Lesson aims
- Distinguish between crisis management and contingency planning.
- Explain the factors that affect effective crisis management, including: transparency, communication, speed, control.
- Analyse the advantages and disadvantages of contingency planning, including: cost, time, risks, safety.
A crisis is an unpredictable event with the potential for large negative consequences that threaten to harm the organisation and its stakeholders. It is something that causes major disruption to normal business operations and can range from a fire to stoppages in the supply chain.
The aim of any crisis management situation is to return to normal business operations as swiftly as possible. Alongside this, crisis management would also focus on communication, transparency, speed and control of the situation.
Contingency planning refers to an organisation's attempt to put in place procedures to deal with a crisis, anticipating it through scenario planning.
U5.7 Crisis management and contingency planning (HL).pptxTasks
- Identify from media reports a recent crisis that affected a business.
- Report on the steps the business took to manage the crisis.
- Comment on the transparency, speed, communication and control the business applied to its approach to managing the crisis.
- Has one of your case study companies been affected by a crisis recently?
- Evaluate the long and short-term impacts of regular contingency planning exercises (e.g. fire drills, earthquake drills, building evacuation, etc)).
- Describe which leadership style is best suited to an emergency, such as an earthquake.
Case study - Air Asia flight 8501
Tony Fernandes is a highly successful entrepreneur. He was a pioneer of the budget airline boom in Asia, the chairman of Queen's Park Rangers Football Club and the founder of a Formula One racing team. As CEO of Air Asia, he faced his biggest challenge in December 2015 when Air Asia flight 8501 crashed into the Java Sea, killing 163 people.
This crisis naturally rocked the company. Tony Fernandes was praised by some for his handling of the crisis. He held transparent, regular meetings with the press, met with the victims' families and did everything in his power to aid recovery efforts. His strong leadership could not take away the pain that was caused, but it did help to minimise any unnecessary additional difficulties.
- Describe an appropriate leadership style Tony Fernandes may have adopted during this time and give reasons for your choice.
- In the months immediately following the crash, explain how Air Asia's marketing mix may have been adapted.
The case study of the Air Asia Flight 8501 accident is a good example of crisis management and attitudes towards the impact of a crisis on the company. In relation to Paper 2 Section C, further research can be conducted on the Air Asia company to find out whether they had any contingency planning, and the approach the company has to minor disruptions of their operations. Some of the questions below can be considered:
- How can such an accident change the safety policy of the company?
- What types of contingencies should different types of organisations plan for?
- What role does leadership play in crisis management?
Paper 2 Section practice questions.docx