Fantasy Land Part 2

July 28, 2013
Childrens'Grand Park

Rides at Children's Grand Park, Seoul

In today's world, many companies conduct business internationally. Because of international considerations, an international crisis is more complex than a domestic one and hence harder to resolve or manage. Companies that are caught up in an international crisis have to pay more attention to cultural, international and communication issues. Cross border management of a crisis management situation has indeed become very important.

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Is your company or business prepared to handle an international crisis situation- or is your company still in fantasy land like the picture in the  left hand corner? An international crisis requires a number of steps to be successfully managed and implemented including:

  1. Planning,
  2. The appointment of a Crisis Manager,
  3. The formation of a Crisis Response Team,
  4. Knowledge of the foreign situation impacted by the crisis,
  5. Proper international communications and PR,
  6. Management of the crisis claims ( legal, etc.), and
  7. Cross border crisis management.

The principle focus of any international crisis strategy has to be communications.  A failed communications strategy often leads to bad publicity, unhappy stakeholders and potential disaster. A question any company doing business internationally must ask itself is whether or not its LRM Program has a crisis communication strategy in place in case an international crisis occurs. Does the company have a crisis communications team in place or not? Are communication protocols in place? What about a communications plan that takes into consideration cultural and/or international issues and concerns? If your company  is not prepared to handle an international crisis, it may be too late to handle it when the incident happens.

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An example of failed communication or the lack of an international crisis communication plan is  a recent  acceleration/gas pedal recall involving an Asian car manufacturer.  The manufacturer  was apparently put on notice of a large number of complaints involving acceleration/gas pedal problems.  However, it did nothing to thoroughly investigate the issues or communicate to the public that it was seriously investigating the issue.  It denied such problems were  due to mechanical issues.  Several years after it first became aware of the potential acceleration issues, it was forced to seriously investigate the matter  because of several fatal car crashes potentially involving unintended acceleration.  The car crashes were widely reported in the media.  Because it failed to handle the crisis properly at the beginning, the car manufacturer  was severely criticized in the media for its lack of response and apparent disregard of its customers' safety. The public became outraged when it learned  the car maker began investigating the acceleration problems in earnest only after the fatal car crashes- 2 years after numerous reports had been made.  The US Congress then got into the act holding hearings on the acceleration issue.   The company  ended up recalling over 8 Million cars worldwide and finally appointing  a safety officer, etc in the US.  Though it  began to communicate more effectively , the car maker's  penchant for secrecy, failed communications and lack of a crisis management plan at the beginning severely impacted the company.

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In the end, the company  was hit with over 130 class action lawsuits in the US.   Billions of dollars  in share value evaporated due to its stock's decreased share value. Because of its failure to properly manage the crisis , it lost almost 6% market share in the US - reflecting a tarnished reputation.  Though it is now regaining market share, it continues to have recall problems and brand issues.

So- is your company prepared to handle an international crisis?  Or is it living in Fantasy Land.

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