Introduction to business strategy (Chapter-4)

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♦Strategy is concerned with an organization’s basic direction for the future, its purpose, its
ambitions, its resources and how it interacts with the world in which it operates.
Strategy is a course of action, including specification of the resources required, to achieve a
specific objective.
Strategy is concerned with:
i. The long-term direction (objectives) of the business.
ii. The environment in which it operates
iii. The resources at its disposal
iv. The return it makes to stakeholders.

Business strategy: A business strategy is a set of competitive moves and actions that
a business uses to attract customers, compete successfully, strengthening performance,
and achieve organisational goals

♦Mintzberg's 5 Ps of Strategy
1. Plan: A Strategic plan is a written document containing targets and instructions
for people to follow which is produced at the end of planning process
2. Ploy: A trick/task to win a victory over competitors.
3. Pattern: A stream of actions, a pattern of behaviour of a consistency in what
the business does, its culture.
4. Position: It’s environment, it’s SWAT, its position in market, how to fit in.
5. Perspective: Business’s unique way of looking at the world and interpreting it.
These five components allow an organisation to implement a more effective strategy
Levels of strategy:
i. Corporate strategy
ii. Business strategy
iii. Functional (operational) strategy
Corporate Level strategy is generally determined at main
board level of the business as a whole. The types of matter
dealt with include:
i. Determining the overall corporate mission and
objectives.
ii. Overall product/market decisions, for example; to expand, close down, enter a new
market, develop a new product, etc.
iii. Other major investment decisions, besides those for products/markets, such as
information systems, IT development.
iv. Overall financing decisions- obtaining sufficient funds at lowest cost to meet the needs
of the business.
v. Relations with external stakeholders, such as share holders, lenders, Government, etc.

Business Level strategy is formed in strategic business units (SBUs) and relate to how a
particular market is approached or how a particular SBU acts.
Competitive strategy is normally determined at this level covering such matters as:
i. How advantage over competitors can be achieved
ii. Marketing issues, such as the marketing mix.
Strategic business unit (SBU): A section, within a larger business, which is
responsible for planning, developing, producing & marketing its own products or services.

Functional / operational Level Strategy: These refers to main functions within each SBU,
such as production/ operations, finance, human resources and marketing, and how they
deliver effectively the strategies determined at the corporate and business level.

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♦♦♦Strategic management: Strategic management involves making decisions on the
business’s scope and long-term direction & resource allocation. Strategic management
involves: ♦
i. Taking decisions about the scope of a business’s activities
ii. The long-term direction of the business &
iii. The allocation of resources.

Planning: The establishment of objectives and the formulation, evaluation & selection of the
policies, strategies, tactics & action required to achieve them. Planning comprises long-
term/strategic planning & short-term/operational planning.
Strategic planning: A statement of long-term goals along with a definition of the strategies
and policies which will ensure achievement of these goals.

Emergent Strategy approach Vs Formal Strategic planning approach

Emergent/Dynamic Strategy approach:

• A pattern of action that develops over time in an organisation in the absence of a
specific mission and goals, or despite a mission and goals.
• strategy emerges over time as intentions collide with and accommodate a changing
reality.
• Is the strategy that actually happens
• Responds to events as they arise (e.g. changes in external environment)
• Often involves strategic and tactical changes
• Is not restricted by formal planning tools and methods
An Emergent or Dynamic approach to strategic planning involves Three key stages:
i. Strategic analysis
ii. Strategic choice & Implementation.
iii. Review & control

Formal/Rational/Planned Strategy: ►►
• The intended strategy
• Influenced by specific corporate objectives
• Based around a formal strategy planning process
• Supported by traditional planning tools and methods (e.g. SWOT Analysis, PESTLE
framework, Porter’s Five Forces)
• Described in formal business plan
A former or rational approach to strategic planning involves four key stages:
i. Strategic analysis
ii. Strategic choice
iii. Implementation of chosen strategies
iv. Review & control

Positioning-based approach VS Resource-based approach to Strategic planning process:

1. ♦Positioning-based approach: ►►
• It is an Outside-in view of strategy, consider outside environment and market, then
the company’s ability to trade in these condition
• Believe that successful strategy involves the business adapting to its environment
• Focus on customers need
• Gain superior position against rivals
• Assess relations with stakeholders
• Seek to gain preferential access to resources
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 2. Resource-based approach:
• It is an inside-out view of strategy, consider key resources first, then how to
exploit competitive advantage in available market
• Firms don’t look for strategies external to them
• They develop and acquire resources and competences
• Create new market and exploit them
• Company don’t merely “Satisfy” customer needs, they “create” them.
• Combination of resources and competences takes years to develop and can
be hard to copy.
♦Stages of Strategic planning process:
A) Strategic analysis stages:
1. External Analysis (Analysing the environment)
2. Internal analysis (analysing the business)
3. Corporate appraisal (Combination of step 1 and 2)(SWOT analysis)
4. Mission, goal and objectives
5. Gap analysis (Compares outcome of step 3 with 4)

B) Strategic Choice stages:

1. Strategic option generation
2. Strategic option evaluation
3. Strategy selection

C) Strategy implementation: Strategy implementation is the conversion of the strategies

chosen into detailed plans or objectives for operating units. The planning of implementation
has several aspects:
i. Resource planning
ii. Operations planning
iii. Organization structure & control system.
D) Review & control

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Environment of a business: Everything outside its boundaries. It may be segmented
according to figure into the physical, the general and the task environment.
A) The physical environment includes land, air, water, plants and animals, buildings
and other infrastructure, and all of the natural resources that provide our basic needs
and opportunities for social and economic development.
B) General Environment: Covers all the Political, Economic, Social/cultural,
Technological, Ecological & Legal (PESTEL) influences in the countries a business
operates in.
C) Task / Competitive environment: Relates to factors of particular relevance to the
business, such as its competitors, customers & suppliers of resources.
i. Static environment: four “S”
i. Static – Environmental change is slow
ii. Single – product/market
iii. Simple – Technology
iv. Safe –
ii. Dynamic environment: four “D”
i. Dynamic – The speed of environmental change appears to
increase through time.
ii. Diverse – Many businesses are now multi product and operate
in many markets, business is also increasingly international.
iii. Difficult – because of the above factors analysis of the
environment is not easy.
iv. Dangerous – because of the above factors ignoring the
environment can have serious consequences for the business.

Fig: The business’s external environment

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♦♦PESTEL Analysis: (Included in General Environment)

*Market: Comprises the customers or potential customers who have needs which are
satisfied by a product or service
*Industry: Comprises those business which use a particular competence, technology,
product or service to satisfy customer needs and which therefore compete with each other.

Industry Life Cycle: IGMD (Included in Strategic Management): Evolution of an industry or

business through four stages based on the business characteristics commonly displayed in
each phase. The four phases of an industry life cycle are:
Stage in life cycle comments
Introduction Newly-invented product or service is made available for purchase
Growth A period of rapid expansion of demand or activity as the industry finds a market
A relative stable period of time where there is littile change in sales volumes
Maturity
year to year but competition between businesses intensifies.
A falling off in activity levels as business leave the industry and industry ceases
Decline
to exist or is absorbed into some other industry.

♦Porter’s 5 competitive forces: (Included in Task Environment)

i. Potential entrants
ii. Customers
iii. Substitutes
iv. Suppliers &
v. Industry competitors.

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These influence the state of competition in an industry as a whole.

Fig: Porter’s five competitive forces

Kotler’s 4 kinds of competitors:

i. Brand competitors: Similar firms offering similar products. (McDonald vs
Burger King)
ii. Industry competitors: Similar products but are different in other ways, such as
geographical market or range of products. (Online retailing vs Traditional
retaining)
iii. Generic competitors: Compete for same disposable income with different
products. (Music store vs Book store on the same street)
iv. Form competitors: Offers distinctly different products but satisfy the same
needs. (Matches vs cigarette lighter)

For each competitor, the following factors can be analysed:

• Competitors strategy
• The competitor’s assumption about the industry
• The competitor’s current and potential situation
• Competitor’s capability

Competitor’s reaction profile:

• The laid-back competitors do not respond to moves by the competitors
• The tiger competitor responds aggressively to all opposing moves
• The Selective competitor reacts to some threats in some markets but not to all
• The Stochastic competitor is unpredictable.

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 Internal analysis:
i. Its resources and competencies, using a position and resource audit
ii. Its value chain
iii. Its supply chain
iv. Its products & market, using the product life cycle and the BCG matrix

Position Audit: Part of planning process which examines the current state of the entity in
respect of different aspects.

Resource Audit: (9 Ms Model):

1. Machinery (Age, Condition. Value. Utilization rate, Replacement))
2. Make-up (Culture and structure. Patent. Goodwill. Brands)
3. Management (Size, Skills, Loyalty. Career progression. Structure)
4. Management information (Information system. Innovation)
5. Market (Product and customer)
6. Materials (Source. Suppliers, Cost. Availability. Future provision)
7. Men (Number. Skill. Wage cost. Efficiency. Labour Turnover)
8. Method (How are activities carried out?)
9. Money (Credit and turnover period. Finance. Gearing levels)

Value chain: The sequence of business activities by which, in the perspective of the end
user, value is added to the products or services by an entity.

Value Activities: The means by which a business creates value in its products

Porter’s Value chain:

The Margin is the excess the customers is prepared to pay over the cost to the business of
obtaining resource inputs and providing value activities.

Primary activities Command

Receiving, handling and storing inputs to the production
Inbound logistics
system. (ie. warehouse, transport, inventory control)
Operations Convert resource inputs into final product.
Outbound logistics Storing the product and its distribution to customers
Marketing & sales Advertising, persuading customers to buy, promotion
Service Installing, repairing, upgrading, providing spare parts

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 Support activities Command
Procurement Acquire the resource inputs to the primary activities
Human Resource management Recruiting, Training, developing and rewarding people
Product design, improving process, resource
Technology development
utilization.
Firm infrastructure Planning, finance, quality control

♦♦Supply chain management: Optimizing the activities of business working together to

produce goods & services. Integrated supply chain management (SCM) is a means by
which the business aims to manage the chain from input resources to the customer.

Product life cycle: How a product demonstrates

different characteristics of profit & investment over
time. Analyzing it enables a business to examine
its portfolio of goods & services as a whole. ♦♦
♦ (Stages of Product life cycle)
Aspects of Product:
• Product class (car, newspaper, genetic
product)
• Product form (Two-seated sports car, weekly local newspaper)
• Brand (Ford)
Boston Consulting Group Matrix (BCG Matrix)
Another useful way to look at the products/services the business is engaged in and the
market it services is to analyze them using the Boston Consulting Group (BCG) matrix.
BCG develop a matrix based on research the assesses a business’s products in terms of
potential cash generation & cash expenditure requirements. Products or SBUs are
categorized in terms of market growth rate & relative market share.

Market Share:
One entity’s sale of
a product or
service in a
specified market
expressed as a
percentage of total
sales by all entities
offering that
product or service.

Market
Growth Rate is a
measure of the
extent at which
the market a
company operates
in is growing. This
provides an insight
into the size of the
opportunity a
company might
have.

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Corporate Appraisal:
A critical assessment
of the Strengths and
Weaknesses,
Opportunities and
Threats (SWOT
analysis) in relation to
the internal &
environmental factors
affecting and entity in
order to establish its
condition period to the
preparation of the
long-term plan. ♦♦

Mendelow's Matrix is
a tool that may be used
by an organisation to
consider the attitude of
their stakeholders at
the start of a project or
when they are setting
out strategic objectives.

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 Conflict of Interest between Stakeholders
Stakeholders Conflict
Shareholders vs Manager/Directors Profit vs Growth
Growth via merger vs Independence
Shareholders vs employees Cost efficiency vs Cost
Customers vs Shareholders and Service level vs Profits and costs
Manager/Directors
Shareholders vs bankers Return vs Risk
Power & it’s Sources: Power is the means by which stakeholders can influence a
business’s objectives. Sources of power may be internal or external.
Internal sources of power: External sources of power:
i. Hierarchy i. Control over strategic resources
ii. Influence/reputation ii. Involvement in implementation
iii. Relative pay iii. Knowledge & skills
iv. Control of strategy resources iv. External links
v. Knowledge skills v. Legal rights
vi. Environmental control
vii. Strategic implementation
involvement

Interest & its factors

1. Where their interest rests: eg shareholders want dividends and capital growth,
employees want higher pay and good conditions, customers want low prices, reliable
supplies and so on.
2. How interested they are: For instance, they will be interested if there are
alternatives (job, supplier, customers etc.), If they are the industry regulator, or if
there is a significant capital investment.

Gap analysis: A comparison between an entity’s desired future performance level

(expressed in terms of profit) and the expected performance of projects both planned &
underway. Gap analysis looks at the gap between what the business would achieve if it
continued on its existing course and what it needs to achieve as demonstrated by its
strategic planning process measured in terms of profit.

Choosing a Corporate Strategy:

Porter’s Genetic Competitive Strategies
Competitive strategy: Taking offensive or defensive actions to create a defendable
position in an industry to cope successfully with competitive forces and thereby give a
superior return on investment of the business.

The two basic types of competitive advantage combined with the scope of activities for
which a firm seeks to achieve them, lead to three generic strategies for achieving above
average performance in an industry: cost leadership, differentiation, and focus.

1. Cost leadership: Cost leadership is one strategy where a company is the most
competitively priced product on the market, meaning it is the cheapest.
How to be accost leader:
i. Set up production facilities to obtain economies of scale
ii. Use the latest technology
iii. Concentrate on improving productivity
iv. Minimize overhead costs
v. Get favorable assess to sources of supply.
vi. Relocate operations to cheaper countries

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2. Differentiation: The provision of product or service which the industry as a whole
believes to be Unique.
Products may be categorized as follows:
i. Break through products offer a radical performance advantage over
competition, perhaps at a drastically lower price.
ii. Improved products offer better performance at a competitive price.
iii. Competitive products offer a particular combination of price & performance.
How to differentiate the product:
i. Build up a brand image
ii. Give the product special features to make it stand out
iii.Exploit other activities of the value chain such as marketing and sales or service.
iv.Use it to create new services or product features.
3. Focus: Involves a restriction of activities to only part of the market (a segment) through
i. Cost Focus: Providing goods and/or services at lower cost in that segment.
ii. Differentiation Focus: Providing a differentiated product/ services to that segment

Ansoff’s Product/Market Strategies

The Ansoff Matrix, also called the Product/Market Expansion Grid, is a tool used by firms to
analyze and plan their strategies for growth. The matrix shows four strategies that can be
used to help a firm grow and also analyzes the risk associated with each strategy.
• Market Penetration: This focuses on
increasing sales of existing products to an
existing market.
• Product Development: Focuses on
introducing new products to an existing
market.
• Market Development: This strategy
focuses on entering a new market using
existing products.
• Diversification: Focuses on entering
a new market with the introduction of new
products.
SFA Matrix
The SFA Matrix is a framework to evaluate your strategic options in order to pick
one. SFA stands for
• Suitability, (does the strategy fit the business’s operational circumstances?)
• Feasibility (Can the strategy in fact be implemented?) and
• Acceptability. (will people accept it? What’s their expectations?)
These are the criteria areas in SAF Analysis used to judge and score each strategy.
Strategy implementation: is the process by which an organisation translates its
chosen strategy into action plans and activities, which will steer the organisation in the
direction set out in the strategy and enable the organisation to achieve
its strategic objectives.
Level of Plans:
1. The strategic plan (general direction that will be taken to achieve the corporate
objective but it is not itself very detailed.)
2. The business plan (for the business as a whole or for an SBU sets out the market(s)
to be served, how the business/SBU will serve the market)
3. The operational plan (Specified what is expected of each function in the business as
a whole or an SBU, based on the relevant functional strategy & how specific actions
will be taken in order to meet that expectation)
Finally, Budgets (summarized or master budget♦) are prepared that set out the business’s
plan for a defined period, expressed in money terms.
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 Introduction to risk management (Chapter-5)

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♦Risk: The possible variation in an outcome from what is expected to happen.

Features of risk:
i. Variability: Events in the future can not be predicted with certainty.
ii. Expectation: We expect something to happened, or perhaps hope that it will
not happen.
iii. Outcome: This is what actually happens compared with what is intended or
expected to happen.

♦Uncertainty: The inability to predict the outcome from an activity due to a lack of
information. (unavoidable)

♦♦*Risk is objective and measurable or quantifiable but Uncertainty is subjective and

unquantifiable.

Symmetrical risk/two-way risk: The risk that something will go wrong is ‘Downside Risk’,
if it is likely to go right the term ‘Upside Risk’ is used.

Opportunity: The possibility that an event will occur and positively affect the achievement
of objectives.

Risk appetite: The extent to which a business is prepared to take on risks in order to
achieve its objectives.

Critical success factor (CSFs)- The areas of a business or project that are vital to
its success.

Approach should be included in risk appetite?

i. Decide what the business wants to achieve (the strategic objective).
ii. Decide what the business’s ‘risk appetite’ is, in other words the extend to which
it is prepared to take on risk in order to achieve its objectives.
iii. Find strategies to achieve the objectives that do not involve more risk than the
business is willing to accept.
iv. If there are no methods of reducing the risk to an acceptable level, the
objectives need to be amended.

Risk adverse attitude is that an investment would be chosen if it has a more certain but
possibly lower return than an alternative less certain, potentially higher return investment.
Risk neutral attitude is that an investment would be chosen according to its expected
return, irrespective of the risk.
Risk seeker attitude is that an investment would be chosen on the basis of it offering
higher levels of risk; even if its expected return is lower than an alternative no risk
investment with a higher expected return.

♦♦Classification of risks:
i. ♦Business risk: arises from the nature of the business, its operations and
the conditions it operates in.
ii. Non-business risk: Any other type of risk, usually classified as:
a. financial risk
b. operational risk.

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♦Business risk includes:
i. Strategy risk: the risk of choosing the wrong corporate business or functional
strategy.
ii. Enterprise risk: the success or failure of a business operation and whether it
should have been undertaken in the first place.
iii. Product risk: the chance that customers will not buy the company’s product
or services in the expected quantity.
iv. Economic risk: the effect of unexpected changing economic conditions.
v. Technology risk: the risk that the market or industry is affected by some
change in production or delivery technology.
vi. Property risk: the risk of loss of property or losses arising from accidents.

Financial risk: Lam, in Enterprise Risk Management, divides financial risk into:
i. Credit risk: The economic loss suffered due to the default of a borrower,
customer or supplier.
ii. Market risk: The exposure to potential loss that would result from changes in
market prices or rates.
Other financial risk includes:
i. Liquidity risk: an unexpected shortage of cash.
ii. Gearing risk: high borrowing in relation to the amount of shareholders’ capital
in the business, increasing the risk of volatility in earnings, and insolvency.
iii. Default risk: Debtors of the business failed to pay what they owe in full and on
time.
iv. Credit risk: The company’s credit rating is downgraded.

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 v. Foreign exchange risk: Making unexpected gains or losses from changes in a
foreign exchange rate.
vi. Interest rate risk: Unexpected change in interest rate placing the business at a
financial disadvantage.
vii. Market risk: An adverse movement in share market prices.

Operational risk: The risk of direct or indirect loss resulting from inadequate or failed
internal process, people & systems or from external events, including legal risks.
Operational risk includes:
i. Process risk: Business’s processes may be ineffective or inefficient.
ii. People risk: risk arising from staff constraints, incompetence, dishonesty.
iii. System risk: risk arising from information and communication system.
iv. Legal risk: Uncertainty in laws, regulations & legal actions.
v. Event risk: risk of loss due to Single even
a. Disaster risk
b. Regulatory risk
c. Reputation risk
d. Systemic risk
Another way of classifying event risks in terms of external environment:
a. Physical risks
b. Social risks
c. Political risks
d. Legal risks
e. Economic risks
f. Operating environment risks

4 Key concepts of risk: The scale of any risk for a business depends upon These.
i. Exposure (Public disclose)
ii. Volatility (change rapidly and unpredictably)
iii. Impact (Measure of the amount of loss if the undesired outcome occurs)
iv. Probability (How likely it is that a particular outcome will occur)

The greatest risks facing a business will arise when:

i. Exposure is high
ii. The underlying factor is volatile
iii. The impact is severe, and
iv. The probability of occurrence is high.

♦♦Risk management: The identification, analysis & economic control of risk which
threaten the assets or earning capacity of a business, so as to reduce the business’s
exposure by either reducing the probability or limiting the impact or both.

When is risk management necessary?

i. There may be legal requirements to manage risk: You are required by law to
insure your car, for instance.
ii. Risk management (in the form of insurance) may be required by licensing
authorities & regulatory bodies.
iii. Financial organizations may require risk management: if you have a
mortgage your lender no doubt requires you to have buildings insurance to protect
its security.
iv. In bank company act 2013, Risk management committee at the board level
has been made mandatory to ensure proper risk management practice in the
banks.
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 ♦♦Risk Management Process

i. Risk awareness and identification, using techniques such as brain storming

& analysis of past experience to identify the business’s exposure to risks.
ii. Risk analysis (assessment & measurement): This considers the volatility of
particular factors, the probability of an event occurring & the severity of the impact
if it does. Measurement may be qualitative or quantitative.
iii. Risk response & control: In essence a risk can be avoided (do not do the
risky activity), reduced (e.g. by strictly controlling processes), shared (e.g with an
insurer) or simply accepted.
iv. Risk monitoring & reporting: Is a continuous process.

Risk awareness and identification

Approach: Way to identifying the risks, which operate most effectively when combined.
i. A top-down approach is led by the senior management /board of the
business, spending time on attempting to identify key risks. Often, this is linked to
the business’s CSFs : what might be prevent us from achieving each CSF?
ii. A bottom-up approach involves a group of employees, with an expert in risk
management, working together to identify risks at the operational level upwards.

Identify the Categories of loss:

i. Property loss: Possible loss, theft or damage of any static or movable assets.
ii. Liability loss: Loss occurring from legal liability to third parties, personal injury
or damage to property.
iii. Personnel Loss: Due to injury, sickness or death of employees.
iv. Pecuniary loss: As a result of defaulting debtors.
v. Interruption loss: A business being unable to operate due to one of the other
types of loss occurring.
Identifying too many risks can make the risk management process overly complex. The
business should focus its efforts on significant risks: those that are potentially damaging the
business’s value.
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 Risk assessment and measurement
♦Risk assessment: For each risk its nature is considered, & the implications it might have
for the business; an initial judgment is then made about the seriousness of the risk.
♦Risk measurement: Identifying the profitability of the risk occurring, & quantifying the
resultant impact by calculating the amount of the potential loss using expected values for
gross risks.
Gross Risk is the potential loss associated with the risk, calculated by combining the impact
and the probability of the risk, before taking any control measures into account.

Risk response & control:

i. Avoidance: Not doing the risk activity. This may not be an option, but the first question
should always be “Do we need to do this risk activity at all?”
ii. Reduction: Doing the activity, but using whatever means are available to ensure that
the profitability of the event occurring & the impact if it does are as small as possible.
iii. Sharing: For example, taking out insurance against the risk, but only after every effort
has been made to reduce it, so that insurance premiums are kept as low as possible.
Another sharing strategy might be to enter an agreement with one or more other
companies.
iv. Acceptance/retention: This should only be considered if the other options are not
viable, for example, if the costs of extra control activities & the costs of insuring against the
risk are greater than the cost of the losses that will occur if the event happens.

In response to risk taking variety of forms, organizations can take Physical controls,
Financial controls, System controls and Management controls

Risk monitoring and reporting

Monitoring process:
i. Has corrective action now been taken? Has it been effective?
ii. Was the risk identified in the first place, & if not why not?
iii. If the risk was identified & planned for but the event still occurred is it because
early warning indicators were not mentioned?
iv. If the response & / or controls were ineffective what changes or new
procedures are necessary?

♦Report All identified risk management problems that could affect the organization’s ability
to achieve its objectives should be reported to those in a position to take necessary action.
i. The chief executive regarding serious problems.
ii. Senior managers regarding risk management problems that affect their units.
iii. Managers in increasing levels of detail as the process moves down the
organizational structure.

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♦Crisis: An unexpected event that threatens the wellbeing of a business, or a significant
disruption to the business and its normal operation which impacts on its customers,
employees, investors and other stakeholders.
It can be fairly predictable and quantifiable or totally Unexpected.
♦♦Crisis management: Identifying a crisis, planning a response to the crisis &
confronting & resolving the crisis.
♦*A crisis happens when a risk becomes a reality.

Types of crisis in terms of effects on the business:

i. Financial crisis: Short term liquidity or cash flow problems, & long term
insolvency problems.
ii. Public relations crisis: Negative publicity that could adversely affect the
success of the business.
iii. Strategic crisis: changes in the business environment that call the viability of
the business into question, such as new technology making old products or
processes obsolete.
♦Types of crisis in terms of their cause:
i. Natural event
ii. Industrial accident
iii. Product or service failure
iv. Public relations disaster
v. Business crisis
vi. Management crisis
vii. Legal/regulatory crisis

♦What are the effective actions in the event of a crisis?

i. Assess objectively the cause(s) of the crisis
ii. Determine whether the cause(s) will have a long term or short term effect
iii. Project the most likely course of events
iv. Focus resources on activities that mitigate or eliminate the crisis
v. Look for opportunities

In the event of a public relation crisis:

i. Act immediately to prevent or counter the spread of negative information; this
may require intense media activities.
ii. Use media to provide a counter-argument or question the credibility of the
original negative publicity.
A Disaster is a major crisis or event which causes a breakdown in the business’s operations
& resultant losses.

Disaster’s recover plan:

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