Issues In Management Crisis And Crisis Management Strategies

Identification of the case

Discuss about the Issues in Management Crisis.

In order to manage the unexpected and sudden adverse situation, the business organizations tend to arrange a proper crisis management with which they can rectify the faults. This crisis management aims to identify the appropriate ways to fight with the organizational threats during, before and after the incidents happen. With the help of proper public relation strategies, the business organizations can maintain their reputation among its consumers. The PR strategies can be proved to be very influential in maintaining relationship with the employees, stakeholders, creditors etc at the time of crisis.  In this report, the crisis management of a leading business organization has been done with a detailed analysis of the issue, strategies and tactics along with suitable theories on it.

In order to analyze the crisis management of a leading business organization, the financial crisis of Woolworth Limited, Australia has been regarded. It is regarded as one of the chief retailing organization of not only Australia but of New Zealand as well. From the financial report of 2016, it is observed that this organization has secured around $62 billion, while earning a profit of around $2.1 billion. However, in this report, this organization has also mentioned about its financial loss of around $1.72 billion which seems to be the largest loss amount of the history of last twenty seven years of this organization (Woolworths.com.au, 2016).

The leading supermarket chain of Australia, Woolworth seems to struggle to maintain the previous position in the retailing market of Australia. It faces obstacles to maintain the prices of its offered products against the excellent marketing strategies of its competitors like Wesfarmers, Coles, Aldi etc. Due to the high prices of its products, the sales rate of this organization falls. Moreover, the poor promotional strategies against the fresh food campaign of Coles increases the negative impact about the food quality on the consumers in Australia.  By benchmarking Coles marketing strategies to sell their products at a cheap rate, Woolworth faces financial loss which they hardly can manage. In addition, the rapid growth of Aldi in the retailing market of Australia also affects the confidence level of this organization. The main reason behind such crisis of Woolworth indicates towards their confused manner to approach the consumers and give them a strong and valid reason to shop from their stores. This organization also does not pay attention to improve their brand equity among the consumers which seems to affect the sales rate as the competing retail organizations of Australia constantly work on improving their brand image in the competitive business market (Woolworths.com.au, 2016).

Analysis of the issues

In order to successfully understand the crisis of Woolworth, Everett Rogers’s Diffusion of innovation theory can be applied. As per this theory, in order to increase the effectiveness of the function of a particular process, innovation actions cannot be ignored. By implementing proper new ideas, the crisis of a particular situation can be solved (Wu, Chen and Olson 2014). In this innovation process, the new idea can be circulated through the diffusion system. There are four specific elements of the developing process of innovation such as the construction of new idea, the communicating mediums, a suitable social system and sufficient time. In order to increase the sustainability through this theory, the public relation needs to be effective enough. There are five different categories of the adopters of this theory namely innovators, early adopters, early majority, late majority and laggards (Schaltegger, Hansen and Lüdeke-Freund 2016).

Figure: Diffusion of innovation theory

(Source: Roche, Propeck-Zimmermann and Mericskay 2013)

Applying this theory in the case of Woolworth seems to be appropriate to resolve the financial crisis. After a detailed study of the demands and needs of the Australian retail market, this organization needs to adapt proper new idea to provide fresh food items to their consumers at a reasonable price without affecting their desired profit amount. In order to circulate their new intention, they need to strengthen their communication mediums with the help of electronic media and social media so that the Australian consumers may know about their latest discounts and good quality food items (Berger, Imbierowicz and Rauch 2016). This organization needs to approach their consumers directly with the help of their social media official page where the consumers can know updated information about this organization. If the management of this organization increases its communication mediums, it will subsequently reach to a wide range of consumers with their new idea. In order to gain the positive impact, this organization needs to give some time so that it can rightfully approach the mindset of the consumers who will ultimately determine its effectiveness (Cohen et al. 2014).  

Strength It seems to be one of the major retailers of Australia. It has very effective human resource team along with technical excellence and leading market position (Gerow, Thatcher and Grover 2015). It aims to provide positive effort to save the environment by reducing carbon footprint along with reducing the food wastage amount (Ferrell and Fraedrich 2015).

Weakness This organization faces major obstacle in growing their market share rapidly as it mainly focuses upon providing their products at high prices so that it can overcome its financial loss (Grégoire, Salle and Tripp 2015).

Opportunity As the retailing market of Australia possesses a great potential because the demands and needs of the consumers are rapidly changing. Moreover, the advancement of technology along with the supply chain system tends to encourage the retailing organization of Australia for further growth (Gruber et al. 2015). Woolworth also aims to increase their potential by adapting new strategy to provide the consumers quality products in reasonable prices.

Threat This organization is facing massive threat from its major competitors namely Aldi and Coles. The rapid growth of these organizations along with their perfect marketing strategies creates threat for Woolworth which presently fails to attract the consumers towards their products for the high prices. On the other hand, the high amount of carbon tax, implemented by Australian Government creates major threat for all retailing organizations, especially Woolworth which restricted the business exposure of this organization.

Table: SWOT analysis of Woolworth Limited, Australia

(Source: Woolworths.com.au, 2016)

The role of media in handling the situation during crisis of an organization seems to be very importance because with the help of media, the management of the affected organization can influence the people to act responsibly so that the organization can overcome its crisis as soon as possible. In the case of Woolworth, it needs to take the help of social media in order to inform the Australian consumers about the adverse financial situation (Jin, Liu and Austin 2014). It can help them to maintain their reputation among its consumers and will also help them to maintain their sales rate even during the crisis period so that they can overcome the financial loss faster. Even if, they do not bother to maintain their media connection, it will affect their reputation among consumers as media can reveal the major flaws of this organization behind this huge financial loss. 

Application of suitable theory, ethics

The stakeholder’s analysis refers to the strategic analysis with which the business organizations tend to identify the evil factors which can harm the systematic function. In the case of Woolworth, the stakeholders can actively participate in the monitoring process of the financial crisis along with participating in identifying the key reasons behind this critical situation (Kuipers et al. 2014).

Woolworth Limited can also take the help of the feedbacks of their stakeholders so that they can successfully identify the potential risks that can affect the function of their organization along with identifying the key responsible individuals who can take active participation in the crisis management (Ogunleye 2014). This analysis of the present situation and the potentiality of further growth can help to attract other stakeholders as well.

In order to face the financial crisis together, the management of Woolworth needs to adapt effective communication system with which they can inform all their employees about the crucial time of their organization. This effective communication will definitely help the employees to understand their responsibilities towards the organization in resolving the financial crisis. On the other hand, by developing effective media communication, through both print and electronic media, this organization can be able to leave positive impact upon its consumers (Roche, Propeck-Zimmermann and Mericskay 2013). With the help of media, Woolworth can inform the consumers about their financial crisis so that they can gain sympathy from them that can help to increase their sales rate.    

In order to resolve the crisis period faster, the management of Woolworth needs to discuss with their employees so that they can also take active participation and contribute their own ideas. In this way, the loyalty of the employees towards the crisis period of their organization can be lifted effectively (Schlesinger and Doyle 2015). This kind of frank communication among the employees of Woolworth can be proved to be fruitful in maintaining the performance level adequate to the crisis period.  

This organization needs to adapt the key message strategy so that it can continuously inform its stakeholders and consumers about the latest updates in managing the crisis situation. The organization knows about their latest financial position which they need to inform their stakeholders as well to maintain the business ethics (Schnackenberg and Tomlinson 2016). In order to avoid the limited word message pattern of the social networking sites, this organization can employ specific links in their official sites so that the interested people can go to the link and get to know the current financial situation.  

Media and environmental analysis

In order to handle the critical financial situation of the organization, the management of Woolworth needs to build an executive team so that it can communicate with the stakeholders, consumers and above all with the employees about the critical financial situation (Taneja et al. 2014). This team needs to include the legal advisor along with the public relation executive so that they can evaluate the impact of this financial crisis upon the consumers and stakeholders and can take necessary measures to improve the reputation of their organization.

In order to communicate with the media and other related stakeholders along with the consumers, the management of Woolworth needs to identify suitable spokes person from their organization who can communicate the present situation of the organization with the outer world (Van Der Vegt et al. 2015). By providing the selected candidate proper training and selecting the appropriate communication medium such as social media, traditional print media etc, this organization can inform the outer world about their present financial situation in a more convenient way.  

The crisis communication team of Woolworth needs to employ suitable monitoring system so that they can provide their effective share in measuring the crisis response along with maintaining adapting prevention measures (Wu, Chen and Olson 2014). With the help of this monitoring system, this organization can identify the feedback of the stakeholders along with their customers with which they can determine appropriate crisis management tactics. There are a number of communications monitoring systems that this organization can adapt such as Google alerts, Hootsuite etc.

Conclusion:

In this way, the crisis management of Woolworth Limited has been done by putting emphasis on the issue. The media and environmental factors are also explored so that the proper reason behind this crisis can be identified. The whole crisis management has been strengthened with the help of suitable theory on crisis management. The stakeholder’s point of view behind this crisis of this organization has also been analyzed. Required PR strategy and tactics are also suggested to resolve the financial crisis of this organization more effectively.  

References

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