Ford and Firestone Tire and Rubber Company

The Ford-Firestone Tire and Rubber Company dispute transpired in August 2000. In response to claims that their 15-inch Wilderness AT, radial ATX and ATX II tire treads were separating from the tire core—leading to grisly, spectacular crashes—Bridgestone/Firestone recalled 6.5 million tires. These tires were mostly used on the Ford Explorer, the world's top-selling sport utility vehicle (SUV). The two companies committed three major blunders early on, say crisis experts. First, they blamed consumers for not inflating their tires properly. Then they blamed each other for faulty tires and faulty vehicle design. Then they said very little about what they were doing to solve a problem that had caused more than 100 deaths—until they got called to Washington to testify before Congress.

Exxon

On March 24, 1989, a tanker belonging to the Exxon Corporation ran aground in the Prince William Sound in Alaska. The Exxon Valdez spilled millions of gallons of crude oil into the waters off Valdez, killing thousands of fish, fowl, and sea otters. Hundreds of miles of coastline were polluted and salmon spawning runs disrupted; numerous fishermen, especially Native Americans, lost their livelihoods. Exxon, by contrast, did not react quickly in terms of dealing with the media and the public; the CEO, Lawrence Rawl, did not become an active part of the public relations effort and actually shunned public involvement; the company had neither a communication plan nor a communication team in place to handle the event—in fact, the company did not appoint a public relations manager to its management team until 1993, 4 years after the incident; Exxon established its media center in Valdez, a location too small and too remote to handle the onslaught of media attention; and the company acted defensively in its response to its publics, even laying blame, at times, on other groups such as the Coast Guard. These responses also happened within days of the incident.

 

                 LESSONS LEARNED IN CRISIS MANAGEMENT

Impact of catastrophes on shareholder value

One of the foremost recognized studies conducted on the impact of a catastrophe on the stock value of an organization was completed by Dr Rory Knight and Dr Deborah Pretty (1996, Templeton College, University of Oxford - commissioned by the Sedgewick Group). This study undertook a detailed analysis of the stock price (post impact) of organizations that had experienced catastrophes. The study identified organizations that recovered and even exceeded pre-catastrophe stock price, (Recoverers), and those that did not recover on stock price, (Non-recoverers). The average cumulative impact on shareholder value for the recoverers was 5% plus on their original stock value. So the net impact on shareholder value by this stage was actually positive. The non-recoverers remained more or less unchanged between days 5 and 50 after the catastrophe, but suffered a net negative cumulative impact of almost 15% on their stock price up to one year afterwards.

One of the key conclusions of this study is that "Effective management of the consequences of catastrophes would appear to be a more significant factor than whether catastrophe insurance hedges the economic impact of the catastrophe".

While there are technical elements to this report it is highly recommended to those who wish to engage their senior management in the value of crisis management.

 

Crisis as Opportunity

To address such shareholder impact, management must move from a mindset that manages crisis to one that generates crisis leadership. Research shows that organizational contributory factors affect the tendency of executives to adopt an effective "crisis as opportunity" mindset. Since pressure is both a precipitator and consequence of crisis, leaders who perform well under pressure can effectively guide the organization through such crisis. James contends that most executives focus on communications and public relations as a reactive strategy. While the company’s reputation with shareholders, financial well-being, and survival are all at stake, potential damage to reputation can result from the actual management of the crisis issue. Additionally, companies may stagnate as their risk management group identifies whether a crisis is sufficiently “statistically significant.” Crisis leadership, on the other hand, immediately addresses both the damage and implications for the company’s present and future conditions, as well as opportunities for improvement.

 

 

                         ORAL SPEECH PRACTICE    

1. Choose one example of successful and one example of unsuccessful crisis management enumerated in the text and analyze them in terms of immediacy and swiftness of reaction, communication with the public, measures taken, etc.

2. Take any company you like and make a report on its efficiency in handling a crisis.

3. Imagine you work in a PR-department of a company that has recently faced a crisis. Analyze the situations given below and say what it is necessary to do to solve the problem:

1. You are employed by a travel agency that not a long time ago sold a great number of package holidays to the most popular destinations, but when the clients arrived at the hotels, they were unable to check in as the receptionists told them the hotel accommodation had not been paid for in advance. The clients are furious because of the spoilt holiday and are going to complain.

2. The pharmaceutical company you work for has recently developed an incredibly effective painkiller that has been heavily promoted and advertised as a revolutionary medicine for a headache. Despite this, after taking it a lot of people have been suffering negative side effects, such as nausea, drowsiness, and rash. The case has definitely received huge public response.

3. You are employer by a tire manufacturing company whose factory is located not far from the lake. Before the construction of the factory the lake used to be crystal clear and pure, but a huge amount of harmful toxic waste has constantly been dumped into the lake causing water pollution and the extinction of some plant and fish species. The local environmentalists have launched a campaign in the media aimed at closing the factory down.

4. You work for a company producing video and computer games for children. Recently there have been a number of complaints from parents who have started to notice their children suffering from inexplicably aggressive behavior. They say that it is due to the violent content of the games and promise to sue your company.

                            TEXT 3

Read the text below and comment on the efficiency of the given tips and the role of body language in communication in general and in crisis situations in particular:

         5 NONVERBAL CRISIS COMMUNICATIONS TIPS

In a crisis situation, how you deliver your message can be just as important as the content of the message itself. Whether you’re facing reporters eager to pepper you with questions, or a mob of angry customers seeking redress, every move you make will be scrutinized. Your physical presence can be an effective tool for communication, but if you don’t pay attention to simple physical cues, you can sink your chances of getting through a crisis without even realizing it.

Here are some basic tips to keep in mind when acting as spokesperson for your brand during a crisis, courtesy of Leonard S. Greenberger, partner at Potomac Communications Group.

Maintain steady eye contact, whether your audience is one person or many. Any eye movement, up or down, side-to-side, sends a signal that you’re being dishonest or evasive.

Keep your hands visible and between your hips and shoulders. Don’t put them in your pockets or behind your back. In a high-concern, low-trust situation that signals discomfort and aggressiveness.

Try to remove barriers between you and your audience. Don’t sit behind your desk, or stand behind a podium. Even crossing your arms becomes a barrier and can make it harder to demonstrate empathy and honesty.

Dress conservatively. Crazy patterns and gaudy jewelry distract from what you’re saying. If you know what your audience will be wearing, dress at least as well, or one notch above.

Eat a banana. Yes, a banana. If you get nervous dealing with someone who is angry and upset, the nutrients in a banana help calm your nerves. It may seem strange, but many performers swear by it. 

 

                         TEXT 4

Translate from Russian into English:

 СВЯЗИ С ОБЩЕСТВЕННОСТЬЮ В КРИЗИСНЫХ СИТУАЦИЯХ

Иногда возникают катастрофические ситуации, требующие немедленных и эффективных действий, подобных применению пожарной машины или спасательной шлюпки при сигнале SOS. Этот тип деятельности PR называется «экстремальные связи с общественностью» или «кризисное управление».

Успешное кризисное управление зависит от трех ключевых элементов:

1. Согласованная политика компании по управлению в экстремальной ситуации.

2. Проверенные средства связи, приспособления и оборудование.

3. Ключевой персонал, прошедший подготовку, необходимую для принятия немедленных мер в случае серьезной аварии; его представители будут выступать от имени компании на пресс-конференциях, на телевидении и т. д

Без полной оценки высшим руководством важности кризисного плана крайне сложно, если вообще возможно, составить всестороннюю программу по связям с общественностью и подготовить персонал, способный осуществить её.

Начать следует с подготовки ключевого персонала в вашей собственной компании. В этот курс подготовки должны входить занятия по ведению телефонных переговоров, практические занятия по участию в телевизионных интервью. Подготовленному таким образом персоналу потребуются надежные средства связи.

Катастрофы могут происходить в любое время суток, поэтому ключевой персонал должен находиться в готовности 24 часа в сутки. Это значит, что должно быть несколько групп, дежурящих по графику.

В кризисной ситуации важными факторами являются: немедленная реакция, обеспечение СМИ точными сведениями, наличие всей технической информации, любые возможные действия в интересах пострадавших и их родственников.

Write a 250-300-word essay on one of these quotations:

1. “When written in Chinese, the word crisis is compounded of two characters – one represents danger and the other represents opportunity.” (John F. Kennedy)

2. “In crisis management be quick with the facts and slow with the blame.” (Leonard Saffir)

3. “Remember, action today can prevent a crisis tomorrow.” (Steve Shallenberger)

Go over all the information of this unit and be ready to speak on these topics:

1. Rules of handling a crisis situation.

2. The role of a PR-practitioner in dealing with crises.

3. Examples of successful and unsuccessful crisis management.

                

                     UNIT 7

 THEORIES IN PUBLIC RELATIONS

                     

                        TEXT 1

PUBLIC RELATIONS THEORIES