Explain, with use of examples, what is meant by crisis management. (8 marks)

Some crises will be long-lasting and will have an effect on the whole economy (such as a recession, or a natural disaster), some crises will affect all the businesses in a particular industry (such as the collapse in demand for aeroplane engines, since the terrorist attacks on New York on September the 11th 2001) and others crises will simply affect a single business (such as the Perrier Water contamination scandal in 1990, or a strike by a workforce such as the problems with the trains).

Any crisis is likely to have implications for the finances of the business, and an effect on personnel and communications and the production patterns. The business must be seen to be acting quickly when faced with a crisis, and it must try to ensure that the damage to the business (especially to its reputation and its image) is minimised by using whichever resources are available.

Successful public relations campaigns, adequate finance, strong leadership, rapid action and effective communication (both internal and external) are the key elements for a crisis to be solved effectively. Crises will always pose a number of unexpected and unpredicted problems and dilemmas for businesses. However, as long as the business is seen to be limiting the effects of the crisis upon its various stakeholder groups (especially its customers) then its reputation may well remain intact.