UNIT 6

1. UNIT 6 Risk management

2. Crisis management quiz (p.70) • What would you do in these crisis situations? VOCABULARY: Recall – to ask for sth to be returned (because there is sth wrong with it) Scrap – to cancel or get rid of sth that is no longer practical or useful Tamper-proof – specially designed so that it cannot be easily changed or damaged Wrongdoing – crime, offence

3. Crisis management quiz- answers 1. C) Tylenol, a Johnson & Johnson company, was praised for recalling 31 million bottles when this happened in 1982. After falling to 8%, the product subsequently recovered its 35% market share when it was relaunched in a tamper-proof package.

4. Crisis management quiz- answers 2. C) Wendy’s restaurants lost millions of dollars in sales and had to make redundancies when a woman claimed she had found a finger in her chilli in 2005. The company contested the woman’s story, and she was eventually sentenced to nine years in prison for filing a fraudulent insurance claim. Redundancy – the situation when somebody has to leave their job because there is no more work available for them Contest – to formally oppose a decision or statement because you think it is wrong Fraudulent – intended to cheat somebody, usually in order to make money illegally

5. Crisis management quiz- answers 3. B) In 2007, CBS cancelled a show and terminated a contract worth $40 million with Don Imus, a TV and radio talk show host who had made racist remarks about a female basketball team. CBS – Columbia Broadcasting System Terminate – to end, to make something end

6. Crisis management quiz- answers 4. B) Eric Dezenhall, the author of Damage Control, says that his company refuses this type of PR contract.

7. Damage Control (p.71) attempting to make big changes in society or to a political system in an extremely determined and enthusiastic way • on the line • evaporate • espouse • canard • threshold • purport • lionize • messianic • exempt from • scrutiny • adversary a false report or piece of news opponent at risk to give your support to a belief to treat somebody as a famous or important person not affected by the level at which something starts to happen or have an effect inspection to disappear to claim to be something or to have done something, when this may not be true; profess

8. Answer the questions: • What did crisis cost a leading cell phone manufacturer, Merck, Perrier and Audi? Why does Dezenhall refer to them? The cell phone manufacturer’s stock dropped by 20%, Merck lost roughly $750 million in the fourth quarter of 2005 alone and was expected to have to pay between $4 billion and $18 billion in damages, Perrier lost its position as market leader, and Audi had very few sales in the US market for ten years. Dezenhall refers to them as examples of how crisis management can be crucial to a company’s survival (and by implication, how easily his PR company’s fees are justified)

9. How does Dezenhall argue these concepts are relevant for crisis survivors? STRONG LEADERS-survivors are able to take difficult decisions FEEL-GOOD GURUS-survivors do not blindly follow conventional wisdom on reputation management CLIMATE SHIFTS-survivors are flexible enough to adapt when necessary GUARANTEES-survivors know there are no guarantees, even when major investments are made PAIN THRESHOLDS-survivors accept short-term losses in return for long-term gains BABY STEPS-survivors do not try to solve everything at the same time SELF-KNOWLEDGE-survivors are realistic and objective THE LITTLE GUY-survivors believe that the ordinary citizen does not automatically have more rights than the corporation LUCK-survivors sometimes get lucky breaks

10. According to Dezenhall, how has the way we judge a crisis changed? In the past, crisis management was judged by financial and ethical standards; now a company’s handling of a crisis is judged by its stock price, its advertising campaigns, its success or failure in court and its image on TV.

11. What is the political model of crisis management? The political model of crisis management assumes that a crisis is motivated by an opponent and must be resolved by fighting, rather than being the result of accident or misfortune and resolvable through good communications.

12. How does Dezenhall see the media in general and TV in particular? Dezenhall seems to be rather cynical about the media: he refers to the hostile scrutiny used to fill the media vacuum on tenty-four-hour-a-day cable news, and suggests that radio and TV encourage experts to criticize crisis management on the grounds that successfully resolving crisis doesn’t make for very good TV.

13. Fill in! • They question __________ PR wisdom and do not worship at the altar of feel-good gurus who espouse ________________, the canard that corporate ___________ follows popularity.

14. They believe that _______________ is an exercise in moral authority, and that their critics are not necessarily _______ simply because they purport to be standing up for the ˝little guy˝.

15. Since the __________ burst and corporate scandals have come to fill the media ______ once occupied by lionizing of messianic CEOs, it seems as if no one’s exempt from ________ scrutiny.

16. The opposing team consists of competitors, plaintiffs’ lawyers, the news media, politicians and __________, ______________, multi-million dollar non-governmental organizations (NGOs), corporate stalkers, _________ and bloggers.

17. Discussion 1. In our culture, whoever attacks, wins, whoever defends, loses. Is this a sad indictment of American culture, a more global phenomenon, or a misleading exaggeration? 2. Do you think there are circumstances in which PR firms should defend companies that pollute the environment, exploit workers, or market defective products?

18. 3. In your opinion, which of Dezenhall’s characteristics of crisis survivors can or cannot be influenced or developed by PR firms? 4. Dezenhall presents competitors, lawyers, the news media, politicians and regulators, short-sellers, NGOs, corporate stalkers, whistleblowers and bloggers as opponents that want to torpedo you. Is this paranoia, sensationalism, savvy marketing, or simply facing facts?

19. 5. As CEO of a large corporation, would you hire Dezenhall’s company? Why (not)