Page 36 - Crisis Management

Corporate profile and crisis prevalence

Corporate profile Likelihood of crises Severity of crises Net effect

Could increase crisis
May minimize the severity because a Fewer crisis but more
Operates in a number of crises crisis is that affects severe in terms of
single industry through specialization one business unit impact to the total
in only one industry cannot be buffered by organization
other business units

Operates multiple
businesses in The link between corporate profile and crisis prevalence depends on the
related industries degree of relatedness among a firm’s business units and the ability of the
(related firm to develop synergy across the businesses
diversification)

Operates multiple Could minimize crisis
May increase the
businesses number of crisis by severity because crisis Greater frequency of
unrelated exposing the firm to events can often be crises but less severe
contained to a single
in terms of impact to
industries multiple business business unit in the the total organization
(unrelated environment firm
diversification)

A five-step strategic control procedure

Top management determines the focus of strategic control by identifying internal
factors that can serve as effective easures for the success or failure of a strategy,
as well as outise factors that could trigger responses from the organization

Benchmarks are established for internal factors with which the actual
.
performance of the organization can be compared after the strategy is
implemented

Management measures evaluates the company’s actual performance, both
qualitatively and quantitatively

Performance evaluations are compared with the previously established standards

If performance meets or exceeds the standards, corrective action is usually not necessary.
If performance falls below the standard, then management must take remedial action