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PRESENTED BY:

VERSION 1.0

APRIL 23, 2015

Table of Contents

Letter of Transmittal P. 2

Abstract P. 4

List of Illustrations P. 5

Introduction of report

Discussion of major points and research P.6

Example one BP Oil Spill P. 10

Example two Germanwings flight 9525 P. 14

Example three Tylenol P. 16

Conclusion P. 19

Recommendations P. 20

Works Cited P. 23

Reference P. 24

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TO: ConnocoPhillips Co.

FROM: BA&P Consulting; Bishop, Aston, and Parrish Consulting

DATE: April 21, 2015

SUBJECT: Public Relation Solutions

____________________________________________________________________________

Here is the report you requested about how to avoid public relation disasters. It is a summary of

problems which have been faced in the past by many companies, how they attempted to solve

their disasters, and the methods to avoid a potential disaster of your own.

We will be covering here three cases: BP and the Deepwater Horizon Oil Spill, The Chicago

Tylenol Murders, and the Germanwings Plane Crash. Deepwater Horizon is an example of how

not to deal with a crisis situation, while Tylenol is a withstanding example of proper crisis

management. Finally, Germanwings is a situation which is still not completely resolved and

gives an example of how to deal with a situation as it is happening.

BA&P Consulting seeks to prevent companies from having to close their doors due to poor

crisis management. As it is well known, the cost of a lawsuit can be hefty, but the cost of lost

public opinion bears too much weight to not be noticed. When the Chicago Tylenol Murders

took place, Tylenol went from controlling over a quarter of the market to less than eight

percent. However, public opinion of Johnson & Johnson improved greatly due to their efficient

managing of their crisis, and they rose again to become one of the most well-known and used

over-the-counter medications. In contrast, BP dealt with the Deepwater Horizon crisis poorly,

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and years after the spill, public opinion is still fairly negative on the company. Germanwings is

still handling their situation and so public opinion has not swayed too much yet.

We thank you for taking the time to consider our consultation, and hope our work will help

influence you to make efficient, positive impacts in the event of a crisis. After all, the last thing

anyone needs is to make a problem larger than it actually is, all for the sake of appeasing

lawyers.

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Abstract

Crisis management within a company is an important key factor to sustainability. The oil

industry has a bad reputation among the people around the world. While Tylenol has a great

reputation with the way their public relations team utilized their crisis management plan and

saved the company. Disasters and controversies over many PR mistakes have cost companies

their reputation and sales. Not only have tragic events occurred, but they were handled poorly.

Every company needs to have a sustainable crisis management plan in place to manage crises

better. By responding to disasters in a tactful manner, not minimizing the incident, taking

responsibility and creating a plan to resolve the crisis, further harm is prevented to the company's

reputation.  All of this can be used in any company, but is specifically tailored to the oil industry.

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Illustration Citations

Figure 1:

Ballard, Brooke. "The 4 Rs Of Crisis Management." Business 2 Community. The B Squared

Media Blog, 29 July 2014. Web. 7 Apr. 2015. <http://www.business2community.com/crisis-

management/4-rs-crisis-management-0953349>.

Figure 2, 3 & 4:

Saunders, Janet. "Best Practice Crisis And Issues Management A Recommended Approach B..."

Best Practice Crisis And Issues Management A Recommended Approach B... Saunders-

McDermott Consulting, 6 July 2009. Web. 19 Apr. 2015.

Figure 5:

Koenig, David, Scott Mayerowitz, and Geir Moulson. "Lufthansa: Co-pilot Disclosed Earlier

'severe Depression' - AOL.com." AOL Article. 31 Mar. 2015. Web. 7 Apr. 2015.

<http://www.aol.com/article/2015/03/31/lufthansa-co-pilot-told-flight-school-of-depressive-

episode/21160016/>.

Figure 6:

Tylenol Graph was self-made based on the research gathered

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What is Crisis Management?

The process when an organization deals with a major threat to the company and devising a plan

to construct a resolution to all outcomes. It is also considered to be the most important job of

public relations. There are three important factors to designing a management plan that is

efficient.

1. The threats to the organization

2. The element of surprise

3. Many times a short reaction and decision time

Crisis management is different than risk management because it assesses and the possible risks to

the company and proficiently acts on them.

Figure 1

The four 4’s to Crisis Management

Crisis can strike at any moment in a company, but it is up to the company and their Public

Relations team on how the issue is handled. A good crisis management plan is great if the four

R’s are perform efficiently.

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React

You should have a plan in place in order to react but if not ask these questions:

Who should I contact regarding this complaint?

Do I know this person? Are they a “regular” or someone new to the community?

Do I know of similar/other issues with this (product/service)?

What’s the best way to respond?

(Ballard, “The 4 R’s of Crisis Management”)

Research

Don’t respond yet. There is still research to do.

Research the user: Can you tell if they’re a legitimate community member, customer or

client? Did they name a specific employee, product or service in their complaint? Did they

include any visuals or links?

Research the issue: You should know if you’ve had similar issues in the past. Also, if this is a

disaster or a companywide crisis then you should act responsibly and research diligently to find

the correct response.

Google Search: If you’re still at a loss for what to say, Google “social media crisis no-no’s”

or “social media crisis wins” to see how others got themselves out of hot water.

Does this person have a habit of leaving bad reviews/comments (aka: Are they a social

media “troll”?): This is rare, and very hard to prove. If you cannot absolutely prove that the

complainer is malicious, then you cannot simply delete and ignore their comment. It’s best to

respond as if it’s your best customer (Ballard, “The 4 R’s of Crisis Management”).

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Respond

The two most important key factors in a crisis are speed and communication in order to

respond efficiently.

Your company should respond as soon as possible to the crisis but not without doing the first two

steps. Remember that people appreciate when their feelings are validated, and a response is made

in a timely manner. Your company should follow up on the matter and continue to update those

affected as well as the media.

Remorse

Admitting mistakes is one of the most transparent and authentic things you can do. Be

remorseful and mean it. Don’t just go through the motions of being sorry. Try to see it from the

affected point of view and then react with remorse. Be genuine, sincere and empathetic.

Figure 2

Saunders- Research on Crisis

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There are many different types of crises and you have to respond to each differently. Researching

and responding in a timely manner are key.

Figure 3

Many crises can occur in different fields or environments

Figure 4

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The two figures above show where crises can occur and the parentages of the different types.

The British Petroleum oil spill: how not to handle a crisis 

The Event 

On April 20, 2010 in the Gulf of Mexico near the Mississippi River Delta, Deepwater Horizon, a

Transocean owned oil drilling rig leased to British Petroleum, exploded then sank two days later.

The explosion killed 11 crewmen, and for five months some 780 million gallons of crude oil

gushed into the ocean.  The disaster is known as the BP oil spill, Deepwater Horizon explosion

and the worst environmental disaster to ever occur in U.S. waters. The months-long spill caused

environmental damage to the ecosystems of thousands of miles of gulf coast that stretches across

Texas, Louisiana, Mississippi, Alabama and Florida. The spill also devastated the local tourism

and fishing industries as well as causing other economic consequences.  

 

BP fails to empathize  

Complaints from crewmen 

BP received backlash after mistreating the workers that survived the explosion. After the

initial incident at least two workers from Deepwater Horizon claimed that once they arrived on

land they were not allowed lawyers or family present, and were coerced into signing forms

before they were released. According to an interview with NPR, attorney Kurt Arnold

said, "They were zipped into private buses, there was security there, there was no press, and no

lawyers allowed, nothing, no family members. They drove them to this hotel and they escorted

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them into the back of this hotel, once again under escort." Transocean denied the

claims in a press release.  

In March of 2014 a New Orleans judge ruled in favor of the crewman. Instead of providing

survivors with adequate care and respect, BP made the situation worse by disregarding the lives

affected, and instead focused on coercing survivors to sign statements to protect their image

when in reality it worsened it. 

Blatant indifference from former BP CEO Hayward 

During a 2010 interview with The Guardian Hayward stated the spill was "relatively tiny." "The

Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting

into it is tiny in relation to the total water volume," he said. This is simply not true.  

According to the New York Times, in 2010 Hayward stated to his fellow executives, “What the

hell did we do to deserve this?” It is understandable that he felt unfortunate to be in that

situation, but the fact that his statement was made public made it is seem that CEO Hayward did

not have the devastation to the public, environment or economy in mind. The New York

Times also said, " In response to a written question, Mr. Hayward said, “Reputationally, and in

every other way, we will be judged by the quality, intensity, speed and efficacy of our

response.” He was right, but only because BP was judged by how poorly they handled the

situation, and in the end he was no longer BP's CEO. 

 

BP neglected safety and risk preparedness  

BP put profits over safety 

Three years after the spill, the company went to trial and BBC reported, “Mike Underhill,

representing the Department of Justice, said the disaster resulted from BP's ‘culture of corporate

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recklessness’. “Despite BP's attempts to shift the blame to other parties, by far the primary fault

for this disaster belongs to BP", said Underhill. One of the lawyers for the plaintiffs, Jim Roy,

said BP put, "production over protection.”

 

BP was not crisis ready 

In 2010 Popular Mechanics wrote a report on the incident titled Investigative Report: How the

BP Oil Rig Blowout Happened. The magazine wrote “By the time the blowout came, it was

almost inevitable.”It's clear that the problem is not technology, but people," says Robert Bea, an

engineering professor at the university of California–Berkeley. "It was a chain of important

errors made by people in critical situations involving complex technological and organization

systems." 

 

The negative effects on BP'S image 

 

Stakeholders 

In a report from Florida State University written by Frank Heflin and Dana Wallace, they found

environmental disasters and environmental risk readiness plans do effect shareholders. 

“Further, we find evidence that firms with more expansive environmental disclosures suffered a

smaller negative shareholder wealth effect, suggesting that shareholders believe firms with more

extensive environmental disclosures are better prepared to address possible future regulatory

costs and possible future similar environmental incidents. We also document an increase in

environmental disclosure, specifically in the disclosure of disaster readiness plans, in the year

following the BP spill. Last, we find that firms with higher institutional ownership and lower

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ownership concentration were more likely to increase disclosures about disaster readiness

plans." 

 

General public 

In 2013 the Huffington Post took a still active poll that stated as of April 2015, 63 percent of

readers think that BP handled the situation poorly. In spite of spending $100 million on adverts

to promote their image, "Among those who had seen the commercials, 28 percent said their

opinion of the company had thereby become more favorable and 11 percent said their opinion

had become less favorable. But 59 percent said that seeing the ads had not changed their view at

all." Although their commercials did help their image some, it is still not enough to change their

reputation in the eyes of the public.  

 

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Germanwings Flight 9525 Example

The Event

On March 24, 2015 a co-pilot deliberately crashed his flight bringing down 150 victims with

him. Andreas Lubitz, a 27-year-old first officer, was the only pilot inside the cockpit when the

plane was doomed. There is a “two in the cockpit rule” to avoid such situations that this could

have been averted, but when one pilot needs to use the restroom or leave for some other reason it

leaves one pilot left in charge for a short period of time. This is what doomed the aircraft and the

150 passengers.

Figure 5

Andreas Lubitz, 27 year old co-pilot that brought down flight 9525

When the captain excused himself from the cockpit to use the restroom the co-pilot decided to

take matters into his hands and locked the captain out and manipulated the buttons to cause the

aircraft to descend voluntarily.

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How Crisis Management Can Help and How to Act on It

After the attacks of 9/11 security was raised extremely high but apparently not in the aspects of

the pilots themselves on behavioral levels. This is where crisis management comes in. In

Advisen Insurance Intelligence they performed a study on aviation crisis management which

explains how to handle a sudden crisis. “How an aviation company responds to a crisis not only

can affect the outcome of the crisis itself, it can have an enormous impact on the company’s

valuable reputation, and even its very survival,” said by Advisen Insurance Intelligence

(Aviation 2). Managing a crisis is extremely important and should be handled with care.

Communicating within a crisis is crucial in maintaining the situation and overcoming it with the

best outcome possible. You must be fast and effective with having a crisis management plan

thoughtfully prepared, and training within the company to secure the company’s reputation.

When organizing the management system you need to make sure the plan is easily laid out for all

members involved including, personnel, media, and family of the passenger, investigators and

the passengers aboard the aircraft. The most important step in crisis management is to gain

control of the situation as soon as possible.

Germanwings Perfect Response

Germanwings is still in the middle of dealing with the crisis of Lubitz bringing the plane down

on March 24th 2015. “Lufthansa’s crisis management center issued regular, reliable updates

through multiple channels, while swiftly extending psychological support and financial relief to

the relatives of the dead. There is not much more an airline can do following a catastrophic

event; it can, however, do much less, as illustrated by Malaysia Airlines’ confused, contradictory

and altogether insensitive handling of the Flight 370 disappearance” (The Economist, 2015).

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Lufthansa has handled the situation with dignity, grace and with a swiftness to the media and

family.

A Proper Method to Crisis Management

The Case

In the year 1982, a series of seven deaths occurred in the Chicago area. The deaths all had one

thing in common: the victims had all taken a Tylenol pill which had been laced with potassium

cyanide, which is highly toxic. A still unknown perpetrator had tampered with Tylenol pills

from supermarkets and drug stores, placing the cyanide in the pills and then returning the

bottles to the shelves. After a few weeks, investigators were able to link the poisoning to

Tylenol, and the company proceeded to drop from over 35 percent of the market to less than 8

percent.

The Solution

Johnson & Johnson decided very quickly to respond to the situation and fix it in a way that

benefited everyone. The first thing they did to ease the crisis was to contact the media and

inform the population of what they were doing to control the circumstances before them. A

massive recall of over 31 million bottles of Tylenol took place, with Johnson & Johnson

offering replacement capsules for people who turned in pills, and offered a reward for

information that could lead to apprehension of the people involved in the murders. New

methods were developed which would protect consumers and greatly impact the future; Tylenol

was changed from an easy to tamper capsule into a caplet which would be harder to open than

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the capsules. Tamper-resistant packaging was introduced and eventually spread to all over-the-

counter medication, and congress made it a federal offense to tamper with consumer products.

Today, companies across the nation all follow the standards which were set by Tylenol for

consumer safety, and the guidelines set by the FDA for manufacturers of medication.

Figure 6

*Chart is self-made based on information from sources.

Lessons Learned

Johnson & Johnson took responsibility for the situation and sought to improve it swiftly. The

company felt themselves partially to blame because of not meeting the standards they put before

themselves; to deliver good products to their customers and ensure safety. The cyanide

poisoning gave Johnson & Johnson the perfect reason to refine their standing and improve for

the future; they did not want another poisoning to occur in the future and took the initiative to

prevent this. By communicating with the public every step of the way, the general populace felt

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that Johnson & Johnson cared about their well-being, which positively influenced company

opinion in the future.

Johnson & Johnson sought to reduce the chance of further poisoning with their massive recall

and replacement, as it was determined the poisoning took place on a local level as opposed to at

the factory. Afterwards, tamper-resistant packaging was developed and enforced for their

products, and the protection would influence the rest of the market of OTC medication.

In short: take responsibility for what happens, have clear and open communication, and seek to

rectify the situation quickly yet effectively.

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Conclusion

The oil industry is a powerful one. According to Forbes magazine, it provides 1/3 of the world's

energy, powers nearly 100 percent of transportation and makes up 1/6 of the world's GDP. A

modern economy depends on oil and natural gas. Imports and exports cannot be traded without

energy. Children cannot get to school. People cannot get to work. Food cannot be transported.

Oil and natural gas are used to power homes, hospitals, the equipment to build infrastructure and

irrigate agriculture. The “first world" as we know it cannot exist without energy, without oil.

The globe is covered in miles of cargo routes by pipelines, train, air and sea. Because the oil

industry is currently imperative to modern civilization, the oil industry has an immense

responsibility. Unfortunately, disasters involving oil are all too prevalent. Considering how much

oil is constantly being drilled and transported it is impossible to consider your corporation

infallible from crises.

A crisis management plan is fundamental to any company involved in the oil industry. 100

percent safety isn't feasible and cannot be guaranteed. The public and stockholders tend to trust

companies that are safe, transparent and responsible. The industry has the duty of supplying the

world with power in a safe, affordable, efficient way. However, this is no easy task.

Unfortunately, as quoted in Forbes by Subsea Hydraulics Engineer Ryan Carlyle, "Oil is a

widely-traded, high-competitive commodity market. That means basic economics causes profits

margins to go as low as they can without companies exiting the industry. In this case, 8-10%

profit margin is the minimum risk premium you can offer a company to convince it to continue

doing business." The industry needs a good public image; however, the market as well as the PR

and regulatory environments are “fairly hostile" (Carlyle 2013). This is why it is essential to

have a good PR team as well as a through crisis management plan.

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Recommendations

To an effective plan

First two hours are critical: access the situation and take control

Identify, verify and communicate the facts: authoritative, clear unemotional

manner

Activate crisis management plan: should be a seamless process

Focus on outcomes: turn negatives into positive the best way possible

o Workable guideline

o Coordination

o Consistent risk matrix

(Saunders, “Best Practice Crisis and Issues..”)

Summary of a crisis plan

"The best defense is a good offense."

Predict – Anticipate everything. Although it is impossible to plan or predict every

scenario, it will benefit you to consider any possible risks.

Approach – What position will your company take on these potential issues? Keep in

mind that what matters is how the public perceives things. Always consider the public's

needs and their point of view.

Plan- Consider your risks and plan ahead. Make a plan to prevent disasters; Do what is

needed to ensure safety to the best ability. Make a plan in case this prevention does not

work. Be prepared for a disaster, and know what to do if that situation occurs.

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Collaborate- Make a crisis team that is composed of lawyers, insurance agents,

management personnel, PR experts and a spokesperson.

Respond-The media is the medium to communicate with the public. Never publicly

consider the media the enemy. When dealing with the media remember to address what

happened, why it happened, and what you are going to do about it. Establish one

spokesperson to communicate messages and statements to the media. These statements

need to be concise, consistent, and clear and be conscious of the audience.

Evaluate – Ultimately, your company will have to execute a crisis plan at some point.

Once the plan is enacted, evaluate the outcome. See what improvements can be made.

(NTA’s Market Development Council, 2013)

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Works Cited

"A Human Response to a Human Tragedy." The Economist. The Economist Newspaper, 30 Mar. 2015. Web. 7 Apr. 2015. <http://www.economist.com/blogs/gulliver/2015/03/germanwings-flight-9525>.

"Aviation Crisis Management." Advisen Insurance Intelligence. American International Group, 1 Sept. 2012. Web. 7 Apr. 2015. <http://www.aig.com/Chartis/internet/US/en/AIG_Topical_2012_AIG_AviationAIGFINAL_tcm3171-458805.pdf>.

Ballard, Brooke. "The 4 Rs Of Crisis Management." Business 2 Community. The B Squared Media Blog, 29 July 2014. Web. 7 Apr. 2015. <http://www.business2community.com/crisis-management/4-rs-crisis-management-0953349>.

Saunders, Janet. "Best Practice Crisis And Issues Management A Recommended Approach B..." Best Practice Crisis And Issues Management A Recommended Approach B... Saunders-McDermott Consulting, 6 July 2009. Web. 19 Apr. 2015.

Markel, Howard. "How the Tylenol Murders of 1982 Changed the Way We Consume Medication." PBS. PBS, 29 Aug. 2014. Web. 23 Apr. 2015. <http://www.pbs.org/newshour/updates/tylenol-murders-1982/>.

Hollie, Pamela. "MAKING PRODUCTS TAMPER-RESISTANT." The New York Times. The New York Times, 16 Sept. 1983. Web. 23 Apr. 2015. <http://www.nytimes.com/1983/09/17/business/making-products-tamper-resistant.html>.

Ryan, Carlyle. "What Are The Top Five Facts Everyone Should Know About Oil Exploration?" Forbes. Forbes Magazine, 3 Apr. 2013. Web. 23 Apr. 2015. <http://www.forbes.com/sites/quora/2013/04/03/what-are-the-top-five-facts-everyone-should-know-about-oil-exploration/>.

"Could the BP Oil Spill Happen Again?" Popular Mechanics. 3 Sept. 2010. Web. 23 Apr. 2015. <http://www.popularmechanics.com/science/energy/a6065/how-the-bp-oil-rig-blowout-happened/>.

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Swanson, Emily. "Poll Finds BP Public Image Still Tarnished 3 Years After Gulf Spill." The Huffington Post. TheHuffingtonPost.com, 20 Apr. 2014. Web. 23 Apr. 2015. <http://www.huffingtonpost.com/2013/04/20/bp-poll_n_3111551.html>.

Webb, Tim. "BP Boss Admits Job on the Line over Gulf Oil Spill." Theguardian.com. The Guardian, 13 May 2010. Web. 23 Apr. 2015. <http://www.theguardian.com/business/2010/may/13/bp-boss-admits-mistakes-gulf-oil-spill>.

Krauss, Clifford. "Oil Spill’s Blow to BP’s Image May Eclipse Costs." The New York Times. The New York Times, 29 Apr. 2010. Web. 23 Apr. 2015. http://www.nytimes.com/2010/04/30/business/30bp.html?hp&_r=0

"BP Oil Spill Trial Told It 'put Profits over Safety' - BBC News." BBC News. 25 Feb. 2013. Web. 23 Apr. 2015. <http://www.bbc.com/news/business-21548117>.

"A Guide to Developing Crisis Management Plans." Ntaonline.com. Developed by NTA’s Market Development Council, 1 Jan. 2003. Web. 23 Apr. 2015. <http://www.ntaonline.com/includes/media/docs/crisis-mgm-plan-020703.pdf>.

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Suggested reading | references 

oil industry facts: http://www.forbes.com/sites/quora/2013/04/03/what-are-the-top-five-facts-everyone-should-know-about-oil-exploration/ A Guide to Developing Crisis Management Plans: http://www.ntaonline.com/includes/media/docs/crisis-mgm-plan-020703.pdf Photos of Deepwater Horizon: Google Images: "BP oil Spill" spill: https://en.wikipedia.org/wiki/Deepwater_Horizon logo : http://www.diecastaircraftforum.com/1-200-scale-model-aircraft/89404-bp-oil-spill-sucked-do-these.html fire on rig: http://wlrn.org/post/report-wildlife-still-feeling-impact-bp-oil-spill beach clean up: http://www.consumerwarningnetwork.com/2010/05/07/who-pays-for-the-massive-oil-spill-clean-up-in-the-gulf/ BP case studies: file:///C:/Users/Jessica/Downloads/07022013.pdf http://digitalcommons.butler.edu/cgi/viewcontent.cgi?article=1092&context=ugtheses BP/Transocean response: http://www.bp.com/en/global/corporate/gulf-of-mexico-restoration/deepwater-horizon-accident-and-response/containing-the-leak.html http://phx.corporate-ir.net/phoenix.zhtml?c=113031&p=irol-newsArticle&ID=1425590&highlight= Court cases: http://www.gpo.gov/fdsys/pkg/USCOURTS-laed-2_10-md-02179/pdf/USCOURTS-laed-2_10-md-02179-51.pdf http://www.npr.org/templates/story/story.php?storyId=126565283 http://www.bbc.com/news/business-21548117

CEO accounts: http://science.time.com/2010/07/25/oil-spill-goodbye-mr-hayward/ http://www.theguardian.com/business/2010/may/13/bp-boss-admits-mistakes-gulf-oil-spill http://www.nytimes.com/2010/04/30/business/30bp.html?hp&_r=0 investigative reports: http://www.popularmechanics.com/science/energy/a6065/how-the-bp-oil-rig-blowout-happened/ https://www.stern.nyu.edu/sites/default/files/assets/documents/con_032099.pdf image poll: http://www.huffingtonpost.com/2013/04/20/bp-poll_n_3111551.html

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