CRISIS MANAGEMENT

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Crisis can affect all segment of
society.

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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 situations may occur as
a result of external factors such as the
development of a new product by a competitor or
internal factors such as a product failure or faulty
decision making, and often involve the need to
make quick decisions.
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TYPES OF CRISIS
 On the Basis of Social Settings:
1. Domestic Crisis
2. Industrial Crisis
3. Natural Crisis
4. Professional Crisis
5. Social Crisis
6. Financial Crisis

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Importance of PR
Develops Good relations with customers.
Helps to Build and create reputation and image of
the company.
Maintains Company’s Credibility.
Communication Gap.
PR is essential for a successful business.

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Three mainStages

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Stages in crisis management
 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 Organization’s risk
management program.
• Preparation involves creating the crisis management
• Plan, selecting and training the crisis management team,
and conducting exercises to test theCrisis 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:
 (1) the initial crisis response and
 (2) 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 management’s attention but still
requires some attention.
Examples of Crisis Management
Odwalla
Exxon
Cadbury

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Case Study-Odwalla

Odwalla (pronounced "odewalla") 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 provide up to
the minute, accurate information. 16
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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Case Study -EXXON Valdez
In 1989, the Exxon Valdez oil
tanker, entered the Prince
William Sound, on its way
towards California.

The ship ran aground and began

spilling oil. Within a very short
period of time, significant
quantities of its 1,260,000 barrels
had entered the environment.

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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.

The probable cause was established that the

Captain and many of the crew had been drinking
alcohol in considerable quantities.

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What did the company do?
The action to contain the spill was slow to get
going.

The company refused to communicate openly

and effectively to the public about the incident.

 The Exxon Chairman, Lawrence Rawl, was

immensely suspicious of the media, and reacted
accordingly.
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Poor Crisis Management
The Chairman refused to be
interviewed on TV and said that he
had no time for “that kind of
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

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Failure to Fix the Problem
While Exxon stalled and attempted to cover up the
problem, the clean-up operation was slow to begin

Around 240,000 barrels had been spilled, with another

million still on the ship.

During the first two days, when calm weather would have
allowed it, little was done to contain the spillage.

This spillage spread out into a 12 square mile slick.

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The
Then Problem Compounds
the bad weather struck, making further containment
almost impossible.

After more than a week, the company was still giving no

ground on the request for better 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. Small pieces of good news claimed by

the company were immediately contradicted by the
eyewitness accounts of the present journalists and
fishermen.
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Outrage Builds
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 to react exactly in this
eventuality.

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Poor Communication
Eventually, Chairman Rawl was interviewed live

He was asked about the latest plans for the clean-
up.

It turned out he had 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.
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The Aftermath
Exxon lost market share and slipped from being
the largest oil company in the world to the third
largest.

The "Exxon Valdez" entered the language as a

shortcut for corporate arrogance and damage.

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What went
The company wrong?
failed to show that they had effective
systems in place to deal with the crisis - and in
particular their ability to move quickly once the
problem had occurred was not in evidence

They showed little leadership after the event in

ensuring such problems would never happen again

They quite simply gave no evidence that they cared

about what had happened. They appeared
indifferent to the environmental destruction.

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THE WORMY
CONTROVERSY

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 RISE OF THE CONTROVERSY
State FDA Commissioner Uttam 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.
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EFFECTS OF THE CONTROVERSY
ON CADBURY
The state Food and 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.

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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.
company also carried out quality checks

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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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How to handle a crisis -
11 communications tips

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

Tip 2 :- Build The Crisis Support Infrastructure.
Tip 3 :- Speak With One Voice.
Tip 4 :- Be Prepared Before You Talk.
Tip 5 :- Remembers Social Media.
Tip 6 :- Be there.

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 Contd…..

Tip 7 :-Fall On Your Sword.

Tips 8 :-Protect The Record. 
Tips 9 :-keep reading the situation.
Tips 10 :-don’t go quiet.
Tip 11 :- learn & tweak.

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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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