mob of reporters

Introduction

Tylenol Tampering Scare

Exxon Valdez Oil Spill

Firestone Tire Fiasco

A Whole New Ballgame

Crisis Plan Checklist

Putting it into Action

Sources

Home
Crises can strike any company at any time. Microsoft, ValueJet, Chrysler, Pepsi and the tobacco industry are some of the most recent companies that can attest to this fact, but they are not the only ones. Crises do not discriminate based on a company's size or notoriety, and they can hit when a company least expects them. They come in many forms - strikes, layoffs, product recalls or allegations of misconduct, but while some of these may seem small, every crisis has the potential to damage the reputation of a company.

Regardless of the severity of the situation, crises pose a serious threat to companies - not only to their reputation but their fiscal health as well. When Odwalla's apple juice was thought to be the cause of an outbreak of E. coli bacteria, the company lost a third of its market value. The same allegation against Jack in the Box restaurant in 1993 caused the hamburger chain's stock price to fall from $14 a share to nearly $3 a share.1 On the other hand, some companies emerge from crises unscathed in the eyes of consumers and investors. Johnson and Johnson is one such company. After it was discovered that its Tylenol capsules had been laced with cyanide, Johnson and Johnson reacted in such an effective way that the case is now well-documented as an example of successful crisis management.

The factor that determines how a company will withstand a crisis is its ability to respond to the crisis. "The public forgives accidents, but it doesn't forgive a corporation if its response to the public is inadequate."2 Once a crisis occurs, the company is suddenly a target for the media, who are acting on behalf of the public to find out the answers to the important questions about their own safety. One substantial barrier the company must overcome is the public's perception, because it is a well-known fact in the public relations field that perception is, indeed, reality. One survey discovered some unsettling facts:

  • Three-fourths of the people surveyed said companies do not take responsibility for crises
  • Three-fourths said companies do not usually tell the truth 3
This high level of cynicism is important to overcome, for it is how the company is perceived by the public that ultimately will determine the future of the organization.

Time is at a premium during a crisis, so it is essential for companies to plan ahead. "In a world where the wrong split-second decision can cost a company millions in negative publicity, not being prepared is not worth the risk - to executives or the companies they work for."4 Many companies today recognize this and have in place a crisis communication plan that outlines the steps to be taken during the first few hours of a crisis. They spell out the who, what, when, where and how the company should deal with the crises. The best plans produce many of the materials necessary ahead of time, including initial official statements, press releases, fact sheets and backgrounders so that the missing information simply must be inserted and the materials are ready to go. A good crisis plan is "everything you need in one place so you don't have to search - because you may not have time to search."5


Introduction | Tylenol Case | Exxon Case | Firestone Case | Computer Age | Crisis Plan | Action Plan | Sources | Home



This page was designed by Jennifer Hogue
Last updated on 4/19/01
MMC 3260/Communications on the Internet