Expert answer:BP Gulf of Mexico Oil Spill
Solved by verified expert:Complete: a minimum of 1,200 words (total assignment) and three scholarly sources. Apa format1. In a narrative format, summarize the key facts and issues of the case.2. Update the information in the case by researching it on the Internet. Focus your response on the specific issues in the case.3. Was the Deepwater Horizon accident a problem associated more with cost cutting or with a faulty process safety culture?4. What impact did BP’s strategy have on the crisis?5. Assume the role of Tony Hayward’s successor as CEO of BP. What steps would you take to address the crisis and rebuild BP’s reputation?
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CHAPTER 4
A Strategic Approach to
G
Crisis Management
O
Landscape Survey
The
Internal
Landscape
The
External
Landscape
I
N
S
Strategic Planning
,
Chapter 4: A Strategic
Approach to Crisis
Management
Chapter 2:
The Crisis
Management
Landscape
Chapter 3:
Sources of
Organizational Crises
Chapter 5:
Forming the
Crisis
Management
Team and
Writing the
Plan
Chapter 6:
Organizational
Strategy
and Crises
Y
V
O
N
Crisis
N
E
Crisis Management
Chapter 7:
Crisis
Management:
Taking Action
When
Disaster Hits
Chapter 8:
Crisis
Communications
Organizational
Learning
Chapter 9:
The
Importance
of Organizational
Learning
Chapter 10:
The
Underlying
Role of Ethics
in Crisis
Management
1
2
Opening Case, Part 1:2The Professor, “Arrogant Amy”
7
Dr. Amy Bishop arrived on the campus of the University of Alabama at Huntsville
5
(UAH) in 2003 with impeccable credentials. She had a Ph.D. from Harvard and
was by all means a rising star in the field of neurobiology. Her new position was
that of a tenure-track assistant professor, a job that would require her to teach and
conduct research. A tenure-track professor at UAH has six years to make a case for
the long-term stint known as tenure. An assistant professor who is not deemed to
be a good fit may be denied tenure, at which time the assistant professor begins
anew at another institution.
In general, a tenure-track faculty member must be a good teacher and provide
a steady stream of research scholarship in the form of peer-reviewed publications.
In addition, being collegial is a term used frequently on university campuses. Albeit
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CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE
subjective, the notion of collegiality means that faculty members are respectful of
their students and peers. Put a bit differently, a faculty member must be likeable,
although agreement with everything that is said at the university is not required.
Indeed, one can disagree with another colleague’s viewpoint but still be respectful
and courteous to that colleague. Professors who are overly confrontational or arrogant may find it hard to attain tenure at some institutions. Amy Bishop’s arrogant
and abrasive style rubbed many people the wrong way, earning her the informal
nickname “Arrogant Amy.” She was even known for introducing herself as “Dr. Amy
Bishop, Harvard-trained” (Wallace, 2011).
Bishop’s personal style of carrying herself did not go over well at UAH. Initially,
she was described by colleagues and students as funny and extroverted, but she was
not universally liked. Students complained
that her exam questions went beyond
G
what was covered in the course. A petition was circulated by students complaining
O 2010).
about her exams (Dewan, Saul, & Zezima,
Her relationship with graduate students
was also volatile. It was generally known
I
that most students simply did not last long working for her in the laboratory, and
N
many transferred to another lab before completing their degrees. One student was
S The student promised to return notebooks
dismissed from her lab in May 2006.
and keys the next day, but Bishop called
, the campus police to address the situation
(Dewan et al., 2010).
Her erratic behavior was noted by a member of her tenure committee, who comY “crazy.” When given a chance to restate the
mented in a report that she was literally
word crazy, the faculty member didV
not change his stance, stating “I said she was
crazy multiple times and I stand by that. . . . The woman has a pattern of erratic
O
behavior. She did things that weren’t normal. . . . She was out of touch with reality”
N
(Wallace, 2011).
In March, 2009, the university decided
N not to accept her application for tenure.
Bishop’s research was cited as being a low point. She had published one peerE
reviewed paper in each of 2004, 2005, and 2006, but none in 2007 and 2008. Then,
in 2009, she had three peer-reviewed papers, although one of them was published
in a journal that was not considered1of very high quality. In addition, her teaching
failed to measure up to the standards desired by UAH (Bartlett, Wilson, Basken,
2
Glenn, & Fischman, 2010).
2 be expected that Amy Bishop would need
At this point in her career, it would
to move on to another institution. 7
The career prospects, though, can be difficult
for some professors, as many in the higher education industry see not getting
5
tenure as being the ultimate rejection from that colleague’s peers (Wallace, 2011).
In addition, career mobility for a faculty member who teaches and researches in a
very specialized field can be limited. For some professors, there may be only one
or two positions each year for which they are truly qualified (Bartlett et al. 2010).
Dr. Bishop decided to appeal the tenure decision and requested that various faculty members write letters of support on her behalf. She was the main source of
income for her family and she desperately needed the job; the family was already
experiencing financial problems and had discussed declaring bankruptcy (Wallace,
2011). Despite her efforts to appeal the tenure decision, her request was still denied.
Dr. Bishop would need to seek employment elsewhere.
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Chapter 4. A Strategic Approach to Crisis Management
83
Opening Case Part 1 Discussion Questions
1. What can colleges and universities do to help their new faculty be successful in their jobs?
2. Some take the viewpoint that the institution is at fault if a faculty member
fails to attain tenure. Discuss this statement in terms of its merits.
3. Faculty members who are not granted tenure are often given a final oneyear contract before they are required to leave. What potential crisis could
emerge during that person’s last year on campus?
G
O
Bartlett, T., Wilson, R., Basken, P., Glenn, D., & Fischman,
I J. (2010, February 26). In Alabama,
a scientist’s focus turns deadly. Chronicle of Higher Education, pp. A8, A12.
Dewan, S., Saul, S., & Zezima, K. (2010, FebruaryN20). For professor, fury just beneath
the surface. New York Times. Retrieved July 26, 2012, from http://www.nytimes
S
.com/2010/02/21/us/21bishop.html?pagewanted=all
Wallace, A. (2011, February 28). What made this university
, researcher snap? Wired. Retrieved
July 26, 2012, from http://www.wired.com/magazine/2011/02/ff_bishop/.
Opening Case Part 1 References
Y
Introduction
V
O
Effective crisis management requires that managers understand both the sources of
N and plan for them. A crisis event
crisis events and the strategies needed to identify
rarely occurs “out of the blue.” Instead, it usually
N follows one or more warning
signs. Typically, a series of precondition events occur before a crisis can commence.
E
These events eventually lead to the “trigger event” that ultimately causes the crisis
(Shrivastava, 1995; Smith, 1990). Recall that in 1984, deadly methyl isocyanate gas
leaked from a storage tank at a Union Carbide 1
plant in Bhopal, India, initially killing more than 2,500 people and injuring another 300,000. The trigger event for
2
this crisis was the entry of water into a storage tank that subsequently caused the
2
unit’s temperature and tank pressure to rise. Numerous
preconditions contributed
to the origin of this accident. These included shutting
down
a refrigeration system
7
designed to keep the gas cool, failing to reset the tank temperature alarm, neglect5
ing to fix a nonfunctioning gas scrubber, and not performing the maintenance and
repair on an inoperative flame tower designed to burn off toxic gases (Hartley,
1993). Each of these four systems was designed to help alert plant workers and
contain the toxic effects of a gas leak. Each of them was inoperable the day of the
accident.
In the evolution of a crisis, the warning signs may not be identified until it is
too late, either because decision makers are not aware of them or because they do
not recognize them as serious threats. Sometimes managers are simply in denial.
Some assert that a crisis cannot happen to their organization or that the probability
of it occurring is so low that it does not warrant spending the time and resources
84
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CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE
required to prevent it (Nathan, 2000; Pearson & Mitroff, 1993). In some cases, the
warning signs are ignored altogether, even though these preconditions are signaling
an impending crisis. For example, Toyota’s unintended acceleration problem with
its Camry model was preceded by a year’s worth of problems with stuck accelerators (Institute for Crisis Management, 2011). All of this underscores the importance
of assessing crisis vulnerability, the practice of scanning the environment and identifying those threats that could happen to the organization.
In this chapter, we examine crisis management from a strategic point of view.
First we overview the challenges managers face as they assess the external environment, particularly in terms of its uncertainty. We then proceed to the heart of
identifying potential crises and employ the SWOT (strengths, weaknesses, opportunities, and threats) analysis, a tool that
Gis widely used in strategic planning. We close
this chapter with a short discussion on the link between organizational culture and
O
crisis planning.
I
N
A Strategic Approach to Crisis Management
S
,
Crisis management requires a strategic mind-set or perspective (Chong & Park,
2010; Preble, 1997; Somers, 2009). Therefore, understanding effective crisis manY the four key distinctions of a strategic
agement requires that we first understand
orientation perspective.
V
1. It is based on a systematic, O
comprehensive analysis of internal attributes,
also referred to as strengths and weaknesses; and of factors external to the organiN
zation, commonly referred to as opportunities and threats. Readers familiar with
strategic management recognize thisNprocess as the SWOT analysis. Approaching
this process in a systematic mannerE
is important because it ensures that potential
crises are not overlooked. Thus, we must look both inside and outside the organization as we determine the risk factors that must be confronted.
1
2. A strategic orientation is long term and future oriented—usually several
2 also built on knowledge of events from the
years to a decade into the future—but
past and present.
2
3. A strategic orientation is distinctively
opportunistic, always seeking to take
7
advantage of favorable situations and avoiding pitfalls that may occur either inside
5
or outside the organization.
4. A strategic orientation involves choices, and very important ones at that.
Because preparing for every conceivable crisis can be costly, priorities must be
established. For example, resources must be spent to ensure safety in the workplace.
The expenditure of resources, however, does take money directly off the bottom
line. Because this approach is strategic, the expenditure may ensure the overall
well-being of the firm in the long run. Therefore, some expenditures should not be
viewed solely as cost items, but as investments in the future longevity (and safety)
of the company.
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Chapter 4. A Strategic Approach to Crisis Management
Because of these distinctions, the overall crisis management program must
include the top executive and members of his or her management team. The chief
executive is the individual ultimately accountable for the organization’s strategic
management, as well as any crises that involve the organization. Except in the
smallest companies, he or she relies on a team of top-level executives, all of whom
play instrumental roles in the strategic management of the firm (Carpenter, 2002;
Das & Teng, 1999).
Strategic decisions designed to head off crises are made within the context of
the strategic management process, which can be summarized in five steps (Parnell,
2013):
1. External analysis. Analyze the opportunities and threats or constraints
G
that exist in the organization’s macroenvironment, including industry and
O
external forces.
I strengths and weaknesses in its
2. Internal analysis. Analyze the organization’s
internal environment; reassess the organization’s
mission and its goals as
N
necessary.
S
3. Strategy formulation. Formulate strategies
, that build and sustain competitive advantage by matching the organization’s strengths and weaknesses
with the environment’s opportunities and threats.
Y
V
5. Strategic control. Engage in strategic control activities when the strategies
O
are not producing the desired outcomes.
N
Crisis management is an important consideration in each step, in different
N
ways. In the first step, managers identify the sources of crises that exist in the firm’s
E
external environment. Typically, the organization’s
external opportunities and
4. Strategy execution. Implement the strategies that have been developed.
threats are identified to determine specific vulnerabilities of concern. The threat of
online viruses and other denial-of-service (DoS) attacks, for example, may suggest
1
that the firm invest in upgrading firewall and virus protection measures so that
2 2005). Also related to technology
its website is not taken offline by hackers (Robb,
is a new opportunity: the use of social media outlets
2 in addition to the company’s
regular Web page. Facebook pages for organizations are common as firms seek to
7
demonstrate their human side to the public. This move can be important when a
crisis does strike, because the company can use5more personalized media outlets to
communicate its side of the story (Jacques, 2009).
Government regulations, formed in response to a previous crisis, are part of the
external environment. Following a salmonella outbreak and subsequent recalls of
tomatoes in 2008, the U.S. Food and Drug Administration strengthened inspection
and other measures to reduce the likelihood of a similar crisis in the future. Initially,
the agency focused on tomatoes as the culprit. Later, various types of peppers were
also part of the investigation (O’Rourke, 2008). Food-related firms from growers
to producers to restaurants should consider how this crisis evolved and what strategic changes might be appropriate (Zhang, 2008). Ultimately, those in the food
85
86
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CRISIS MANAGEMENT IN THE NEW STRATEGY LANDSCAPE
manufacturing industry must be knowledgeable concerning what is now labeled
food traceability, a term that requires all parties processing food to have the ability
to track inputs through the entire supply chain (Schrader, 2010).
The second step focuses on vulnerabilities within the organization that may
result in a crisis event. Typically, the organization’s internal strengths and weaknesses are identified to determine what vulnerabilities may be present. A poorly
trained workforce, for example, could lead to a workplace accident. Likewise, dubious advertising claims about one’s competitors could result in litigation. Aging
equipment is another common area of weakness.
The Chalk’s Ocean Airways crash mentioned in Chapter 3 is an example of a
company with certain strengths that made it a popular small airline over many
decades. In 2003, the airline had beenGcited in the Guinness Book of World Records as
the world’s oldest continuously operating airline (Scammell, 2003). The company
O it flew vintage seaplanes to the Bahamas,
was a novelty in south Florida because
a feature that made it popular with Ilocal Bahamians who found the arrangement
convenient when returning home. Indeed,
N flying in seaplanes in a time of modern
aviation was a strength that the airline possessed. It was a visit back to nostalgic
S also embodied a weakness that was not
times. Unfortunately, the vintage seaplanes
apparent to its mechanics: structural
, fatigue cracks caused by years of use. “This
accident tragically illustrates a gap in the safety net with regard to older airplanes,”
said Mark Rosenker, National Transportation Safety Board (NTSB) chairman. “The
Y
signs of structural problems were there—but
not addressed. And to ignore continuing problems is to court disaster” (Vines,
V 2007, p. 14).
The third and fourth steps concern the development and execution of the firm’s
O
strategies at the various functional levels. Indeed, some strategies are more prone
N a strategy that emphasizes global expanto crisis events than others. For example,
sion into less stable emerging nations
N engenders a greater risk of crisis than one
that has a strong domestic market orientation. This is not to suggest that potential
E
crisis-laden strategies be avoided, but rather that they be evaluated closely within
the strategic decision-making process.
The final step involves strategic control.
This is an evaluative process through
1
which the organization’s managers engage in a serious assessment of the outcomes
2
that are occurring or have occurred in the organization. Once the assessment is
2 action to counter undesirable or unanticicompleted, the organization must take
pated outcomes that emanate from the
7 strategy’s implementation. When a strategy
is executed as planned, control may be minimal. When execution difficulties exist
5
or unforeseen problems arise, however, the nature of strategic control may need to
change to crisis prevention or even crisis response. Monitoring mechanisms must
be established so that corrective action can be initiated when necessary. Strategic
control is useful in crisis management because it often signals that a problem may
be forthcoming. For example, accounting controls can signal whether there is
embezzlement taking place in the organization. Figure 4.1 depicts how these five
strategic steps fit within the crisis management framework. Note that Chapter 3
provided the foundation for the second step in the process—examining the external landscape. This chapter builds on that discussion and also focuses on Steps 2
and 3. In the next section, we examine the nature of environmental uncertainty as
it pertains to the strategic and crisis management process.
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Copyright © 2014 by SAGE Publications, Inc.
Chapter 4. A Strategic Approach to Crisis Management
Landscape Survey
The
Internal
Landscape
The
External
Landscape
Strategic Planning
Crisis Management
Organizational
Learning
2. Internal
Analysis
3. Strategy
Formulation
4. Strategy
Execution
5. Strategic
Control
1. External
Analysis
G
O
Figure 4.1 A Strategic Approach to Crisis Management
I
N
S
Understanding Environmental Uncertainty
,
Chapter 3 discussed a number of external sources of crises: political–legal, economic, social, and technological forces. Preventing crises would probably not be so
Yperfect inf …
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