An essential characteristic of crisis situations is the limitation on the resources available to the affected organization. At the same time, this means that the affected spheres have to be weighed and prioritized based on their importance. For most organizations, this importance is derived from the influence that the respective areas exert over business success. Seen from a general point of view, the consequence for the different spheres vary according to the respective branches. For production companies, for example, they will basically increase costs, as the effects will be primarily legal norms and less from the sales market.
In tourism, it should be assumed that the consumer, that is, the sales market, occupies first place in the activity spheres. In the majority of cases, the events unleash a sales rather than cost-sided effect. The consequence of the effect is essentially determined by the market constellation in which the affected unit or units are located. From this point of view, competitors are also important. The social environment of the affected organization, which can be more widely viewed than the amount of actual or potential customers, is also important in tourism. At present, interest groups and stakeholders are of little importance but the generally high interest that is shown towards tourism contributes to the fact that themes with negative events are quickly disseminated and paid great attention. Moreover, this influences the state sphere of activity that should be ranked after the social environment sphere. Its mobilization is essentially dependent on public opinion on which the affected organization should already have concentrated. The potential for catastrophe of the event has an accelerated effect on the inclusion of the state. If it is great, it can induce the state institutions taking on a leading role. In this case, the affected organization unexpectedly and very quickly takes on a defensive position.
Findings made within the various spheres of activity form, like knowledge of the general order – this can, of course, change due to events and other influences – the basis of preventive measures as well as helping to contribute to the overall optimization of the company’s actions in coping with crises.
Responsible Management
Munich Re is not only the world’s largest reinsu- rance company but also an important institutio- nal investor. In this function, the company incre- asingly presses companies into which they invest to apply sustainable and environment-friendly practices. Following this principle, the company aims in the near future to have 80 per cent of their investments in corporations which are either listed in the Dow-Jones-Sustainability (DJSI) or in the British FTSE4Good-Index.
Personnel
Questions for review and discussion
The state as a sphere of activity
• What are the consequences of the actions of the state?
• Does the state react only by applying sanctions and regulations?
• What are the services the state makes available for its citizens?
Investors, personnel and other spheres of activity
• How do capital investors react to negative events?
• What is to be understood by responsible management of a tourism company, from the viewpoint of a capital investor?
Suggestions for further reading
World Tourism Organization (2000), Global Code of Ethics for Tourism,WTO, Madrid.
World Tourism Organization (2003), Tourism Recovery Series,WTO, Madrid.
World Tourism Organization (2005), Tsunami Relief for the Tourism Sector – Phuket Action Plan, WTO, Madrid.
World Tourism Organization (2005), Proposal to Channel Funds for the Economic and Operational Recovery of Small and Medium-Size Tourism Enterprises Affected by the Tsunami,WTO, Madrid.
World Tourism Organization (2005), Tsunami: One Year on – A summary of the implementation of the Phuket Action Plan, WTO, Madrid
prognosis
Objectives
• To evaluate techniques of analysis and prognosis to determine their suitability in the identification of important areas and events
• To understand the consequences of a negative image transfer
• To describe the development stages of an early warning system
• To be able to evaluate the suitability of early warning systems based on indicators or weak signals
Key terms and concepts
• Techniques of analysis and prognosis • Indicators
• Negative image transfer • Weak signals
• Similarity measurement • Travel advisories
• Early warning systems
As has already been illustrated, preventive and coping crisis management must be distinguished within crisis management. The aim of preventive crisis management is taking precautions and to avoid crises.
Firstly, areas of the organization must be identified that are especially threatened by negative events or are of such significance that they must not be exposed to threat at all. This interior-oriented identification and evaluation of possible problematic areas within crisis precautions is followed by strategic and operative measures with which the organization protects itself from the environment.
Only then and on basis of these findings is the environment of the company to be looked at by early warning systems in order to indicate possible changes and allow a prompt reaction on the part of the organization (also, internal areas of the company can be the causes of crises but should not be considered further as they are subject of normal management).
The sequence of identification and early warning systems is not a hard rule as the results of early warning can lead to a complete change in the previously defined areas at threat. Nevertheless, the consideration in this sequence corresponds to practical actions.