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Transcript of Crisis Management
What is Crisis Management?
Crisis management is how a business deals with a sudden emergency situation and requires decisions to be made within a short time frame.
In order to reduce uncertainty in the event of a crisis, organizations often create a crisis management plan.
BP Oil Spill (2010)
In 2010, BP's Deepwater Horizon Oil exploded resulting in the largest oil spill disaster in history
more than 200 million gallons of crude oil was pumped into the Gulf of Mexico for a total of 87 days
The initial oil rig explosion killed 11 people and injured 17 others
Taco Bell's "seasoned beef" meat filling lawsuit (2011)
Taco Bell was sued over the contents of its meat.
The lawsuit alleged that the company's "seasoned beef" contained only 35% beef.
Taco Bell was lying in its advertising.
An unknown author said, "Trust is a peculiar resource; it is built rather than depleted by use."
Trust is something that takes time to build, and can be lost in seconds.
Johnson & Johnson's cyanide-laced Tylenol capsules (1982)
Seven people died after taking extra-strength Tylenol capsules that had been laced with potassium cyanide.
The killer was never found.
Crisis Management Plan
J&J decided to immediately pull 31 million bottles of Tylenol off the shelves.
Stopped advertising and production of the product.
Pledged not to put product back on shelves until they could provide better product protection .
31 million bottles with an estimated worth of $100M
Controlled 37% of the market ($1.2M) and reduced to 7% after the recall
Loss of faith in the company
Within 5 months Tylenol recovered 70% of its market share.
Overtime, re-established as a trusted brand.
developed tripled sealed tamper resistant packaging
Poor Crisis Management
Minimize the situation with the media.
CEO lacked compassion.
Did not work with government to minimize the ecological damage.
CEO is fired.
BP lost $17 billion in 2010
Still recovering today with organization restructuring and regaining public trust.
What BP Should Of Done:
Issue regular, frequent progress reports
Control the pictures (even some on the Web site appeared to be canned or generic)
Display empathy as a concerned corporate entity comprised of authentic people diligently making a good-faith effort to solve the problem
Taco Bell declared the claims false.
shared its real percentages (88% beef and 12% secret recipe)
Launched a multi-platform PR campaign
get the word out about its "not-so-secret" recipe
Taco Bell's existing consumer based responded overwhelming well to the campaign.
4 months later, the lawsuit was dropped.
Corporations want to act ethically and legally because that is the best way to conduct your business.
Corporate executives have a legal responsibility (fiduciary duty) to the owners of the company (often shareholders).
Daniel Brock and Ashley Tanaka