Ch 6, Instructor’s Manual, Business & Society, Carroll 10e
Chapter 6
Issue, Risk, and Crisis Management
LEARNING OUTCOMES
After studying this chapter, you should be able to:
1. Distinguish between risk management, issue management, and crisis management.
3. Define issue management and the stages in the issue management process.
5. List and discuss the major stages or steps involved in managing business crises.
TEACHING SUGGESTIONS
INTRODUCTION – The decision-making processes known as issues management and crisis
management are two important ways that organizations deal with internal issues (e.g., corporate
scandals, litigation, employee rights, sexual harassment, product safety, workplace safety,
sweatshops, bribery and corruption, smoking in the workplace, and deceptive advertising) and
external issues (e.g., natural disasters and terrorist attacks). This chapter introduces the concepts
of issues management and crisis management, distinguishes between them, and describes their
similarities. The authors utilize the conventional approach toward issues management, not
because it is favored, but because it concentrates on public, social, and ethical stakeholder issues.
KEY TALKING POINTS – This chapter allows students to get into the “juicy” cases of issues
that companies deal with on a daily basis—worker relations, pollution and sustainability,
Affirmative Action, product liability, and many others. Although the chapter focuses on the
process of issues and crisis management, students should be given ample opportunity to discuss
Ch 6, Instructor’s Manual, Business & Society, Carroll 10e
PEDAGOGICAL DEVICES – In this chapter, instructors may utilize a combination of:
Cases:
3-The Body Shop (B) – Reputation is Tarnished
4-The Body Shop (C) – Into the New Millennium
6-The Waiter Rule: What Makes for a Good CEO?
11-Family Business
15-Nike, Inc. and Sweatshops
16-Coke & Pepsi in India
17-Chiquita – An Excruciating Dilemma
20-DTCA – The Pill Pushing Debate
21-Big Pharma’s Marketing Tactics
23-McDonald’s Coffee Spill
24-The Betaseron Decision (A)
25-The Hudson River Cleanup and GE
27-New Belgium Brewing, Defining a Business on Sustainability
28-Safety, What Safety
Ethics in Practice Cases:
Crisis Management: When to Repent? When to Defend?
Spotlight on Sustainability:
Sustainable Corporations Shine in Financial Crisis
Power Point slides:
LECTURE OUTLINE
I. THE RELATIONSHIPS BETWEEN RISK, ISSUE, AND CRISIS MANAGEMENT
II. RISK MANAGEMENT
A. Risk Management and Sustainability
III. ISSUE MANAGEMENT
A. A Portfolio Approach
B. Issue Definition and the Issue Management Process
1. Model of the Issue Management Process
3. Issue Selling and Buying
5. Ranking or Prioritization of Issues
7. Evaluation, Monitoring, and Control
C. Issue Development Process
1. Illustrations of Issue Development
Ch 6, Instructor’s Manual, Business & Society, Carroll 10e
D. Issue Management in Practice
IV. CRISIS MANAGEMENT
A. The Nature of Crises
2. Four Crisis Stages
a. Prodromal Crisis Stage
b. Acute Crisis Stage
c. Chronic Crisis Stage
d. Crisis Resolution Stage
B. Managing Business Crises
1. Five Practical Steps in Managing Crises
a. First: Identifying Areas of Vulnerability
b. Second: Develop a Plan for Dealing with Threats
C. Crisis Communications
D. Successful Crisis Management
1. Being Prepared for Crisis
3. A Successful Crisis Management Example
V. SUMMARY
SUGGESTED ANSWERS TO DISCUSSION QUESTIONS
Students should recognize that their answers to these discussion questions should be well
reasoned and supported with evidence. Although some answers will be more correct than others,
students should be aware that simplistic answers to complex questions, problems, or issues such
as these will never be “good” answers.
1. Question: Which of the major stages in the issue management process do you think is the
most important? Why?
Answer: Students will obviously differ in their selection of the “most important” stage of
issues management. Whichever stage they select, they should be able to provide a list of
Ch 6, Instructor’s Manual, Business & Society, Carroll 10e
2. Question: Following the approach presented in Figure 6-1, identify a new issue category
not listed in Figure 6-1. Identify several examples of “crises” that have occurred in recent
years under each issue category.
3. Question: Identify one example, other than those listed in Figure 6-3, of each of the
leading force categories: events, authorities/advocates, literature, organizations, and
political jurisdictions.
Answer: Again, it will be interesting to see what students come up with for answers to this
question. Examples for each force category might include:
4. Question: Identify a crisis that has occurred in your life or in the life of someone you
know, and briefly explain it in terms of the four crisis stages: prodromal, acute, chronic,
and resolution.
5. Question: Do research on the impact of Hurricane Sandy on business organizations. What
have been successful and unsuccessful examples of crisis management that have come out
of this research? Is terrorism a likely crisis for which business may prepare? How does
preparation for terrorism (which comes from without) compare with preparation for
ethical scandals (which come from within)?
Answer:
Research will be different for every student. They can focus on stories that show good or
poor crisis management. In an area where hurricanes and bad weather are common, were
Ch 6, Instructor’s Manual, Business & Society, Carroll 10e
GROUP ACTIVITIES
Group Activity 1 – Moving Too Fast
Divide students into groups of four to five students. Ask students to review the following:
“Imagine that you are a member of top management at Toyota. The company has been notified
that problems with the gas pedals in certain vehicles could lead to sudden and unexpected
acceleration. Government officials believe that approximately 90 people have died from
unintended acceleration.”
Students should prepare a written memo to the company’s CEO addressing how the company
should handle the crisis. Specifically, students should address (1) corporate strategy with respect
Group Activity 2 – Emergency Planning
Divide students into groups of four to five students. Distribute your college’s or university’s
emergency plan and/or emergency procedures. Ask students to identify whether the procedures
are practical and useful. Ask students to consider whether any revisions to the plans and/or
procedures are necessary. Finally, group leaders should assess whether students were familiar
Group Activity 3 – Troubled Waters
Divide students into groups of four to five students. Ask students to review the following:
Ch 6, Instructor’s Manual, Business & Society, Carroll 10e
“Imagine that you are a member of top management at a company that owns several rental
properties along the Gulf shore in Louisiana and Alabama; you just learned that an oil drilling
platform has exploded and that thousands of barrels of oil are spilling into the Gulf of Mexico.
INDIVIDUAL ASSIGNMENT
(Note: This Assignment also may be used in conjunction with Chapter 15)
Distribute the following instructions to each student:
Research how BP initially handled the Gulf oil spill when the Deepwater Horizon drilling
platform exploded in April 2010. Specifically, note how the company dealt with the clean-up