Business Continuity and Crisis Management Essay

  • Length: 11 pages
  • Sources: 10
  • Subject: Business - Management
  • Type: Essay
  • Paper: #58174463

Excerpt from Essay :

Jet Blue Airways

Theoretical Framework to Crisis Management Approach in Business Continuity

Jet Blue Airways Valentine's Day crisis 2007

Jet Blue Airways BCM

Crisis management

Stakeholder Analysis

Invocation and escalation

Management and recovery

Closure and review

Enterprise Management

Jet Blue Airways

Business continuity management (BCM) is defined by the Business Continuity Institute as 'holistic management process that identifies potential impacts that threaten an organization and provides a framework for building resilience and capability for an effective response that safeguards the interests of its key stakeholders, reputation, brand and value creating activities' (The Business Continuity Institute, 2007).

The impact of the 9/11 attacks has left companies with the compulsion to deal with the aftereffects and ever since, BCM has gained increased popularity. 9/11 was basically a crisis in the external environment that had wide ranging consequences for the business organisations. It has emerged as a discipline in organisational studies that is being paid tremendous attention. BCM as a discipline basically deals with conflict, crisis and planning for alternatives. To deal with conflict, some organisations take a proactive approach while others take a reactive stance. In case of a proactive approach, organizations have learned to deal with the crisis by focusing on developing contingency plans to avoid such events in the future as well. It is the responsibility of companies to be able to provide quality services and products to their customers even in disruptive times. This reflects the commitment of the organization to its stakeholders and hence it is essential that a proper crisis management plan be established in the organization.

BCCM framework has been developed to serve as a guide for the managers in dealing with different situations. Each crisis is different and therefore requires different treatment. Every crisis has to be treated in a unique way and a new strategy has to be formulated. Every crisis cannot be dealt with in a similar manner. This framework is very simple and can be followed at all levels of management. This paper covers the incidence of Jet Blue Airways in 2006 as the discussion case to explain the crisis management tactics followed by the organization's management. Each part of the case will be discussed in detail to show the impact of following or ignoring the BCCM principles. Jet Blue Airways is a prime example of how BCCM strategies can work for an organisation. The incidence has been discussed and analysed in detail along with the exploration of the stakeholders and the impact of the disaster on each stakeholder. Furthermore, the management's actions in light of the BCM principles have also been discussed in detail.

Theoretical Framework to Crisis Management Approach in Business Continuity

In order to understand the full implications of the BCCI, it is important to review the functional framework of the BCCM. BCCM is basically a discipline that works for the well being of the business and ensures that none of the conflict in the internal or external environment becomes lethal for the business. The fundamental aspect of the BCCM is that proper responsibility for the crisis at various levels is assigned. The whole organisation is tapered in a way that it is best equipped to deal with conflict. It is not possible to deal with the conflict at one of the levels of the organisation. Instead, crisis engulfs the whole organisation and needs to be dealt with, as collective enemy. The conflict might arise because of issues inside the organisation or outside the organisation. The BCCM reflects the organization's risk profile as well as the external environment. (Brizek, 2007)

Furthermore it is also important to take the BCCM approach to factors extended beyond the technological difficulties that might arise in the organizational functioning. In the past, organisations only dealt with crisis on a need basis and before the need arose, no precautionary measures were taken. The traditional approach to managing crisis when it hits the corporation has been replaced with the emphasis on a proactive approach recently. The firms are required to have the capability to face uncertain events in order to increase the effectiveness. The more proactive an organization is the higher is the chance for business performance improvement for the company. (Refer to Appendix 1 for diagrammatic representation)

The emergency situations require the organization to take certain steps, which are necessary to save the organisation from vanishing into oblivion. Federal Emergency Management Agency's graphical framework for Comprehensive Emergency Management has provided a simple framework which can be followed by organizations to minimize damage. This has been described in the "Comprehensive Emergency Management Framework" mentioned in Appendix 2. This model has been modified according to changing scenarios to accommodate the needed changes. It requires an organization to mitigate the risks once occurred and take actions for future scenarios.

The Herrald's model (1998) has been a modification of the structure presented by the Federal Emergency Management Agency and has served as a valuable guideline for organizations. This model not only incorporates the general structure but also specifies how organizations can monitor their activities by breaking them down into different sectors. Hence the response categories are also elaborated as compared to the previous model. Herrald's model was essentially developed on the same theme as the Federal Emergency Management Agency's model, but provides things in a lot more detail.

In order to formulate a more comprehensive framework, the most recent framework for business crisis and continuity management has been laid by Shaw (2004) which incorporates Harrald's (1998) model into the context. The figure in Appendix 4 describes the levels of hierarchy in an organisation where crisis management is needed. These are areas like knowledge management, crisis management, system monitoring, Incident management, Planning and training initiatives. The core competencies are required in order to manage the crisis as described by Shaw (2004).

The framework highlights management at different levels. Enterprise management, for instance includes aligning the organization's culture, objectives and the structure. The purpose is ensuring that all the activities of the firm are in line with the firm's strategies. Business crisis and business continuity should be in line with the enterprise management scope. In other words, these must not deviate from the mission and the vision of the organisation, otherwise their utility is lost. (Elliot and Herbane, 2001)

The crisis management in business continuity means that the activities must be coordinated in case of a crisis. The activities of the organization must be in alignment to the strategic goals that have been formulated by the management. The crisis management process has been described diagrammatically in Appendix 5, showing that it is a continuous process. The process goes on, in tandem with other organisational activities. The organizations need to be proactive in order to minimize the damage. The control requires a constant monitoring of the events in order to ensure prevention. Furthermore, any discrepancy in the normal functioning is spotted in time due to the monitoring. The crisis is then evaluated after which successive measures are taken to avoid the risks and losses. For Restoration and recovery from the crisis, it is very important that the organization should be proactive and responsive to the changes occurring in the external environment. (Tsui, 2000)

It is important that in addition to the technological capabilities to counter the crisis, the management must have the core competencies as described by Shaw and Harrald (2004) to ensure minimum loss. Stakeholders like investors, shareholder, regulators and the creditors of the organisation are an important factor in crisis management which is often ignored by the managers because of an internal focus. The perception of the stakeholders is highly critical and hence it is imperative that their interests should not only be kept in mind, but given priority if the situation demands it. (Elsasser, 2001)

The crisis must be communicated once detected after which the knowledge management competency enables the organization to properly analyse the situation at hand. Knowledge management deals with all sorts of information in the organization which keeps the company informed and cognizant. The risk management includes the utilization of knowledge management to make risk-based decisions. The impact of the risk is better assessed if the managers are competent in risk management. The risk assessment involves the monitoring of events which can go wrong in the business and the examination of existing solutions to the possible problems. Planning is done after the risk assessment which can be categorized into several types such as crisis management plan, incident management plan, communication plan, business continuity, recovery and restoration plans. These plans are used to formulate plans which are then implemented. The operational responses are impacted by the operations, logistics and the finance of the organization which are managed under incident management. These incidents are then responded to in order to ensure the business continuity. Further actions are taken in order to minimize damage in the future through restoration and transition.

Jet Blue Airways Valentine's Day crisis 2007

Background

Jet Blue Airways has had a good reputation as a leading airline in the United States. However, on 14th of…

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