Strategic Management and Critical Challenges in Crisis Management - Essay Example

?Strategic Management INTRODUCTION The contemporary business environment has become highly dynamic and uncertain. These dynamism and complexities have increased the potentiality of occurring crisis situations. Strategic management in crisis situations, also referred as crisis management in organizational contexts, is the art of designing as well as executing plans to mitigate the obstacles witnessed in particular circumstances towards the ultimate achievement of organizational goals. Crisis management plan must be prepared keeping into consideration the overall safety of the strategic planning process. The aim of the strategic management in such needful situations is to enhance the organizational capacity in responding to the crisis and make strategic plans to effectively overcome from the identified obstacles (European Interagency Security Forum, “Crisis Management of Critical Incidents”). Organizations usually keep much attention in the maintenance of the strategic plans implemented for dealing with the crisis situation by providing the staff with regular training to acquaint them with essential skills to manage such situation. At often instances, engagement of a Crisis Management Team (CMT) for dealing with the situation is deemed beneficial and strategically effective. CMT’s primary responsibility is to resolve the obstructions of crisis completely and assist the organization to regain its previous smoothness in performing its operations (European Interagency Security Forum, “Crisis Management of Critical Incidents”). Notably, CMT does not follow the management structure of work. According to the strategic plan for the crisis situations, there exist three stages, which encompass before crisis, during crisis and after crisis situations. CMT, thus, assists with the development of various strategic plans to deal with these stages in the most effective manner. In the first stage of crisis situation, i.e. before the crisis, the organizations try to identify the types of crisis that might occur at a given period of time and make plans accordingly. Similarly, during the crisis, the CMT looks after the specific organizational operations affected by the crisis. Also, the time required for the resolution of the crisis is kept in consideration by the CMT. Concerning the stage after crisis, CMT studies the causes responsible for the crisis and take precautionary measures so as to avoid similar circumstances in future (Boin and Lagadec185-191). Thesis Statement. This essay intends to discuss the role and the significance of strategic management in crisis situations and its implications on organizations. A BRIEF OVERVIEW OF PREVALENT CRISIS SITUATIONS IN ORGANIZATIONS Organizational crisis can be referred to particular situational obstacles, where the causes and consequences of organizational non-performances are unidentified at the initial stage and are therefore, capable of imposing major threat to organizational performances even though the chances of a crisis occurrence are relatively lower. It has often been proclaimed that the remedies to the crisis must be made early in order to prevent any adverse consequence of it on the organization. It is worth mentioning that not all the crisis situations are preventable within the organizational context, such as the crisis arising from external environment. It thus, argued that organization should have the sufficient competency to proactively manage these non-preventable crisis situations. The objective of the crisis management does not end with the resolving of the problem but it also involves identifying measures so that such crisis would not occur again in the future. Thus, the best way of deal and manage the crisis situations is to believe that every crisis has a life cycle. This life cycle process is termed to be a vital approach for coping up with the organizational crisis. It means that the strategy of crisis management must be divided into various segments so that an effective approach can be formulated and implemented by the organization for its remittance (European Interagency Security Forum, “Crisis Management of Critical Incidents”). Crisis Management Cycle. Organizational crisis is a state where the psychological, technological and the political factors are highly responsible for the emergence of the crisis situation. The study of the crisis situation in the organization requires a systematic approach as the crisis may impose adverse implications on the organization (Boin and Lagadec185-191). Organizational crisis have become more destructive in the recent days. The major threat can be attributed with the possible damage to the reputation of the business. An organizational crisis cannot be determined earlier or is not possible to avoid before its occurrence. Every organization appoints a crisis management team to oversee and solve the problems related to the emergence of crisis in the business. In the crisis situations, planning acts as a vital tool because many of the crises occur from a predictable event. Planning includes identifying the nature of the crisis and devising solutions to them accordingly. However, there lie certain differences between identifying the crisis and dealing with it. In a planning process all the element of the crisis must be identified such as the type, nature, size and scope of frequent occurrence in the future (Kyhn 1-97). In the modern business era, crisis is regarded to be highly unpredictable and sudden. Thus, the organizations have divided the steps for the avoidance of crisis in three major categories which is named as crisis management cycle. This pictorial representation of the crisis management cycle is illustrated below. (The Government of the Hong Kong Special Administrative Region, “Crisis Management – An International Overview”) As observable from the above diagram, the crisis management cycle constitutes various steps, which an organization needs to use strategically for effectively dealing with the crisis situation in the business. Correspondingly, the three elements of the crisis management cycle involve preparing for crises, managing crises and evaluation and learning from the crisis. Preparing for the crisis comprises of planning necessary steps and training of the specific staffs in order to efficiently manage the crisis situations. The first step in the planning process which is commonly used by the organization is to form a special staff such as crisis management team. They can identify the crisis and coordinate with it in such manner that the chances of its occurrence in future are minimized. Planning ensures effective remittance of the crisis because most of the organizational crises rise from a predictable event. The planning method for preventing the organizational crisis needs preparation for the diverged crises situations. The nature of the crisis must be studied in details by the management team so as to find out the best methods for its removal. In the preparation stage of the crisis, the staffs of the organization must be trained effectively such that they can take the necessary steps during the emergence of crisis situations. Although the crisis management team is a trained group of staffs, the organizations are also required to train the other staffs in the organization so that they can are able to take the initial step related with identification and reporting of the crisis occurrence. Training of organization’s staff also facilitates in increasing the competency of the organization to deal with the complex situation of crises in the most influential fashion (The Government of the Hong Kong Special Administrative Region, “Crisis Management – An International Overview”) The managing of the crisis comprises of activities such as proper distribution of resources and sound communications in the crisis situation of the organizations. This factor is dependent on the initial stage of preparation. An effective plan must be enough descriptive so as to cope with the situation in an efficient manner. Some of the crises decisions need immediate action against the crisis erupted. There is a high demand for the identification of responsibilities and measures of coordination in the crisis situations. Also, in some of the organizations, a particular crisis requires the response from a number of other organizations. For dealing with such crisis situation, an effective approach namely Integrated Command System (ICS) has been introduced which offers versatile approach for the organizations to effectively overcome from the crisis encountered. In the initial stages of crisis, the management must be able to differentiate the information of high importance and that information which must be collected for further use. The management team is not responsible for managing all the situations alone and thus requires the decision from the top level authorities. The top level management must guide and instruct the team for finding the best and the most effective way for the avoidance of crisis situation in the organization. These are the fundamental factors to be taken into consideration while managing the organizational crisis (The Government of the Hong Kong Special Administrative Region, “Crisis Management – An International Overview”). The last stage of the crisis management cycle is the evaluation and learning from the crisis situation. The evaluation and learning from the crisis influences the culture of the organizations. The organizations must keep record of every details of learning so that it can reduce the risk of the crisis in the future and rectify the areas which were mostly influenced by the crisis situation. It is worth to be mention that the area which is most affected by the crisis are the revenue income of the company and its reputation. The evaluation and learning from the crisis situation possibly contribute towards ascertaining the proper understanding of the crisis situation. These beforehand information and understanding would contribute towards formulating effective measures for the similar crisis situation that might emerge in any given time in future (The Government of the Hong Kong Special Administrative Region, “Crisis Management – An International Overview”) Influencing Factors to Strategic Management in Crisis Situations. Precisely, stating the primary role of CMT is to control the loss incurred by the business and regain the confidence of the public in order to sustain the business operation profitably and successfully. In fact, the theory of crisis management is the basic characteristics of a ‘good public management’ (The Government of the Hong Kong Special Administrative Region, “Crisis Management – An International Overview”). The management of crisis depends on the risks involved in the crisis. Some of the risks require fast government response as it involves risk which cannot be handled alone by a single organization, an individual or any particular department. To handle the situation an organization must have a public department which will interact with the government bodies and seek responses against the crisis situation within the organization. This relationship between the department of the organization and the government bodies will assists the organization in every phase of crisis (The Government of the Hong Kong Special Administrative Region, “Crisis Management – An International Overview”). The modern business organizations have categorized the risk level of the crisis situation into three parts. The first level of crisis is that which occurs within an organization and possess limited impact on the external factors of business. This level of risk can be solved using the available resources within the organization. The second level includes those events which damage many organizations and the impact lies to few vital portion of the organization. The last level comprises of risks which will affect the entire region or the major part of the organization. Its impact remains on a large scale and the solving these crisis or risks cannot be carried on with the use of the available resources (The Government of the Hong Kong Special Administrative Region, “Crisis Management – An International Overview”). ROLE AND SIGNIFICANCE OF STRATEGIC MANAGEMENT IN CRISIS SITUATIONS Role of Strategic Management in Crisis. An organization needs to adopt certain strategies to prolong its existence in the market, obtaining the expected competitive advantages. The adoption of these strategies is termed as the strategic management (Small Business Advancement National Center, “Defining Strategic Management”). Strategic management certainly plays a very vital role in the crisis situation encountered by an organization or a group of organizations. The solving process of the crisis requires the analysis of the type of crisis, decisions to be made in the situation and the appropriate actions to be taken in such circumstances. Thus, the strategic management with proper analysis, effective decision making and through appropriate actions during the crisis situations ensures successfully dealing with such circumstances. In a crisis situation, leadership possesses a significant role. A leader must possess certain skills to deal with the crisis situation such as proper decision making, increasing the organizational potentialities, development of effective communication, creating capital and managing other vivid tasks of the organization. The management of the crisis situation largely depends one of the essential qualities of a leader. This quality can be related with the ability of leaders to encourage the other members of the organization in acquiring knowledge and solving the risks associated with the crisis situation (Wooten and James 1-28). An effective leader must develop the skills and frame strategies which will help the organization in the avoidance crisis situation and also deal with the ongoing crisis in the most efficient fashion. The competencies of the leaders during the time of crisis can be depicted in the human resource and strategic function. The leaders must take the direct responsibility to provide a better working environment which acts as an approach for the remittance of crisis in the business. The responsibilities also include identification of the necessary activities to be performed during the crisis, skills required for completion of the activities and a study of the ongoing crisis for proper implementation of strategies related to the management of crisis. The efficient leaders can provide a structure which will facilitate in acquiring insights regarding the uncertainty and eliminating misunderstanding of the causes of crisis in an organization. These roles are essential for leaders to display during the occurrence of crisis situation as well as to reduce the adversities associated with this crisis. The harmony of the crisis management lies on the nature of the crisis and the role played by the leader’s decision making capacity (Wooten and James 1-28). Apart from the leadership quality, there are other aspects of an effective crisis management capability. Those aspects are the information management, decision making of the other staffs, future planning of the crisis avoidance and effective framework for management team among others. The information management includes collection of information from a relevant source and ensures that the information compiled is reliable and accurate. Resolving of the crisis situation in an organization often requires proper and fast decisions. The skills of decision making of the leaders must be in compliance with the use of decision making tools such as the crisis management plan. The future planning of the crisis management refers to the affect of that organizational crisis on the future performances and reputation of the organization. The value of the future planning in course of the crisis management is an important tool of acquiring control over the anticipated requirements of the organization (Cockram and Heuvel 1-15). The concept of strategic management has a lot of significances in the organizational crisis situation. The organizations are unable to gather much information about the crisis situation because they get a very little chance to understand the crisis and identify the ways to manage it. In the earlier research studies, it has been observed that there always remains a gap in the planning made for dealing with crisis situation and the actual occurrences of it (Wang and Belardo 1-11). This problem reveals that there is a greater need for gaining the appropriate knowledge for managing the crisis situation by the organizations. Responsively, the various concepts of strategic management have been developed to overcome the situation of crisis within an organization. For fostering the actual benefits of the strategic crisis management, a training and education of the CMT is essential requirement. The training enhances the competencies of staff in resolving the crisis. The strategic crisis management also provides the organization with an opportunity to respond effectively with the crisis and reinforce company with a huge reputation and gain a competitive edge over other companies witnessing the crisis situation. The other benefit provided by the strategic crisis management is that it assists the organization in rendering much integrated and faster decisions in the crisis situations. The training provided at the prior stages of the crisis identification makes the team competent enough to take better and effective decisions in the organizational crisis situations customers (Kellogg school of Management, “Strategic Crisis Management”). As it has been stated earlier some of the crisis requires better and faster decisions, thus this requirement can be fulfilled with the implementation of the strategic management in the crisis situations. The implementation of the strategic crisis management will also reduce the chances of occurrence of crisis of same nature in the future to certain extent. The strategies which are applied by the CMT during the crisis situations are much stronger in nature that it not only overcomes the crisis but also lessens the scope of future occurrences. The study of strategic crisis management provides the organization with an opportunity to prepare for the crisis situations. Furthermore, of the strategic crisis management facilitates an understanding regarding the possible crisis before its occurrence and also provides with techniques to effectively deal with such crisis situations. The application of these techniques for resolving crisis situations are most likely to benefit the reputation of the organization in return. In many of the crisis situation within the organization most of the investors do not continue with the business transactions. However, it is observed that appropriate implementation of the strategic crisis management significantly facilitate the organization to effectively cope up with the crisis situation and regain its reputation as well as the confidence of its customers (Kellogg School of Management, “Strategic Crisis Management”). Significance of Strategic Management in Crisis. It has been observed that the strategic crisis management occupies a specific role in the crisis avoidance and also provides the organizations with considerable benefits. It can be stated that strategic management enables the organization to undergo the change in the business environment in the best advantageous manner (Barnat, “Strategic Management Defined”).The strategic management in crisis situations ensures that operations of the organization is not disrupted by any factors including crisis emerging either internally or externally. In a general sense, the entire method of the strategic management assist in encouraging the employees and the top level managers to implement a better ideas and policies in the best interest of the organization. It helps the members in the organization to understand the need and importance of strategic crisis management in preventing the crisis situation in the organization. The implementation of strategic management ensures effective decision making and seeks committed employees (Huiru 1-71). One of the vital benefits provided by the strategic crisis management is that this concept helps the organization and the employees to formulate better and effective strategies spontaneously during crisis. During the crisis situation, the strategic management helps the organization to come up with the existing problem including the development of productivity and the volume of sales. During crisis situation the daily operations of the organizations are radically impacted wherein the managers face huge challenges in operating the business smoothly. However, the implementation of the strategic management during the crisis reduces the adverse implications of the crisis situation on the business organizations and facilitate in integrating measures to effectively deal with such crisis. Furthermore, the strategic management assists the organizations in satisfying the needs of the customers, improving the sales and the profit margin of the organizations to a great extent. The strategic management assists CMT to deal with the problem and find out the best alternatives to cope up with the problem while keeping the other aspects of the business stable. In this regard, the other aspects of the business relates to the production, sales and customer’s needs among others. The crisis situation probably has the radical and much adverse impact on the organizational revenue generation capabilities. However, the implementation of the effective strategic ideas in that situation assists the organization to keep all these aspects stable as well as it ensures effectively managing the crisis situation. Also, the strategic management enables the managers to compile information from various sources and make effective decision to deal with such challenging business circumstances (Barnat, “Strategic Management Defined”). Certainly, strategic management enables managers to be more creative in making agile and quick decisions required when responding to crisis situation. The strategic management in the crisis situation seek that the technical planning and control are duly followed by the managers. The technical planning comprises of the efficient allocation of the resources during the crisis situations. The other fundamental requirement of the strategic management in the crisis situation is the reliable and long range planning. The long range planning refers to the plans which are to be formulated for the remittance of the crisis in the future. It can be argued that almost a major portion of the strategic decisions made to deal with the crisis situation possess long term consequence. It implies that whenever a decision is made by the management in terms of crisis, it is directed with an intention to rectify the problem in such a manner that it will have less chance to occur again in the future (Barnat, “Strategic Management Defined”). Thus, it can be firmly argued that the role of strategic management is extremely vital for the organizations in effectively dealing with the crisis situations. CONCLUSION The paper has provided with the detailed study of the strategic management in crisis situations of an organization. The study also includes the prevalent crisis situations within an organization and the role played by the strategic management in the situation. The top level management of an organization along with all the other employees has huge responsibilities in the crisis situation. Most of the organizations in the current business environment establish a team of managers also referred as CMT to deal with the crisis situation in an effective fashion. Notably, the responsibilities of CMT does not end up with the solving of the crisis but are also responsible for framing strategies to prevent the crisis from occurring in the future again. The CMT needs to work before the crisis, during the crisis and also after the successful remittance of the crisis. The role of top level management can also be identified as crucial in terms of assisting the CMT in making vital decisions regarding the crisis situation. Besides, the idea of strategic management provides significant approach for dealing with crisis situation. Strategic management in the crisis situation provides the organization with flexibility to adapt in the changing business environment. The strategic management assists the organizations affected from crisis to formulate effective ideas for dealing with crisis situations without influencing the other factors such as profit margin and sales volume. A crisis situation also affects the organization’s competency to satisfy the various needs of the customers. The adoption of strategic management provides opportunities to the organizations to uplift the business even in the crisis situations. Hence, it can be argued that strategic management is essence for the successful operation of the business organizations in the contemporary business environment as well as for dealing with crisis situations in the most effective manner. Works Cited Boin, Arjen and Patrick Lagadec. “Preparing for the Future: Critical Challenges in Crisis Management.” Journal of Contingencies and Crisis Management 8.4 (2000): 185-191. Print. Barnat, Ryszard. Strategic Management Defined. 2005. Web. 26 Oct. 2013. Cockram, Dominic and Claudia Van Den Heuvel. “Crisis Management – What Is It And How Is It Delivered?” BCI Partnership (2012): 1-15. 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