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5 months ago
Describe the pattern of crisis development.
Business and Its Environment
Edition: 7th
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5 months ago
Crises have patterns that progress through stages. Some crises are identified within a firm, but many are identified outside the firm by consumers, business partners, or government. Crises can escalate quickly, particularly when the media covers the developments. How a crisis develops depends on the intervention of not only the firm but often government as well. In cases involving safety and health, natural disasters, or environmental damage, government agencies have expertise and can be an important source of information and action. Government can typically mobilize resources and deploy them where they are needed. Firms and government agencies often work together in resolving a crisis. Crises pass, but their effects can continue in the form of changes in management practices, new government regulations, or increased public scrutiny of the performance of firms.
Crises often have a pattern that can be conceptualized using the life cycle framework that identifies the stages as identification, escalation, intervention, and resolution. The first stage in the life cycle of a crisis is identification. A crisis may result from a single event or from a series of developments over time. The second stage is escalation. Some crises explode as a result of media coverage, government actions, or company actions. An important factor influencing the development of the public phase of a crisis is media coverage. Often media coverage begins before the firm can act, and hence the firm is forced into a reactive mode. Particularly in a reactive situation, communication with stakeholders, the public, and government through the media can be crucial to dealing with the crisis. Intervention involves actions by the company or government to deal with the crisis and provide assistance to victims. These actions include communication with stakeholders, the public, and government as well as substantive measures to resolve the crisis and lessen the likelihood that a similar crisis will occur in the future. Resolution involves turning the crisis into a manageable nonmarket issue. This may be accomplished by eliminating any further potential for harm, assuring the public and the media that the crisis has passed, or compensating those harmed. Even those crises in which a company had no responsibility can have a lingering effect on a company and its reputation.
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