What is reactive crisis management

Crisis management

Crisis management is a specific form of company management. Its task is to avoid or cope with all processes in the company that would otherwise be able to substantially jeopardize the company's continued existence (cf. Mette, 1999, p. 330f.). Basically, a distinction can be made between active and reactive crisis management (cf. Hahn / Krystek, 1989, Sp. 1220ff.):

- Active crisis management refers to the early detection and avoidance of not yet acute corporate risks (early detection, strategic). A distinction can be made here between potential corporate crises (anticipatory crisis management) and latent corporate crises (preventive crisis management).

- Reactive crisis management deals with coping with (acute) corporate crises that have already occurred. If the acute corporate crises are manageable, one speaks of repulsive crisis management, while in the case of uncontrollable corporate crises one speaks of liquid crisis management.

In a comprehensive view, international crisis management extends not only to the "management" of crises, but in particular to the early detection and avoidance of crises (cf. Mette, 1999, p. 335).

Crises in international companies are caused by deficiencies in the company's planning, management and control (management errors). Risk factors here include the selection of executives, the group organization, an inadequate information system, etc. Target countries as well as the possible multiplier effect of such risks on the overall system. Particularly noteworthy are political and economic risks, especially the currency risk of international companies (country risk).

Crisis avoidance strategies against politically induced crisis phenomena are, for example:

- Delay in market entry in host countries that are latently threatened by crises

- Divestments as a restriction / abandonment of regional business activities

- Centralization of know-how in a non-crisis country

- Distribution of the production volume to different regional / national locations.

In addition to the strategies related to the overall system, a distinction is made between specific subsystem-related (country-oriented) strategies for crisis avoidance:

- Conclusion of investment protection contracts (capital investment protection) with the respective host countries, which define the mutual rights and obligations of the host country, government and foreign investor

- Formation of international joint ventures for country-specific activities

- vertical integration in the form of interlinking with local suppliers and / or processing companies.

If threats (or opportunities) arise in individual country markets of international companies, detached from political and / or specific exchange rate-oriented causes of the crisis, then regionally-oriented offensive strategies, restructuring strategies and defensive strategies are relevant (cf. Hahn / Krystek, 1989, Sp. 1230L). Overall, crises in international companies do not necessarily have to have only negative effects. In principle, they also offer the opportunity to carry out more in-depth changes, develop new concepts and break up frozen structures.

Overall planning

Crisis management is the sum of the measures that managers take to resolve a current crisis situation. Crisis management is understood to be three areas of management activity that aim to overcome crises:
· Crisis perception
· Analysis and problem solving
· Action planning and crisis management. A sensitivity to crisis situations is necessary in order to be able to take correct adjustment decisions (crisis actions) in good time. In the timely perception of a crisis situation, the sensitivity of the management and the direction of the company play a decisive role. A company that is one-sidedly focused on sales success, for example, will often recognize a crisis in the area of ​​research and development too late due to the fixation of its goals and the corresponding concentration of its activities. Conversely, a planning and control-intensive management will often ignore crises in the personnel area (fluctuation, loss of skilled workers and capable managers) or perceive them too late.
Preventive crisis management is a kind of potential analysis of crises. By constantly observing environmental data (e.g. international patents relating to its own products), the company will have to analyze potentially dangerous influences on internal processes in order to avoid negative surprises. However, preventive crisis management does not refer to environmental data, but also to the planning and provision of “action reserves”. This means the sum of the measures that can be taken in an emergency. Preventive crisis management also includes creating reserves and analyzing weak points.
A company's crisis system refers to an information system that collects, evaluates, and compresses all relevant environmental data and makes it available in the form of key figures.
"Early warning systems" are used to interpret the symptoms of the crisis. They provide information about operational processes such as fluctuation, reject rates, sales figures, liquidity figures, receivables and liabilities at an early stage in the form of - indicators and trends, an early warning system.
Preventive crisis management, a crisis system and organization form the prerequisites for the control and handling of current crises.

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