International Business Environments and Operations 16th Global Edition test b...
Learn how companies should manage a crisis
1. Don’t try to make it small.
When the oil spills, the money goes missing and the yoga pants you’re pushing
are too thin, use crisis communication theory to craft your public relations
response. New study shows companies that do, don’t see a drop in stock price.
IMPACT ON STOCK PRICE
-3.2%
AVERAGE
DECLINE IN
STOCK PRICE
OF COMPANIES
NOT
FOLLOWING
CRISIS
COMMUNICATIONS
THEORY
STAY
ON
MESSAGE
KNOWWHERE YOU STAND
Before a crisis hits, do an honest
assessment of your company’s
reputation. Whether or not your
company has a good performance
history will determine which strategy is
most effective to use. The strategies
that work for one company that has a
good performance history will not work
for a company that has a poor
performance history.
DON’T DOWNPLAY
When companies downplay or minimize an obviously bad
crisis, investors become uncertain. When investors become
uncertain, a company’s stock price declines. If you downplay
a big crisis, expect a smaller stock price.
-3%
DECLINE IN
STOCK PRICE OF
COMPANIES THAT
RADICALLY
CHANGED
MESSAGING
About this infographic: This infographic is based on a study titled “We’re Still Sorry: How Companies
Manage Prolonged Crises.” The study was conducted as a graduate research project by Mallard Holliday at
Syracuse University. Follow Mallard on twitter @mallardholliday for a copy of the entire study. W. T.
Coombs’ (1995) Crisis-Response Strategies and W. L. Benoit’s (1995) Theory of Image Restoration were
used to analyze 24 statements issued by 12 companies during crisis events. Companies studied include:
Apple, Anadarko, AT&T, BP, Carnival Cruise Lines, Costa Crociere, Domino’s Pizza, General Electric, J. P.
Morgan Chase, Lululemon, Taco Bell and US Airways. The research project does not examine the many
other factors that could have impacted the stock price at the time.
THEORIES BY
COOMBS &
BENOIT
Theories provide a clearer
path to determine how to
respond in a crisis. Before
the crisis hits, know the
theory and decide which
response is best given your
company’s performance
history and the severity of
the incident.
USE COOMBS’ THEORY DECISION FLOW CHART TO DETERMINE
WHAT TO SAY.
MAJOR
ACCIDENT
HAPPENS
WITH VICTIMS
POSITIVE
PERFORMANCE
HISTORY
NEGATIVE
PERFORMANCE
HISTORY
USE MORTIFICATION &
INGRATIATION STRATEGIES
“WE’RE SORRY. WE
HAVE A GOOD
TRACK RECORD.”
USE ONLY MORTIFICATION
STRATEGIES
“WE’RE VERY
SORRY.”
DECIDE