELATIONS

(cont)
GAINING 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.

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ROLE OF THE PUBLIC RELATIONS

BENEFITS OF A GOOD CAMPAIGN

The 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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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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THANK YOU !
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