Shuanghui Business Group: Crisis Management Plan - Dissertation Example

 Shuanghui Business Group: Crisis Management Plan Introduction Crisis is a major and unpredictable even that may harm an organization instantly. Such events may be related to economy or politics, as well as even weather or social issues. However, they all have three definite characteristics: a crisis is always unexpected, is a threat to an organization, and provides limited time for decision making (Goel, 2009, p. 25). Nevertheless, though a crisis cannot, in most cases, be predicted, it can be managed. That is the goal of crisis management, which can be defined as a set of activities aimed at minimizing the potential, or responding to an existing crisis effectively. As such, an effective crisis management plan may provide a company with an opportunity to effectively take urgent actions for minimizing the harm caused by a crisis and, in such a way, save the future of the organization. Furthermore, relevant crisis and issue management activities may even help the company to avoid a crisis and, as a result, save valuable resources to be invested into further growth and development. In is especially true considering the fact that news in the contemporary world spread within hours. Therefore, urgent actions for rescuing the company should be taken immediately after an issue arises. At the same time, good and well-structured relationships with the media may help an organization to decrease the level of crisis’ impact on the company’s future. Therefore, the given paper will try to draw up a basic crisis management plan for Shuanghui Business Group, a food business group that majors in processing pork. The company has already had some experience managing crisis. However, the presented plant will help it to forecast and assess potential future crisis, recommend specific crisis management processes and team structures, as well as provide a list of materials to be to be produced as part of the crisis toolkit. In addition, business continuity considerations will be addressed and a proposal for testing and refining the crisis plan will be presented. All this information will help the company to prepare for a potential crisis and, furthermore, get an opportunity to avoid it and save money. Forecasting and assessing a potential crisis the organization could face. On the 15th of March, 2011, Shuanghui Business Group was suspected of using clenbuterol pigs. As a result, the stock of the company dropped to the trading limit causing a loss of CNY 5.2 billion in the capital market. Furthermore, the company had to withdraw its products form all the major supermarkets, while some marketplaces even stopped selling the products of the Business Group or refused to continue working with the company. The organization took back all of its products circulating in market and closed manufacturing down to be rectified (Zhang, 2011). Nevertheless, what Shuanghui Business Group experienced is the crisis of consumers’ trust or, if defined more precisely, a product-harm crisis (Dawar & Pillutla, 2000, p. 215), since it involved recalling products from all of the distribution networks due to safety concerns (Chen, Ganesan, & Liu, 2009, p. 214). As a result, the brand’s equity and company’s reputation got damaged, customers’ loyalty decreased, and revenues and market shares – lost (Laufer & Coombs, 2006, p. 379). So, in order for the Business Group not to experience such a disastrous situation again, continuous forecasting and assessing a potential crisis the organization can face should be conducted. The very first condition for forecasting a crisis is noting both internal and external inputs. People’s perceptions of information differ – what one may consider to be a potential threat will be missed by another. Therefore, it is important to make sure that the organization does not miss any internal or external issues that might indicate a potential crisis (Harvard Business School, 2004, p. 12). For this reason clear and open communication channels should be determined and established within the organization. This will enable people to share their observations, ideas and assumptions and will ensure those thoughts will reach the decision-makers. Therefore, certain two-way communication processes should be defined, implemented and integrated into the company’s overall culture in order for the crisis management team to be continuously receiving the information it might be interested in. Secondly, a company should be continuously monitoring its external environment. All the information related to the company’s economic, political, social, or any other environment, should be taken into account when analyzing the overall situation. The more complete information the company gathers, the easier it will be to identify potential risks. Such environmental scanning is to become a basis of the whole crisis management strategy and process of the company. A web-based scanning approach can be used in order for the company to be receiving all the necessary information round the clock. In case of Shuanghui Business Group, some of the most important risks the company might be a subject to are, in addition to accidents and natural events, product tampering (Harvard Business School, 2004, p. 5) or, as it already happened, a product-harm crisis. These threats are the most applicable to the company in its current situation because the organization deals with food products that always have a chance to damage people’s health, even by accident, and, consequently, damage the company’s reputation. Therefore, it is important for the Business Group to not only learn from its past negative experience, but also use the advice of professionals and define proper crisis management processes and a team to be responsible for them. The recommended crisis management process Both product tampering and product-harm risks will lead to a wide spread of negative publicity about the company even if the organization is convicted wrongfully. The media are always on a lookout for a sensation, so such a case will be actively discussed in press, on TV and, of course, in the Internet. Therefore, before even developing a crisis management process the company must take all possible measures in order to ensure its reputation in relation to the quality of the product is positive. PR, marketing and advertising campaigns should point out the high quality of the product and educate the customers on how quality control is conducted for them to trust and be more loyal to the organization. These actions will not only improve the company’s reputation, but will help to reduce the negative consequences of a crisis if it happens. Mitroff’s crisis management model The recommended crisis management process for Shuanghui Business Group might be based on Mitroff’s model created in 1994. This approach will require a company to deal with five stages of the crisis management process: signal detection, probing and prevention, damage containment, recovery and learning (Coombs & Holladay, 2010, p. 22). The signal detection stage implies conducting continuous environmental scanning with the purpose of identifying potential risks and taking preventative measures. Probing and prevention means identifying existing risks and working towards the reduction of risks factors. These two stages of the process are needed for reducing the number of risks the company may actually face. Furthermore, the preventative and preventive measures are to minimize the harm of a crisis if it happens. It is one of the most important aspects of the model since effective management of this particular stage may even help the company to avoid a crisis. At the damage containment stage of the process the company will be taking actions in order to reduce the negative consequences of a crisis that has already occurred. In addition, such actions will be targeted at reducing the spread and development of the crisis. Everyone should act fast at this stage because timing might be critical for survival. At the recovery stage of the crisis management process the company will be trying to return to normal modes of operations. Finally, the learning stage is purposed for reviewing and analyzing the crisis the company had undergone. The employees have to learn from their mistakes, if such occurred, and, on the basis of newly acquired knowledge and experience, develop strategies for coping with potential future crisis. Key steps Then crisis scenarios should be developed in advance. Such crisis scenarios will be customized to the particular organization - Shuanghui Business Group in this case, and will take into consideration the company’s size, structure, communication channels, market position and other relevant factors (Crandall, Parnell, & Spillan, 2009, p. 183). Since every single company is unique, the crisis scenarios are to be unique for each one. Specific training programs, communication channels and exercises are to be developed for the crisis scenarios. This will help the trained employees to adequately and quickly respond to unexpected situations. In addition, key employees should be united into crisis response teams for both trainings and dealing with real life issues. This will be the major crisis management structure within the organization. Such a team will directly communicate with external organizations or internal departments in order to make sure that “all appropriate measures are being taken, in terms of operational support as well as business continuity, legal, liability, reputation and media liaison” (Blyth, 2008, p. 145). Spokespersons should be identified and trained accordingly. They will be representing the company in the times of a crisis, delivering different information to different target audiences (Zdziarski, Dunk, & Rollo, 2007, p. 112). The kind of information and the way it is delivered will define the effectiveness of damage containment and recovery stages of the company’s crisis management process. In addition, proper media policy, target audiences and key messages should be identified in advance. Such key messages should be communicated to the target audiences in language that suits the audience and relieves anxiety. This will help to establish and build trust about the company’s commitment to control, reduce and contain the risk. Besides, in the process of planning the company should consider the fact that crisis recovery will require it to spend additional resources. Therefore, the resources that are needed to limit harm to the business should be allocated accordingly. Nevertheless, as it has been mentioned before, the crisis can be totally avoided if the signal detection stage is managed properly. If the crisis is inevitable, a well-prepared organization is more likely to survive it with less damage to its image, operations, and revenue. The recommended crisis management team structure It is recommended that Shuanghui Business Group adopt the described below crisis management team structure in order to, first of all, ensure the possibility of a crisis are minimized and, secondly, effectively manage crisis in case it occurs. Of course, the structure of a crisis management team will depend on the company’s internal structure. Nevertheless, the members of the team should work at all the levels of the organization. This will help to receive relevant information on time and communicate back in an effective manner. A corporate crisis management team should work directly with any vendors or other team members for the purposes of crisis prevention and management (Blyth, 2008, p. 145). In addition, this will help to streamline decision making. This team will directly cooperate will smaller local units in order to effective manage operations and needed activities at the sites. People to take part in crisis management are to be appointed on the basis of each one’s personal abilities and position within the organizational structure. Such a team should, of course have a leader and a commander. This person is the one to take executive decisions and monitor their execution. An administration manager will help to keep all the relevant documentation in order. In addition, this person will be conducting such important tasks as data collection or procuring resources. Intelligence or information manager is to make sure all the received information is accurate and up-to-date. This is the person to establish mutually beneficial relationships with external sources of information, such as government agencies and the media. Physical and technical security managers should be the members of the risk management team in order for the security staff of the company to know how to respond to any unexpected situations, whether they are related to physical or technological (digital) security. A liaison officer is to be appointed in order to take the responsibility of contacting any external organizations in case their support is needed. A spokesperson together with the public relations manager will be working with all the communication issues in the times of a crisis. A lawyer and a finance manager will help to deal with legal and financial issues. Surely, all of the mentioned above people should be regularly devoting their time to crisis prevention and management activities, as well be trained themselves and train their subordinates and other employees of the organization on how to behave if the crisis occurs. All their activities should be coordinated with the team commander and HR department as the one that may take the responsibility of organizing and handling the corresponding training sessions. List of the materials that will need to be produced as part of the crisis toolkit A crisis toolkit is a set of materials gathered and organized by the crisis management team in association with both external and internal strategic partners. Such a toolkit is to be regularly updated and revised. In the times of a crisis it will be the very first aid to be used by the organization. First of all, conduct a crisis management audit. This activity will provide information needed to understand the environment, potential threats, and the current crisis management situation within the company. Prioritize the threats – decide which ones are more likely to impact the organization, as well as define the impact of which ones will be the most significant. In such a way the crisis management team will be able to set certain goals in relation to what particular crisis scenarios and trainings should be designed. Create a contingency plan. Such a plan will identify the potential threats, evaluate the level of such crisis’ probability, set company’s objectives and assumptions in relation to the particular crisis scenario, and define action steps for coping with the crisis (Fay & Fay, 1993, p. 213). The action plan is one of the most important components of a contingency plan. It defines particular action that a company should be taking starting from the first minute after the crisis has occurred. Develop a crisis communication plan that will determine what information will be communicated to the target audiences at different stages of crisis management process. Created key messages in advance. When a crisis occurs there is not time to spend for composing messages carefully. Therefore, it is very helpful to have pre-written messages to provide the initial response to the media and other audiences regarding the crisis. Make sure each of the prepared in advance messages is relevant to a particular scenario, and issue the message as soon as the news about the crisis is starting to spread. This will provide the company with some additional time for preparing a more profound response relevant to the specific situation. Business continuity considerations No matter how well the crisis prevention and management processes might work, the major goal of the company is always continuous growth and development. As soon as disaster recovery ends, business continuity starts (Snedaker, 2007, p. 351). So, as soon as the company gets out of the crisis recovery phase and relatively normalizes its operations, it moves to the business continuity phase. Among the tasks the company has to fulfill during the business continuity phase is determining what in particular should be restored, salvaged or replaced. Both money and time are to be invested into this process. Among the strategies that can help the company in this process is advanced market orientation. This means the company should put more emphasis on delivering products that bring value to the clients, continuous monitoring of market conditions and high levels of adaptation to changes (Narver & Slater, 1990). Another aspect to pay more attention to is strategic flexibility. It has “a positive influence on firm performance after a crisis, which is enhanced by competitive intensity and moderated by demand and technological uncertainty” (Grewal & Tansuhaj, 2001, p. 67). It should also be remembered that business continuity should be aligned with the changes an organization is to undergo. In addition, it should be included into the company’s strategic development plan (Sikich, 2008, p. 120). At the same time, systems continuity (meaning that all of the organizational systems work in such a way that their operations are easy to restore) is not enough for the company to be well-protected against a failure. What is required is total continuity planning that will ensure that all aspects of organizational performance are ready to survive a crisis and develop further afterwards. Testing and refining the crisis plan After all the planning has been performed, it is the time to train, test and audit (Snedaker, 2007, p. 360). So, after all the roles are assigned within the company the employees should be trained on their roles and responsibilities in relation to crisis management. In addition, specific skills each of the key individuals needs for fulfilling one’s duties are to be trained and developed too. The training plan should be developed for each of the crisis scenarios identified by the crisis management team. Such a plan is to outline the scope of the training, its objectives, timing and requirement. Though the actual training will take place only after all the details of the plan are clarified, it is important to pay attention to the mentioned training outline points. Practical training on the basis of such an outline will, basically, represent a testing of the crisis management plan. The training process will show how well how well the key employees understand and fulfill their obligations, how well different structural divisions of the organization cooperate in the process of crisis management, how effective the crisis management plant is itself, and what particular changes and improvements should be applied to the planned crisis management process. Behaviors of working groups and individuals is to be evaluated in the process of training in order to make conclusions regarding the effectiveness of the particular crisis management plan. References Blyth, M. (2008). Risk and Security Management: Protecting People and Sites Worldwide. John Wiley and Sons. Chen, Y., Ganesan, S., & Liu, Y. (2009). Does a Firm’s Product-Recall Strategy Affect Its Financial Value? An Examination of Strategic Alternatives During Product-Harm Crises. Journal of Marketing, 73 (November), 214–226 Coombs, T. & Holladay, S. (2010). The handbook of crisis communication. John Wiley and Sons. 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