Crisis Communication

Summary

There are a few different types of crisis situations. One is when the company is at fault, and the other is when the company becomes a victim. The book speaks about many different situations dealing with crisis situations but I will just mention a few. One example of a company being at fault was in June 2000 when the Panamanian tanker sunk. It spilled 400 tons of heavy oil into the ocean. This was a major crisis that ended up harming a lot of animals and people whom depended on catching certain seafood to make money.
The next type of crises is when a company becomes a victim such as when a bank becomes a victim of online theft. Many people are using "Trojans" that are created by hackers that when opened on someone's computer can steal all the information they use when doing online banking. There have been many cases of this over the past two years, and with the recession were are in, people are trying to do whatever it takes to get people’s money.
Some steps to help prepare for a crisis situation are highlighted in the book. The first step is to realize that at any time a company can be involved in a crises no matter what. The next step is to assess the risk for your organization. Know if your company is more at risk for a crisis to happen compared to other companies. The third step is to have a plan for crises. The person in charge of the corporate communication should brainstorm with all the head managers and come up with ideas about potential crises. These are the three major steps in the crises planning, and there are many more throughout the book though.

Experiences

I feel that having a good handle on the type of crisis situations your organization could possible be involved in is the major factor to being able to reduce the problem from happening, and if it does happen, it will make it much easier to maintain the problem and get it taken care of as soon as possible. More recently, we have seen many organizations go into one form or another of a crisis. One crisis I can recall that happened about a year ago was the crisis of the peanut butter recall by McKee foods. I did not think that the company had a good plan set up to handle a crisis. I personally thought that their situation could have been avoided if they did a better job screening the products before the left he company.

Related Material

http://www.fda.gov/oc/po/firmrecalls/mckee01_09.html

This is an article about the McKee foods company recall on some of their peanut butter products.

http://www.latimes.com/news/nationworld/nation/la-na-aig30-2009mar30,0,2898712,full.story

This is an article about AIG, and how their improper business within the company created a downward fall for the company.

By: Pat McDanel

Government Relations

It seems that the government and business in the United States have a very complex relationship. It seems that each year the Government wants to be more involved in what businesses are doing and influence the choices that they are making. While businesses wishes to find ways to decease the amount of involvement that the Government has within their company/companies.

Many Regulatory Agencies were developed over the years of the government trying to control business. The first ones were Act to Regulate Commerce and Interstate Commerce Commission (ICC). About 3 years after that the Sherman Antitrust Act. All of these acts were developed by the government to aid in regulating many different areas of business. Many more Acts and commissions were developed over the years to influence and protect businesses. Many of the agencies have been converted into organizations.

Through the years government has became involved in virtually all stages of business development. Many new enterprises cannot begin operations until they receive a license from a regulatory agency such as the ICC listed above. Once a license is obtained the business must also pass inspection and their products must be approved. Another area that must be covered before the business starts its operation is developing safety standards. All of these steps must be accomplished before products reach the market.

Business finally with time realized that instead of fighting the regulations of the government they must focus on advocating their own business positions instead. They did this by becoming more involved in the political aspects of their companies. Businesses focused on lobbying, negotiating tactics, and community groups. An example of this is the company Philip Morris a controversial tobacco industry.

In my opinion the government has became more and more involved especially with the current economic situation. Many companies are asking for government money to help them from going bankrupt. By doing this the businesses are allowing the government to have more control over their company and what they are doing with their money. It seems that with the current economic situation comapies are more willing to allow the government to have some control over the affairs of their company.

Chapter 8: Investor Relations

Several resources are needed for companies to grow. One of the most important resources to fund growth is cash or access to capital. Most small to mid-sized companies rely on banks for funding short and long-term opportunities. However, as companies begin to take on larger projects, or feel the need to expand, companies can issue stock or equity in their company. When a private company chooses this option it is known as an initial public offering or IPO. Below is a link which will take you to a graph showing the number of IPOs over the last 35 years:

http://www.tradersnarrative.com/will-the-ipo-drought-end-in-february-2009-2248.html

Once a company becomes publicly traded it is extremely important that the company relays financial and non-financial information in a timely manner to its shareholders. This task is the job for representatives in investor relations.

In November of last year I was fortunate to work on a CFA society project analyzing the company Ansys. Ansys is headquartered in Pittsburgh and produces simulation software for companies who want a cheaper way to test products. Attending the meeting were the various competing groups from other local colleges, the CEO of Ansys, and the Director of Investor Relations. It was quite an opportunity to meet with these individuals and I learned a lot from their presentations.

During their presentation the CEO explained the company’s vision, strategy, and potential. The Director of Investor Relations discussed the company’s prospects, the industry outlook, and expectations of the economy. But what I thought was most intriguing about the presentation was what these two individuals could not comment or state due to regulations. There were a lot of questions regarding Ansys’s future stock valuation, and due to such regulations, both the CEO and Director of Investor Relations were unable to answer them.

Overall the experience was very worthwhile. It taught me that no matter how much research you do on a company, it is very important to hear directly from a company’s leaders. I feel that anyone who invests in a company, should try to attend a shareholder’s meeting to gain valuable firsthand insight.

By: Ted Staruch