Group 6

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Introduction to the subject

How can enterprises use information to be prepared when a crisis comes?
Now-a-days enterprises are gifted with powerful technology, however, they are also damned with a fast-pace constant changing market. The whole market evolution and product cycle are faster, new technologies overcome old technologies almost in a monthly basis. It is very hard for a company to keep on the top of the edge, without falling into disaster.

Companies need then, to be able to understand the market, learn it and - most importantly - react to it. The extra mile on the path to organizational success might reside in the information we get from the market every moment of the day, the enterprise internal and external information, and in the analysis put on both of the information together.

If enterprises are able to capture the small changes that take place every day, record minimal evolutions in the market, and notice the competition moves, they could be always one step ahead of any crisis.

Our group is interested in analyzing how can enterprises be better prepared when a crisis comes, through the use information?

Crisis

The Institute for Crisis Management defines crisis as:

A significant business disruption that stimulates extensive news media coverage. The resulting public scrutiny will affect the organization’s normal operations and also could have a political, legal, financial and governmental impact on its business.[1]

There are two types of Crisis. Sudden Crisis and Smoldering Crisis.

Sudden Crisis

Sudden Crisis are circumstances that occur without warning and beyond an institution’s control, usually the company is not to blame for this. This type of crisis is impossible to predict, the variables affecting it are out of scope, and modeling it is simply too complex.

Smoldering Crisis

Sudden vs Smoldering Crisis and the Crisis Origins over the last years.

Smoldering Crisis are “events that start out as small, internal problems within a firm, become public to stakeholders, and, over time, escalate to crisis status as a result of inattention by management." [James and Wooten, “ [2] This type of crisis is possible to predict/anticipate, the variables affecting it are manageable although it is still very complicated. As shown in the graphs with data from The Institute for Crisis Management [3], smoldering crisis are a huge threat for organizations. Normally, organizations have contingency plans, crisis management plans and/or other mechanisms to prevent organizational collapse during and after a crisis. Before a crisis starts to happen is almost impossible to predict it. However, it is possible to identify the crisis in a very early stage, being easy to mitigate the threat. This is the goal of our presentation.

Smoldering crisis classification [4]

Level 1 Level 2 Level 3 Level 4
Description An internal business problem or disruption that can be dealt with and resolved by management responsible for responding to this kind of situation. An internal problem that can be managed by those who are responsible for this area of business, with support from other management or employees who may have to be brought in to assess the situation and help resolve it. An internal problem that has the potential of going “public” via the news media and generating negative reactions from government officials, plaintiff’s attorneys, competitors, investors consumer activists, labor unions, etc. The crisis can still be contained but will require specialized assistance beyond the management capabilities in place to deal with normal business problems. This assistance may be from corporate headquarters, outside legal counsel, and/or consultants who specialize in resolving this kind of problem. The situation is very serious and is likely to be disclosed publicly in the very near future. The public reaction will have a significant adverse impact on the business for a period of weeks or months and top management along with numerous employees and outside consultants will have be diverted from their normal activities to resolve this situation. The financial impact will be substantial and will have a direct and indirect effect on operating results.
Example Employees of an organization are upset with bad work conditions. They talk with their boss to find a solution for this problem. Employees decided to boycott their work temporarily until their problem is solved. Their boss and other higher management discuss the problem with them. Employees decide to stand in demonstration to achieve what they asked for. They also decide to send a letter to their syndicate to find a resolution for their problems. Employees are resisted and don’t have the chance to manifest dissatisfaction. However, they decided manifest. There’s high friction between them and the management, it draws the attention of media which makes the whole story public. Sales go down.

Using Data for Prediction and Monitoring

Organizational environment

Anything related to the organizational environment can be found on the following page: Organizational environment

Business Intelligence

Business Intelligence

Data Mining

Information concerning Data Mining and Data warehousing can be found here: Data Mining

Data Mining and Socio-Economic Crisis

Issues related to data mining techniques and socio-economic crisis can be found here: Data Mining and Socio-Economic Crisis

Sorts of Data and its Sources

Everything related to the different kinds of data and their origin can be found by clicking to the following page: Sorts of data and its sources

From Data to Knowledge & Action

Can these data help us take more intelligent decisions? The answer is no. To take better decisions one needs to discover and understand the underlying patterns from these data. Data mining can provide the answers to all kid of organization-related question. Data mining can help organizations to have useful insights into its business from the data it has collected over the years and take better decisions to achieve new heights.

See the following page for information on the process from deriving Knowledge and Action from Data: From Data to Knowledge & Action

Data Analysis

The different kinds of analysis and statistical methods used can be found by clicking: Data Analysis

Strategic Management Schools: Prediction

Anything related to the above mentioned section can be found here: Strategic management schools

Assembly

Issues related to Assembly

Examples, Lessons and Curiosities

Crisis related examples can be found in the page Crisis: Examples, Lessons and Curiosities.

Case Study

The overview of our case study, the questionnaire and other info can be found at Case study Group 6.

Group and Work Plan overview

Our group is formed by the following students:

Details about our work plan evolution can be found in Group 6 Work Plan page.

Discussion: Are Crises Predictable?

Article about the predictability of the European Financial Crisis

Presentation

The handouts for the IMOC Group 6 presentation on "Predicting a Crisis" are available here:
http://dl.dropbox.com/u/872165/IMOC-Group6-PredictingCrisis-PresentationHandout.pdf

References

  1. Institute for Crisis Management - Crisis Definition, http://www.crisisexperts.com/crisisdef_main.htm
  2. Leadership as (Un)usual (2007) [142–143]. Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 7
  3. http://www.crisisexperts.com/04report.htm
  4. Institute for Crisis Management - Crisis Definition, http://www.crisisexperts.com/crisisdef_main.htm

Literature

Environmental uncertainty, foresight and strategic decision making Sales, Marketing, and Research-and-Development Cooperation Across New Product Development Stages: Implications for Success