Company Crisis Research Articles

Turning crisis into opportunity

PurposeThis paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting‐edge research and case studies.Design/methodology/approachThis briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.FindingsEffective leadership is a vital ingredient in the success of any organization. Many leaders are competent enough when times are prosperous. But when things get tough, only the best are able to step up to the plate. It is somewhat disconcerting that crises are a frequent occurrence in the business world. Such problems manifest themselves in various guises and their consequences often have the potential to be catastrophic. The demise of high‐profile corporations like Enron is ample testimony to that. One sad fact of a company crisis is the ripple effect, ensuring that few people emerge unscathed. The positions of management and employees alike become precarious, while shareholder investments are equally insecure.Practical implicationsThe paper provides strategic insights and practical thinking that have influenced some of the world's leading organizations.Originality/valueThe briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy‐to digest format.

Effects of a perceived brand crisis on product evaluation and purchase intention: the moderating roles of brand credibility and brand attachment

Since a crisis always arises unexpectedly, companies are often unprepared to face it. It is obvious that no company can be perfectly safe from crises, and even the greatest company has the possibility to face a crisis. In fact, exposing a company's negative information results in a decrease in corporate credibility, brand loyalty, and corporate asset values. Existing brand crisis literature focuses on the corporate response effectiveness in strategic response time and the way to respond to a company's crisis. However, limited research is found regarding customer perceptions in a brand crisis situation. The purpose of this study is to examine how a perceived brand crisis affects consumer's product evaluation and purchase intention and to figure out how brand credibility and brand attachment moderate such effects. That is, this study examines whether brand credibility and brand attachment mitigate the negative effects in a brand crisis situation.

Evaluating Predictive power of Data Envelopment Analysis Technique Compared with Logit and Probit Models in Predicting Corporate Bankruptcy

Simultaneous with extensive environmental changes and the rapid development of technology which has increasingly accelerated economy, competitiveness economical enterprises have restricted earning profit and make probable closing of bankrupt firms. Thus it seems necessary to find a model that can predict financial crisis and bankruptcy of companies. Nowadays occurrence of significant progress in other sciences, such as computer and math attract the attention of the financial scholars toward designing and using more exact patterns like Data Envelopment Analysis (DEA). For this purpose, this study uses DEA technique to predict the bankruptcy likelihood of manufacturing firms and also compare its predictability with2 methods : Logit and Probit models. Study sample includes all manufacturing firms listed in Stock Exchange of Tehran from 2000-2010. The results showed that the accuracy of the designed model under DEA technique is %72 and the predictability of Logit and Probit models has been81, and %80 respectively. The results also showed DEA was proved to be an effective tool for predicting bankruptcy likelihood of manufacturing firms; but,it acted less efficient than Logit and Probit models.

Performances of Brazilian IPOs backed by private equity

Private equity funds invest actively. According to the literature, their portfolio companies maintain superior transparency standards and corporate governance practices, such as keeping independent board members and hiring international auditing firms. Private equity funds require either a controlling interest or restrictive clauses to limit managerial action and usually appoint the executives of their portfolio companies. Brazil faced an IPO wave that started in 2004 and peaked in 2007. Many private equity deals went public. The aim of this paper is to investigate whether private equity backed IPOs performed better in the long run (1year) than non-private equity backed IPOs. We examine the one-year cumulative abnormal returns (CAR) of 108 Brazilian IPOs from January 2004 to June 2008, including 42 PE backed IPOs. We split the sample into two calendar periods: 2004–2006 and 2007–2008, and we find that PE backed IPOs have higher average CAR than non-PE backed IPOs in both periods. However, PE backed IPOs issued during 2007–2008 were not immune to the 2008 world economic crisis and investments in the smallest companies are the ones most severely affected. Regression analysis confirms that PE investment has a positive relation to CAR, but only for IPOs issued in 2004–2006.

The role of corporate entrepreneurship in solving the competitiveness crisis of large companies

The purpose of this paper is to highlight importance of entrepreneurship in gaining and maintaining competitive advantage in large companies. The paper examines following four forms of corporate entrepreneurship and its development modalities: Corporate venturing, Intrapreneurship, 'Bringing the market inside', and Entrepreneurial transformation. The paper has demonstrated that lack of entrepreneurial focus is not necessarily an outcome of company's developmental growth, i.e. that lack of entrepreneurial spirit can be postponed, prevented, or retrieved if lost and that entrepreneurial transformation entails profound and complex changes in organizational structure. Even more, entrepreneurial behavior is becoming more and more a company's growth factor. Growing entrepreneurial transformation need will ultimately require new organizational forms and wider range of applicable solutions.

A taxonomic approach to supplier intelligence in manufacturing: managing components of strategic procurement planning

This paper is used to explore requirements for achieving sustainability and survival of manufacturing organisations by means of ensuring continuous supplies for production. Under the current environmental uncertainty due to the global financial crisis and consequent demise of many companies, the contention is that manufacturers require more information and data regarding their suppliers and use supplier intelligence (SI) to reduce supply risk. Current research literature indicates there is little information regarding supplier intelligence; in the context of the supplier’s supplier, supplier’s financial health in terms of capital investment, debt, share market performance, financial reporting, accounting practices, auditing, corporate governance and operating environment. Consequently, a conceptual framework is proposed for gathering supplier intelligence to improve supplier relations and their management. The impetus for a planned approach to increasing information about a trading partner has become more critical since the collapse of well-known and stable MNCs and the demise of tier 2 suppliers. Supplier intelligence enables the buyer to advance their operations and long term strategies to succeed with more certainty, less supply risk, increased competitive advantage and greater innovative capabilities. Finally, a taxonomy for collecting SI data and information is proposed.

Johnson and Johnson phantom recall: A fall from grace or a re-visit of the ghost of the past

This paper addresses and evaluates the case of Johnson and Johnson's crisis management. In an attempt to analyze the case, the paper overviews Johnson and Johnson's Tylenol product tampering in the 1980s and its recent phantom recall of Children's Motrin. The assessment of the company's crisis management was done using the anticipatory model of crisis management (AMCM). Conclusions drawn from this assessment put Johnson and Johnson in a different spotlight than it had enjoyed during its earlier crisis management efforts. Implications for organizational crisis management efforts are also presented.

A LENTA CONSTRUÇÃO DO PROJETO PRIVATISTA: a polá­tica econômica brasileira entre 1964-1974

O presente artigo pretende analisar o lento processo de construção do discurso legitimador do projeto privatista implementado no Brasil com força total a partir do governo de Fernando Collor de Melo (1990-1992). Parte-se da hipótese central de que a crise em que se encontravam as Empresas Estatais no final da década de 1980 tem suas origens na nova orientação da polá­tica econômica brasileira implementada pela ditadura civil-militar que chegou ao poder através do golpe de 1964. Assim sendo, tomando como referencial o arcabouço gramsciano, serão objeto de investigação as agências e seus principais agentes que no controle do Estado Restrito, redefiniram os rumos da polá­tica econômica brasileira, ou seja, o Ministério da Fazenda, o Ministério do Planejamento, o Banco Central e o Banco do Brasil no perá­odo entre 1964 e 1974.

Merger Control in the Banking Sector During the Financial Crisis

This paper analyses the merger control instruments available to overcome a crisis of a company and highlights their role in the 2008/09 global financial market crisis. It concludes that the German merger control regime is well equipped to overcome any (further) banking crisis as long as the market structure in the German banking sector virtually excludes the emergence of serious conflicts of objectives between the protection of competition on the one hand and the stabilisation of the financial system on the other hand.

Crisis management in pharmaceuticals: evidence from Greece

PurposeThe purpose of this paper is to explore the practice, prevention, and problems pharmaceutical companies face with respect to crisis management (CM). The pharmaceutical sector is considered to be the most crisis prone of all industries.Design/methodology/approachThe study is exploratory in nature and data were collected by carrying out semi‐structured in‐depth interviews with key managers in 16 pharmaceutical companies. The open‐ended questions were content analyzed.FindingsRespondents identified product recall as the major reason for business crisis in pharmaceutical companies. Also, the results revealed that the large‐sized companies had CM departments or had collaborated with consulting firms.Research limitations/implicationsThis is a limited exploratory study restricted to one country. However, Greece's pharmaceutical expenditure is above the average in OECD countries. Suggestions are presented for future studies and especially for generalization of the findings.Practical implicationsToday's business environment requires a robust, enterprise‐wide plan to deal with crises, especially in pharmaceutical companies where a “mistake” can lead to civilian casualties.Originality/valueThis study offers empirical findings from pharmaceutical companies, where studies are limited and broadly confirms the findings and conclusions of earlier studies in other industries in the international context.

Managerial competencies in tackling an acute company crisis

The crisis manager’s goal is not only to stop the crisis development in the company, but, as a further step, to achieve the fundamental turnover in its development leading to a successful solution. Crisis management requires completely different managerial competencies from those used in “standard” periods as time pressure is a negative factor aggravating the situation and in addition to that, resources are reduced calling for stimulation. A crisis manager should motivate both himself and the staff and it is he who is expected to be creative even under pressure.

Company crisis as opportunity

For many company managers, company crises are associated with the time when the very existence of the company is discussed. In literature, however, crisis is sometimes viewed as a potential opportunity for the company. This article presents the findings of the survey the purpose of which was to confirm or reject the hypothesis that crisis might become an opportunity for the company. The hypothesis being proven true, the survey further focused on the identification of factors that help companies overcome crisis situations and improve their competitive position with respect to that held before the crisis.

Enron & Parmalat two twins parables

The Idea to write this work is born from the wish to deepen the study of the phenomenon of business crisis, of the risk management and of the processes of restructuring proposed by the management of Enron and Parmalat. These two financial bankruptcies have marked a new century, the bankruptcy of Enron and Parmalat have had a great impact on accounting firms and financial institutions, and have raised several questions on the independence of auditors and analysts. This document is composed of five chapters: The first chapter introduces the matter of business crisis offering a definition of the concept of crisis as a support to continue my dissertation. Besides, I try to underline the importance of the individualization and quantification of the objective and subjective causes of crisis of company giving a brief explanation on the system-company, analysing different American, English and Italian authors. In the chapter II, I introduce the theory of the turnaround as solution of the crisis of the company, proposing the concept and its strategic, economic and organizational aspects. In this chapter, I offer an overview of the main international systems of management of the enterprise crisis, focusing the attention on the American system, of which I analyze the public procedure of chapter 11 and Italian corporate reorganization. In the chapter III, I start to analyze the Enron Group, offering an inherent picture of the decade 1991-2000: describing the history of the society, its steps of expansion and its areas business. Then I summarise the phases of the collapse of Enron, trying to explain those that, in my opinion, were the causes of the crack of the society which can be considered. In this chapter it is stressed the analysis of the role of equity research analysts in the case of Enron and how the valuations of the company did not reflect the information of the company available: many alarming signals were publicly available and were overlooked by analysts who maintained positive recommendations on the company. In the chapter IV, I start to analyze Parmalat, giving a general overview, quickly summarising the history of the company, its international acquisitions and mergers, proposing an economic analysis through the reading of the group's reports. In this chapter, I offer a brief analysis of the comedown of parmalat analyzing in the specific all the causes that have brought in my opinion to the default procedures for the group. At the end of this work, there are the conclusions where I analyze two financial bankruptcies comparating two twins parables.

Crisis management in Turkish construction industry

Various economical crises have affected Turkish economy during the last decade and construction industry has always been among the hardest hit; giving the idea that a comprehensive approach to crisis management is unavoidable. However, literature showed no findings related with crisis management applications by construction companies. Thus, a questionnaire survey was undertaken by the top management of 120 construction companies to investigate the degree of crisis management applications throughout the industry, mainly focusing on the outcomes during the economical crisis in 2001. Frequency analysis, Likert scale of comparison, Thurstone's paired comparisons, Pearson's chi-square test and Fisher's exact test were used to evaluate the results. The results showed that government policies and instable market conditions were the most important causes of crisis for Turkish construction companies. Meanwhile, only a small number of the companies utilized a systematic crisis management and the extent of crisis management applications varied depending on the size and the structure of the companies. Consequently, panic and powerlessness were the common feelings shared throughout the industry during the economical crisis in 2001. Despite, it was still encouraging that the managers utilized contemporary decision-making methods to get out of the crisis and their final decisions were generally in favour of strategically repositioning themselves.

A bargain born of a paradox: the oil industry's role in American domestic and foreign policy

Scholarly attention to oil reached its zenith in the late 1980s. Spirited debates on regime theory, neorealism and American hegemony dovetailed with the aftermath of the oil shocks, the ongoing Ira...

Peculiarities of Managing a Company in Crisis

A company crisis can be defined as a short-term, undesired, unfavourable and critical state in the company, which has derived from both internal and external causes and which directly endangers the further existence and growth of the company. As the functioning and behaviour of the company in the state of crisis differs from the one that is present during a period of planned growth, the techniques and methods used by management need to be different. Crisis management follows two basic objectives: (1) stopping adverse trends and handling the crisis situation (survival) and (2) reaching a turning point (redirectioning) and ensuring the foundations for new development.

A Bug-Eat-Bug World

A Bug-Eat-Bug World

A bug-eat-bug world

A bug-eat-bug world

Corporate governance vs. crisis of company

There is a lot of available investigations in the area of company crisis reasons problems nowadays. These inquiries were summarised into the indicators of company crisis reasons. The development and level of these indicators is not possible to consider to be company crisis reasons but above all to be its manifestation. The veritable reason of crisis is the absence of effective control mechanisms in the company, especially of the “natural” control mechanisms. The natural control mechanism means such as rises from the substance of joint stock companies (respectively legal rules of joint stock company). There is a presumption of control activities interaction among the General Assembly, Supervisory Board and Board. Control mechanisms work on the common economic principles’ base in this sense and it means that the owner is considered to be the primary managing element and the management acts as the derivative managing element. The assumption of effective economic principles functioning is the existence of standard variable of these relations i. e. the existence of relevant interests.

The future of the upstream oil and gas industry: a City perspective

Dr. Robert Arnott, senior research fellow, at the Oxford Institute for Energy Studies, and former oil analyst, provides an insight into how the investment community views the oil and gas E and P industry, with particular reference to the UK North Sea. The article is based on Dr Arnott’s keynote presentation at last December’s PETEX event in London and highlights themes included in his recent book ‘Oil company crisis: managing structure, profitability and growth’.