Mahesh Dongaonkar Mahesh Dongaonkar MMM/IIISEM/Roll No 3MMM/IIISEM/Roll No 3

Sheelam GaurSheelam GaurMFM/III SEM/Roll No 4MFM/III SEM/Roll No 4

Corporate Crisis Types & Managing Strategies

Sinhagad Institute Of Business Management

Corporate crisisCorporate crisis

• Crisis is a period of trauma, distress and inevitable Crisis is a period of trauma, distress and inevitable change. While events triggering a corporate crisis cannot change. While events triggering a corporate crisis cannot be predicted with absolute certainty, they always bring be predicted with absolute certainty, they always bring about change—often for the worse, and always involving about change—often for the worse, and always involving the company's reputation, management, brand or market the company's reputation, management, brand or market share. share.

CharacteristicsCharacteristics

• SurpriseSurprise

• Escalating Flow of EventsEscalating Flow of Events

• Lack Of InformationLack Of Information

• Loss Of ControlLoss Of Control

• PanicPanic

• Intense SecurityIntense Security

• Short term FocusShort term Focus

Types Of crisisTypes Of crisis

Natural disaster Natural disaster

Technological crises Technological crises

Confrontation Confrontation

Malevolence Malevolence

Crisis of skewed management value Crisis of skewed management value

Crisis of deception Crisis of deception

Crisis of management misconduct Crisis of management misconduct

ObjectiveObjective To Manage Crisis To Manage Crisis

• Short TermShort Term– Immediate OvercomeImmediate Overcome

• Long TermLong Term– BrandBrand– Healthy relationship with environmentHealthy relationship with environment– Credibility & reputationCredibility & reputation

Strategy To Manage CrisisStrategy To Manage Crisis

Gather InformationGather Information

Form Crisis Management TeamForm Crisis Management Team

Assign Tasks & Continue Facts FindingsAssign Tasks & Continue Facts Findings

Develop Possible SolutionDevelop Possible Solution

Implement SolutionImplement Solution

Communicate ActionsCommunicate Actions

Review Review

Learning's For Future StrategiesLearning's For Future Strategies

Communication features Communication features

• ResponsibilityResponsibility

• ConsistencyConsistency

• HonestyHonesty

• OpennessOpenness

• TimingTiming

• InitiativeInitiative

Case StudyCase StudyFinancial Crisis In Indian CorporateFinancial Crisis In Indian Corporate

SATYAM COMPUTERSSATYAM COMPUTERSKEY FEATURES KEY FEATURES

Promoter Involved In Finanancial irregularities of Promoter Involved In Finanancial irregularities of Rs 5040 CrsRs 5040 CrsCrisis Not Discovered, But AdmittedCrisis Not Discovered, But AdmittedSatyam Associated with 185 Fortune500 Satyam Associated with 185 Fortune500 Companies in 66 Countries Companies in 66 Countries Brand INDIA AS IT LEADER On StakeBrand INDIA AS IT LEADER On StakeNegative Impact on Stock marketNegative Impact on Stock market

StrategyTo Manage Satyam Crisis StrategyTo Manage Satyam Crisis

Govt.of India Intervened In Next 2 daysGovt.of India Intervened In Next 2 daysNormal Process of bankruptcy, Liquidation Normal Process of bankruptcy, Liquidation Kept aside & Formed Company Board Kept aside & Formed Company Board which Superseded Existing Boardwhich Superseded Existing Board New Board Composition-Field Expert’s New Board Composition-Field Expert’s

Deepak Parekh (Finance), KIran Karnik(IT Deepak Parekh (Finance), KIran Karnik(IT Sector) & Achutan( Company Law)Sector) & Achutan( Company Law)Transparent Communication to Investors, Transparent Communication to Investors, Customers, through Media From Govt.Customers, through Media From Govt.

Objectives Set To Manage CrisisObjectives Set To Manage Crisis

To Sustain Operation,Clients & employeesTo Sustain Operation,Clients & employees

To Protect India’s Image As IT LeaderTo Protect India’s Image As IT Leader

To Understand Actual Frauds & Decide To Understand Actual Frauds & Decide Corrective ActionsCorrective Actions

Openly & Transparently Find New Buyer Openly & Transparently Find New Buyer For SatyamFor Satyam

To Make Transparent CommunicationTo Make Transparent Communication

Result Of Satyam Crisis Result Of Satyam Crisis Management Management

New Board Managed To Sustain & Add New Board Managed To Sustain & Add operations,Clients,Investors & Employeesoperations,Clients,Investors & EmployeesLegal Actions Initiated Against FraudstersLegal Actions Initiated Against FraudstersIndia’s Brand In IT Sector ProtectedIndia’s Brand In IT Sector ProtectedNew Buyer For Satyam- “Tech Mahindra” New Buyer For Satyam- “Tech Mahindra” Found in Transparent MannerFound in Transparent MannerGovt Made Mandatory To Companies To Govt Made Mandatory To Companies To Declare About Pledge Shares In Balance Declare About Pledge Shares In Balance Sheet Sheet

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