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Business & Marketing
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English (U.K.)
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Topic:
Business Continuity and Crisis Management
Essay Instructions:
Re-sit assessments 2
Select a major organisational crisis and write a report outlining the key issues that the organisation faced and how these issues were managed.
You are expected to critically evaluate the handling of the event in terms of both crisis management and crisis communication efforts and provide recommendations for improvement where appropriate. The report should draw on the theory and concepts studied in the module and make reference to a range of academic and professional journal articles and texts.
Please choose a different organisational crisis from your failed assessment. Which is (The case of BP oil spill crisis in the Gulf of Mexico)
please heed the following advice:
Focus on the key concepts and ideas studied in the module, particularly in relation to crisis management and crisis communication. Many of you completely neglected to do this and at best mentioned them in the introduction and conclusion. If you do not address the issues studied in the module then you will not pass. I need to see evidence that you have read, researched and understood this topic.
Make sure you conduct a good range of research, again if you have not researched the topic i.e. crisis management and crisis communication then you will not be able to achieve point 1 above. I expect to see upwards of 15 good quality, relevant references that have been cited in the text and then referenced fully in the reference section.
Make sure you reference your work thoroughly in the text, if you do not do this you cannot provide evidence that you have achieved points 1 and 2 above.
Make sure you are analytical - I put guidance slides on Blackboard earlier this year for this assessment which provide clear and specific advice on what you must look at and that the emphasis is on how you use the theory and literature to analyse the case you have chosen. If you provide a purely descriptive account, again you will not pass as you have not addressed the question.
The lecture material on Blackboard for this assessment is comprehensive and provides an indication of all the areas you are to address in your assessment, there are also 4 book chapters attached which you can use in your analysis, in addition to the guidance slides. If you read all of this, research the areas further and follow the guideline slides carefully there is no reason why you should not achieve a pass.
Essay Sample Content Preview:
May 1995 - One.Tel Limited, an interdependent group of telecommunications companies, was instigated by visionaries` Jodee Rich and Brad Keeling (Cook, 2001). Their vision mainly was to appeal to the general masses; in essence, they aspire that every person on the street has an uncomplicated access to telephony products. Therefore, the initiative was targeted towards a people-oriented (especially the youth) approach; hence, their slogan You`ll tell your friends about One.Tel. Likewise, their marketing strategy advocated the catch phrase "100% Telephone Company" to fittingly serve their mantra.
One.Tel was initially a large reseller of Optus, the second largest telco in Australia. This was a crucial part to the company`s early success (Cook, 2001). However, there were certain oversights in the arrangement and by 1996, Optus decided to resell their shares back to the company and end the deal altogether. Regardless, One.Tel still had its breakthrough with a boost from two large corporate empires - the Murdoch`s News Corporation and the Packer`s Publishing and Broadcasting Ltd (PBL); their investment in the company totaled to an astounding $955 million which then went to the domestic and overseas expansion of One.Tel (Avison and Wilson, 2007). Technological advancements in the area, alongside persuasive advertising strategies, have contributed to their success as well (Avison and Wilson, 2007).
Now half a decade later, One.Tel is enlisted as one of the 30 major companies based in Sydney, Australia with revenues doubling to $653 million from 1998 through 2000 (Cook, 2001). Then in the year 2001, they experienced a major setback - the fourth largest telecommunications company in Australia was now the third to collapse in a series of corporate failures proceeding in just a matter of weeks (Cook, 2001).
In spite of speculations constricting that the company will revive to its former glory, ensuing events proved otherwise. Steve Sherman, the administrator put in charge of this investigation, notified at a creditor`s meeting that One.Tel was nowhere near that path (Cook, 2001). He reports that One.Tel loses an average of $12 million every week and owes an estimate of $600 million to 3000 of its creditors. Moreover, he states that the company has an unsettled credit of about $19 million to the 1400 employees that has been relieved of their positions.
Unsurprisingly, the company`s assets have also begun to become affected by the consequential impact of this clash (Cook, 2001). For instance, the Cable & Wireless Optus Group and Telstra which set up the communication networks for One.Tel demands a remuneration of nearly $100 million. Meanwhile, the US Company Lucent Technologies, after having constructed the first stage for One.Tel`s communications network which had an initial cost that ranged beyond $500 million, are now filing for a $1.2 billion claim with the administrator. Additionally, the company`s extensions in Hong Kong, United Kingdom and those in mainland Europe are subsequently being closed and set up on the market for interested buyers.
From the creditors to the government - mostly everyone associated with the company were left with inopportune circumstances. The company`s demise has left many of its creditors in a state of bankruptcy and many more of its people unemployed and without entitlements. The government in turn is left uncertain of what steps they could in response to the needs of these unemployed workers. The high-profile benefactors - Murdoch and Packer - were crestfallen. And the company`s pioneers simply tried to escape from it (Cook, 2001).
What took years to build was ruined in just a few months.
Certainly, the corporate world can be likened to a gamble - you win some, you lose some. One may find himself rising to the skies and then suddenly crashing to the ground; or as some cases may prove, the other way around. In any event, minor or major setbacks are inevitable in the rise to the top - or in any which way, for that matter. Nevertheless, the point at which such arrives does not necessarily inhibit one from picking itself up and re-discover itself once more. Then again, as to where there are ‘rules`, there are ‘exceptions`- so to speak. Assumingly, the ‘rule` would pertain to companies which once fallen, fail to rise again; the ‘exception` then could be deemed as those companies who have found a way to re-invent themselves and finally become successful after the nth time. As for One.Tel`s situation, it was already proclaimed ‘insolvent` (Cook, 2001) - the probability that it will once more rise to the top is evidently low, considering the wreck the company leaders have left behind; consequently, it falls under the category of being a ‘rule`.
According to Seymour and Moore (1983), crises come in two guises: the ‘Cobra`, or the ‘sudden` crisis; and the ‘Python`, or the ‘slow-burning` crisis or ‘crisis-creep`. One.Tel`s situation fittingly counts as having undergone the ‘Cobra` - up until 2000, they were in the top five and seen as one of the top gross earners in Australia; then their sudden crash in 2001 came around.
More often than not, a company`s downfall is blamed upon external factors - unprecedented events such as natural disasters and others that are likewise considered to be out of their control or what they would refer to as an ‘Act of God` (Seymour & Moore, 2000). However, in reality, a large percentage of the corporate crisis is likely to stem from internal involvement. Although the definition of a crisis in the corporate domain comes close to the former, it doesn`t necessarily fit into that description. Rather than the common excuse of inevitability or ‘Act of God`, the fault most probably is of the company`s own doings (Toft & Reynolds, 1997).
Similarly, One.Tel`s demise is due to their own pursuit - none of which is relative to forces which they could not have possibly contested. Despite the statement of Murdoch and Packer that the crash of the company has been because they have been ‘profoundly misled`, circumstantial evidence point out that there are indeed flaws in company`s administrative construct per se; thus, proving that although there were external influences involved, a greater part to their demise is still because of their poor planning. An instance pointing to this ‘circumstantial evidence` is already explicit when both Rich and Keeling had suddenly resigned from their positions amidst the crisis being endured by the company (Cook, 2001). By then, the company`s foundation has already weakened and left to ‘die`, so to speak.
Coombs (2007) have highlighted the corporate crisis can create three related threats: 1) public safety, (2) financial loss, and (3) reputation loss. In the end of One.Tel`s case, two of these were demonstrated- immense financial loss, particularly in the form of debts; and a ruined reputation.
There is no saying that One.Tel did not try to fix this problem before it had gotten worse; as a matter of fact, they had pursued what Cook (2001) called a ‘positive spin on its financial situation`. However, with the chain of deceits and lies going around the board of company executives, One.Tel was sure to be left with a ruined reputation. Accordingly, both Rich and Keeling had falsified the company`s financial documents, having lied about the company`s cash reserves and such; and in the end, acquired over $65 million between them (Cook, 2001).
Besides the pioneers` apparent personal greed, a larger concern is why the company was not able to recover even at the least before everything has been finally exposed. Though there are other various factors that can be taken into account in determining the cause of One.Tel`s demise, it will all nonetheless fall down upon the management/recovery strategy the company has decided upon the advent of the crisis (Toft & Reynolds, 1997). After all, unexpected rise-and-fall situations are to be expected in the business world in the first place; thus, the need to constantly come up with conditional changes and efficient management in order to maintain consistency and prevent sudden impacts brought about by negative events (Miller, 2009). In other words, it is how the company responds to the crisis which determines the outcome of everything altogether.
Because it is the efficiency of the company in their application of strategic management and communication techniques by which we base the stability of the company itself, it is from this context then that we will review their weak link. Ironically, One.Tel used to boast of its efficient management techniques. According to One.Tel`s Annual Report of 2000 (Avison & Wilson, 2007),
One.Tel used to pride itself upon its enlightened management techniques. The company operated a flat non-bureaucratic organizational structure, and was organized into small functional teams. Each team was regularly measures against a set of key performance indicators, and bonuses were paid on achieving them. The directors worked in hands-on mode, and there was almost no middle management.
How a company with ‘enlightened management techniques` suddenly find itself with a ruined r...
One.Tel was initially a large reseller of Optus, the second largest telco in Australia. This was a crucial part to the company`s early success (Cook, 2001). However, there were certain oversights in the arrangement and by 1996, Optus decided to resell their shares back to the company and end the deal altogether. Regardless, One.Tel still had its breakthrough with a boost from two large corporate empires - the Murdoch`s News Corporation and the Packer`s Publishing and Broadcasting Ltd (PBL); their investment in the company totaled to an astounding $955 million which then went to the domestic and overseas expansion of One.Tel (Avison and Wilson, 2007). Technological advancements in the area, alongside persuasive advertising strategies, have contributed to their success as well (Avison and Wilson, 2007).
Now half a decade later, One.Tel is enlisted as one of the 30 major companies based in Sydney, Australia with revenues doubling to $653 million from 1998 through 2000 (Cook, 2001). Then in the year 2001, they experienced a major setback - the fourth largest telecommunications company in Australia was now the third to collapse in a series of corporate failures proceeding in just a matter of weeks (Cook, 2001).
In spite of speculations constricting that the company will revive to its former glory, ensuing events proved otherwise. Steve Sherman, the administrator put in charge of this investigation, notified at a creditor`s meeting that One.Tel was nowhere near that path (Cook, 2001). He reports that One.Tel loses an average of $12 million every week and owes an estimate of $600 million to 3000 of its creditors. Moreover, he states that the company has an unsettled credit of about $19 million to the 1400 employees that has been relieved of their positions.
Unsurprisingly, the company`s assets have also begun to become affected by the consequential impact of this clash (Cook, 2001). For instance, the Cable & Wireless Optus Group and Telstra which set up the communication networks for One.Tel demands a remuneration of nearly $100 million. Meanwhile, the US Company Lucent Technologies, after having constructed the first stage for One.Tel`s communications network which had an initial cost that ranged beyond $500 million, are now filing for a $1.2 billion claim with the administrator. Additionally, the company`s extensions in Hong Kong, United Kingdom and those in mainland Europe are subsequently being closed and set up on the market for interested buyers.
From the creditors to the government - mostly everyone associated with the company were left with inopportune circumstances. The company`s demise has left many of its creditors in a state of bankruptcy and many more of its people unemployed and without entitlements. The government in turn is left uncertain of what steps they could in response to the needs of these unemployed workers. The high-profile benefactors - Murdoch and Packer - were crestfallen. And the company`s pioneers simply tried to escape from it (Cook, 2001).
What took years to build was ruined in just a few months.
Certainly, the corporate world can be likened to a gamble - you win some, you lose some. One may find himself rising to the skies and then suddenly crashing to the ground; or as some cases may prove, the other way around. In any event, minor or major setbacks are inevitable in the rise to the top - or in any which way, for that matter. Nevertheless, the point at which such arrives does not necessarily inhibit one from picking itself up and re-discover itself once more. Then again, as to where there are ‘rules`, there are ‘exceptions`- so to speak. Assumingly, the ‘rule` would pertain to companies which once fallen, fail to rise again; the ‘exception` then could be deemed as those companies who have found a way to re-invent themselves and finally become successful after the nth time. As for One.Tel`s situation, it was already proclaimed ‘insolvent` (Cook, 2001) - the probability that it will once more rise to the top is evidently low, considering the wreck the company leaders have left behind; consequently, it falls under the category of being a ‘rule`.
According to Seymour and Moore (1983), crises come in two guises: the ‘Cobra`, or the ‘sudden` crisis; and the ‘Python`, or the ‘slow-burning` crisis or ‘crisis-creep`. One.Tel`s situation fittingly counts as having undergone the ‘Cobra` - up until 2000, they were in the top five and seen as one of the top gross earners in Australia; then their sudden crash in 2001 came around.
More often than not, a company`s downfall is blamed upon external factors - unprecedented events such as natural disasters and others that are likewise considered to be out of their control or what they would refer to as an ‘Act of God` (Seymour & Moore, 2000). However, in reality, a large percentage of the corporate crisis is likely to stem from internal involvement. Although the definition of a crisis in the corporate domain comes close to the former, it doesn`t necessarily fit into that description. Rather than the common excuse of inevitability or ‘Act of God`, the fault most probably is of the company`s own doings (Toft & Reynolds, 1997).
Similarly, One.Tel`s demise is due to their own pursuit - none of which is relative to forces which they could not have possibly contested. Despite the statement of Murdoch and Packer that the crash of the company has been because they have been ‘profoundly misled`, circumstantial evidence point out that there are indeed flaws in company`s administrative construct per se; thus, proving that although there were external influences involved, a greater part to their demise is still because of their poor planning. An instance pointing to this ‘circumstantial evidence` is already explicit when both Rich and Keeling had suddenly resigned from their positions amidst the crisis being endured by the company (Cook, 2001). By then, the company`s foundation has already weakened and left to ‘die`, so to speak.
Coombs (2007) have highlighted the corporate crisis can create three related threats: 1) public safety, (2) financial loss, and (3) reputation loss. In the end of One.Tel`s case, two of these were demonstrated- immense financial loss, particularly in the form of debts; and a ruined reputation.
There is no saying that One.Tel did not try to fix this problem before it had gotten worse; as a matter of fact, they had pursued what Cook (2001) called a ‘positive spin on its financial situation`. However, with the chain of deceits and lies going around the board of company executives, One.Tel was sure to be left with a ruined reputation. Accordingly, both Rich and Keeling had falsified the company`s financial documents, having lied about the company`s cash reserves and such; and in the end, acquired over $65 million between them (Cook, 2001).
Besides the pioneers` apparent personal greed, a larger concern is why the company was not able to recover even at the least before everything has been finally exposed. Though there are other various factors that can be taken into account in determining the cause of One.Tel`s demise, it will all nonetheless fall down upon the management/recovery strategy the company has decided upon the advent of the crisis (Toft & Reynolds, 1997). After all, unexpected rise-and-fall situations are to be expected in the business world in the first place; thus, the need to constantly come up with conditional changes and efficient management in order to maintain consistency and prevent sudden impacts brought about by negative events (Miller, 2009). In other words, it is how the company responds to the crisis which determines the outcome of everything altogether.
Because it is the efficiency of the company in their application of strategic management and communication techniques by which we base the stability of the company itself, it is from this context then that we will review their weak link. Ironically, One.Tel used to boast of its efficient management techniques. According to One.Tel`s Annual Report of 2000 (Avison & Wilson, 2007),
One.Tel used to pride itself upon its enlightened management techniques. The company operated a flat non-bureaucratic organizational structure, and was organized into small functional teams. Each team was regularly measures against a set of key performance indicators, and bonuses were paid on achieving them. The directors worked in hands-on mode, and there was almost no middle management.
How a company with ‘enlightened management techniques` suddenly find itself with a ruined r...
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