Crisis Management of BMW Motorrad Australia

Research Paper (undergraduate), 2010

15 Pages, Grade: 1,3



Table of Contents

1 Introduction
1.1 Crisis definition
1.2 What is a company crisis?
1.3 Characteristics of a crisis

2 Theory – crisis management & planning
2.1 Guidelines and Preparation
2.2 Goals of crisis management

3 Stakeholder Strategy

4 Crisis management strategies
4.1 Crisis Management Team
4.2 Media Management Strategies
4.3 Crisis Preparation
4.4 Crisis Communication
4.5 Crisis Evaluation

5 Conclusion

6 References:

7 Appendix

1 Introduction

This assignment deals with the management of crisis. First of all, crisis and company crisis will be defined. Secondly, the characteristics of a crisis will be identified. Furthermore, theory about crisis management and crisis planning will be provided. In this context, guidelines, preparation and goals of crisis management will be described. Moreover, different tables will provide additional information and describe the crisis management of BMW.

1.1 Crisis definition

According to Heath and Millar (2004, p. 2), a crisis is an inappropriate and inconvenient event that has negative consequences for everybody who is concerned. Argenti (2009, pp. 258-259) states that a crisis is a “major catastrophe” and argues that these catastrophes are either a result of “natural disaster” or “caused by human error, negligence, or ... malicious intent”. Argenti (2009) argues that a crisis is something everybody can identify with.

1.2 What is a company crisis?

Stacks (2004) states that all organisations will at some time be affected by a crisis. Fearn-Banks defines a company crisis as a “major occurrence with a potentially negative outcome affecting an organization, company, industry, as well as its publics, products, services, or good name” (Fearn-Banks as cited in Heath & Millar, 2004, p. 5). A company crisis can negatively affect an organisation’s relationship with its stakeholders and the reputation of the company (Hearth & Millar, 2004). Furthermore, the company’s reliability might be damaged (Argenti, 2009). According to Argenti (2009), there are two different forms of company crises:

- crises that occur due to an obvious error of the organisation and;
- crises where the organisation is the victim.

1.3 Characteristics of a crisis

Argenti (2009, p. 259) states that “all crises are unique”. However, according to Argenti (2009, p. 259), all crises have some characteristics in common: “(1) the element of surprise ... ; (2) insufficient information ... ; (3) the quick pace of events ... ; (4) intense scrutiny”. Argenti (2009) argues that the surprising occurrence of a crisis might result in losing control. The organisation needs to explain the crisis but often the necessary facts and explanations are not available immediately. Thus, the company cannot provide an adequate statement. Moreover, events are escalating very quickly. Consequently, the company’s spokesperson is often not prepared when it comes to the company statement, which needs to take place as soon as possible.

According to Heath and Millar (2004), the following characteristics describe a crisis: “magnitude, duration, locus of cause, locus of responsibility, emergency response (timely and effective), and restoration/resolution” (Heath & Millar, 2004, p. 4). Furthermore, the authors argue that, on the one hand, the likelihood of a crisis is low but, on the other hand, the consequences are very high and that crises can be of different severities. However, they state that crises are foreseeable.

2 Theory – crisis management & planning

Delvin (2006) argues that crisis management involves specific actions taken by crisis managers to solve problems and threats a company faces. Figure 1 illustrates a crisis management model with four important steps for ongoing crisis management understanding and learning.

illustration not visible in this excerpt

Figure 1: Crisis Management Model

(Source: Hosie & Smith, 2004)

Effective crisis managers need to do more than just trying to prevent crises by reducing risks and dangers. They need to prepare for potential crises, respond adequately to crises, lead the organisation to recovery and prevent further crises. It is a constant process and they need to develop a crisis management plan:

Crisis management planning is actually a corporate communication plan that seeks to manage various public perceptions of the crisis. An effective crisis management plan is a well thought out campaign that seeks to reduce any negative impact, while generating positive outcomes during a crisis period (Stacks, 2004, p. 38).

Organisations are exposed to more than one type of crisis, so the plan must identify actions to be taken on a number of different crisis scenarios. The plan will identify these actions based on specific types of crisis (Delvin, 2006). Crisis management helps organisations to anticipate and to be able to handle potential problems and also helps to overcome the psychological difficulty of “thinking about the unthinkable” (Mitroff & Pearson, 1993, p. XV).

2.1 Guidelines and Preparation

Preparing for the unpredictable is essential for all businesses because “any organization, no matter what industry or location it is in, can find itself involved in … crises” (Argenti, 2009, p. 272). As a guideline for crisis preparation, the following steps should be observed: First of all, theoretical planning is necessary. Secondly, brainstorming is essential to determine the different crises that could affect the company. Next, in the course of planning, the drawing of written plans is important. Furthermore, in the course of a media training, the companies’ spokespeople need to be trained how to communicate during crises. As fifth step, simulations are important, which are necessary in order to assess the weaknesses and strengths of the crisis management team and also audits are essential (Bland, 1995). Furthermore, it is of importance to determine the effect of the crisis on the stakeholder universe of the company, which usually is not given enough attention by crisis communication experts. Organisations need to identify the risk in terms of its effect on the most important constituencies, since some of them are more important than others (Argenti, 2009).

2.2 Goals of crisis management

According to Trest and Guernsey (2003), the main goal of crisis management should be to prevent crises. Wallace (1991) states that there are three other important objectives of crisis management. He argues that is important to quickly terminate the crisis, to assess and reduce the damage and to restore the company’s credibility and reputation as soon as possible. Furthermore, crisis management needs to stabilise the company in crisis and decides which actions will be taken with the resources available (Holmes, 2006).


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Crisis Management of BMW Motorrad Australia
Griffith University  (Business School)
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