Crisis Management in International Business

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  • 0:03 What Is Crisis Management?
  • 1:16 Stages of Crisis Management
  • 2:24 Evaluating Risks
  • 3:25 Lesson Summary
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Lesson Transcript
Instructor: Sean Kennedy

Sean has 8 years experience as a supervisor and has an MBA with a concentration in marketing.

Crisis management in international business is essential. In this lesson, we'll discuss the steps to take in a crisis, phases of a crisis, and evaluating the risks in international business.

What Is Crisis Management?

A crisis is an event, or series of events, that can create a threat to an organization's existence. Some examples of potential crises are natural disasters, technological crises, terrorist attacks, and theft. An effective crisis plan is able to avoid any potential problems and also manage any crises that do happen to a business. When having businesses overseas, it is essential to have steps in place to be prepared for any crisis. The following steps should be taken in the event of a crisis in international business:

  • It is important to first identify the crisis and determine if this crisis will occur internationally.

  • The next step would be for the company to decide who will be in charge of handling a crisis, and who will be the representative to tell the public.

  • The company should then create a task force of employees who will handle the crisis and communicate with the rest of the team. The task force will be in charge of handling any issues that arise with the crisis, while other team members can continue to work as normal.

  • The task force should be able to deal with the government and stakeholders to fix the problem.

  • Information should be shared immediately with the public to reassure them that the problem will be fixed.

Stages of Crisis Management

The prodromal crisis stage is the warning stage which could be a short period of time or immediate. It is essential for a company to be aware of the warning signs and have efficient training to make sure employees can help prevent a crisis from occurring. During training, employees can learn where to exit in case of a fire, how to properly stack merchandise in case of a flood, and how to handle theft properly. When operating internationally, it is important to be aware of social and economic factors that could affect your company before they actually happen. Risk depends on the society's beliefs and experiences.

During the acute crisis stage, the damage starts to occur. Management must take an active role, and the amount of damage that is done is based on management preparedness.

The chronic crisis stage is when the company tries to recover from the crisis, determine what made it vulnerable, and learn what failed and what was successful in the crisis planning process. The last stage is the crisis resolution stage.

In the crisis resolution stage, the company goes back to normal business activity. The damage has been repaired, and the company has decided to maintain operations or do what is best for financial purposes.

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