Crisis Management Report - BSB52415 Diploma of Marketing

This report provides a comprehensive analysis of crisis management, using the Toyota recall crisis and a Marrickville sandwich shop incident as case studies. It explores the urgency of crisis situations, the impact on brand equity and customer loyalty, and the importance of swift responses. The report delves into the consequences of delayed action, the effects on sales and brand image, and the significance of effective communication. It discusses the development of crisis management plans, the role of digital media, and the importance of verbal communication. Furthermore, the report examines the implementation of strategic plans, the preparedness of business leaders, and the legal implications, particularly concerning the Privacy Act. Finally, it addresses the management of media and the importance of social media policies in crisis situations, offering insights into avoiding or effectively handling crises.

Running head: CRISIS MANAGEMENT
Crisis Management
Name of the Student
Name of the University
Author Note

1Crisis Management
Response to Question 1A
It can be said that in the case study of Toyota, the crisis was very much urgent as it
was hampering the brand equity of the company as well as affecting the faith of the loyal
customers and they had to restore their image as a quality automaker and a fast crisis
management solution provider. They failed to acknowledge the recall crisis in 2007 and the
opportunity to diminish the damage they had suffered. Toyota announced the SMART
business process to solve the customer needs (Jindal, Laveena and Aggarwal 2015).
Similarly, the situation in Marrickville was hampering the quality image of the sandwich
shop, though the members of the group thought to not redeem their vouchers on the weekend
and some others advised to take legal action against the reporter as well.
Response to Question 1B
The scenario faced by Toyota in 2009-10 was very serious as the company had to halt
the entire sales and production of eight of its most popular models. The sales of the company
got down straight due to the growing number of recalls, which hampered the global position
of Toyota in the automobile industry (Pirozzi 2013). Brand image was hampered due to this
situation and a huge loss was incurred by the company (approximately $30billion) (Pirozzi
2013). Similarly, distributing free sandwiches to a limited number of people or group rather
than distributing it to entire people of Sydney is less harmful for the brand image of a
restaurant. Many people saw this as a low-priced publicity and deterioration in the quality of
the sandwiches the restaurant used to provide.
Response to Question 1C
Toyota, in that crisis situation, have already suffered a huge loss in terms of money as
well as image. Had they responded early in 2007, they did not have to face the setback they

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suffered in 2009-10. If they had not responded, the market share of the company would grow
down in a drastic rate globally, which would have hampered the overall growth and existence
of the company. Similarly, being an indigenous sandwich shop, it would have lost almost the
entire customer base which might have forced the owner to close the shop. The local shops
mainly run in word-of-mouth publicity and faith of the customers. The revenue has been
hampered badly if the shop-owner didn’t respond.
Response to Question 1D
The effect was immense in case of the Toyota scenario. The entire sales of the
company were hampered after that crisis, though this was not the first time the company was
facing such crisis. They had to recall several vehicles between the year 1990-1998 due to
power steering problem. The company faced a major financial crisis as they had to repair all
the cars and had to regain the faith of the customers and to restore its image as a quality
automaker. It would have affected the environment of global automobile industry. Similarly,
the sandwich shop of Marrickville also had to provide solution to the miscommunication by
the popular food blog. Otherwise, they have lost the visit of the local people who provided
the base of the revenue earners of the shop.
Response to Question 1E
Toyota had stopped producing certain vehicles lines from 1st February 2010, to assess
the defected vehicles and to repair them all. The recall came during a challenging time for
Toyota, as the company was struggling from the collapse and got affected already from a
sales downfall. Toyota used SMART (Swift Market Analysis Response Team) to conduct on-
site vehicle inspections. Image restoration strategy was followed for the protection of the
image, identity and reputation of the company. On the other hand, the owner of the sandwich
shop learned a lesson about marketing in social media. The people who had coupons with

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them told to not redeem them in the weekend. The food blogger who did the blunder should
have apologised to the shop owner. The local people had faith on the shop owner and put
forward the helping hand towards Marrickville.
Response to Question 1F
Toyota should check all its vehicles thoroughly before releasing them in the global
market, so that they had not to face the scenario they faced in 2009-10. They should have a
separate team of quality experts to check the vehicles. On the other hand, the shop owner of
Marrickville should be more cautious while advertising in the social media.
Response to Question 2
Crisis Management plan is a plan where the different kinds of actions are given in
details which are to be taken during crisis or critical situations. These plans need to be
understood by the employees. The employees of the organization have to be aware of the
image, reputation and identity as well as the impact of the crisis which the company might
face. As a public relation consultant, I can use some questionnaires to ask the employees
about different crisis and what will be their planning to move out from that crisis, being the
employee of that organization. I can engage then in a group discussion to identify the
problem areas and factors which led to crisis at the workforce. To recognize and deal a crisis
before its break out will be the best suitable method followed by the employees.
Response to Question 3
Digital media’s reach beyond borders is a legal responsibility which I have to follow
while developing crisis management plan. Modern digital media allows the content to be seen
in every parts of the world. Accidentally this can incur some legal jurisdiction of another
country if things go wrong. Tweets, posts and other contents may reach from one part of the

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world to another, irrespective of the operation of the organization. One must be very careful
while writing the content of the social media.
Response to Question 4
Verbal communication, according to me, is the appropriate mode of communication.
The management should communicate effectively with the employees, and the employees
also should communicate effectively with the management to run a successful business. And
to run a successful business, the crisis management is very important. Oral communication
between the employees in case of discussing the crisis management ideas and solutions. It
may help to identify and deal with the crisis before it breaks out. The clarity of the message is
maintained in this mode of communication, which helps in crisis management scenarios.
Response to Question 5A
In modern world, the implementation details lack in most strategic plans, that will
help the employees to understand their role in implementation. The focus is shifted to WHAT
is desired rather than on HOW the outcome will be achieved. For example, Toyota failed to
reduce the mistakes when the crisis scenario first came out in 2007. This, in turn, reduces the
chance to implement the plans accordingly and hampers the growth of the company. While
determining the strategic plan of dealing a crisis management plan, I focused on the way or
process of its solution, which will help my company to deal properly and effectively if such
kind of crisis occurs (Taneja et al 2014).
Response to Question 5B
According to me, most business owners or leaders are ill prepared to face or handle a
crisis situation. Crisis management has real arms with critical assignments, approaches and
solutions. If an organization has to prepare a response to a problem or issue within less than

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an hour or so, that will count as a crisis for that organization. To manage an expected
situation, advanced planning is the key to survival. For example, Toyota could have avoided
the crisis in 2010 if they had faced the crisis situation and solved it in 2007. They did not
have a proper crisis management at that moment which hampered their brand image as well
as the growth. There should be a proper plan, identify a spokesperson (if needed), remain
honest and open, communicate with customers and suppliers, update all early and as often as
possible and take social media as the mode of communication with the people. A well-
managed crisis confirms about the processes and procedures that the company has to address
nearly any crisis that might develop in future (Pirozzi 2013).
Response to Question 6
The Privacy Act has information regarding particular fields of law embodied in the
description of the Privacy Act, which consists of thirteen Principles of Australian Privacy
(Taneja et al 2014). These fall under federal privacy laws and applies to every organisation
and government agency across Australia that meets some qualifying criteria. Government of
Australia increased penalties for failure to obey the Privacy Act. For example, if the company
is unable to protect the personal information of the employees working there, which is a
sensitive information as well, the government may sue the company and it have to face legal
actions as well have to pay penalties for breaching the Privacy Act (Wright and Raab 2014).
This will lead to a crisis situation in the company and will hamper the revenue earning and
growth of the company.
Response to Question 7
Managing the media is very much important in today’s tech-savvy world. There
should be a proper social media policy which should be followed by the organisations. Social
media scrutiny is followed by many organisations before publishing their news on the social

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media platform. The guidelines should be mentioned clearly for appropriate use, which will
guide the employees to talk on their personal channels about the business. The social media
accounts should be properly secured to avoid cyber security crisis (Kaplan and Norton 2005).
As the main purpose of a crisis management plan is to provide a clear and effective
communication plan, engaging media and using it properly can avoid to handle a crisis
effectively or may save an organization to avoid the crisis (Kaplan and Norton 2005).

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References
Jindal, S., Laveena, L. and Aggarwal, A., 2015. A comparitive study of crisis management-
Toyota v/s General motors. Scholedge International Journal of Management &
Development, 2(6), pp.1-12.
Kaplan, R.S. and Norton, D.P., 2005. Creating the office of strategy management. Boston,
MA: Division of Research, Harvard Business School.
Pirozzi, N., 2013. The EU’s comprehensive approach to crisis management. EU crisis
management papers series, 12.
Sadgrove, K., 2016. The complete guide to business risk management. Routledge.
Taneja, S., Pryor, M.G., Sewell, S. and Recuero, A.M., 2014. Strategic Crisis Management:
A Basis for Renewal and Crisis Prevention. Journal of Management Policy &
Practice, 15(1).
Wright, D. and Raab, C., 2014. Privacy principles, risks and harms. International Review of
Law, Computers & Technology, 28(3), pp.277-298.