Critical Evaluation of the Effectiveness of Tesco’s Crisis Management Skills

  Crisis management in an organization requires quick and swift action to ensure that damage does not spread far and wide. In case this happens, then firm’s publicity is usually at stake. Handling of the crisis in question requires that right channels and means are used. If the opposite happens, the firm appears ignorant or irresponsible to its clients, consumer’s society or even the authorities. In no particular time should those responsible start trading accusations because this worsens the situation. The response of Tesco company to the horse meat scandal is a good example. By replying to the concerned society through right channels, the company proved beyond a reasonable doubt that it was responsible for the mess and was willing to do little or nothing at all about it. This was quite different from other companies affected. A good example is Sainsbury, one of Tesco’s biggest rivals. Despite the fact that Sainsbury had withdrawn some of its products from its stocks, it convinced the public that they knew  nothing about the horse meat scandal. This case brings into scrutiny the leadership skills applied and their implications during and after a crisis in a company. The effect a crisis has on a company depends on leadership style and the amount of information that leaders get about a situation and how they respond to the same. The need for strong and competent leadership is evident during any type of crisis. It calls for a firm and effective decision making to contain the consequences of such crisis. Despite the uncertainty faced, the time pressure experienced, and high stakes and costs associated with the decision making process, it becomes vital to ensure that the decision is firm and affirmative. In a crisis, leaders are required to come in and inform the public, consumers, and any other valuable and interested parties about the situation. They must also show high levels of optimism.

  This should come from all sections of leadership starting from high profile company leaders to the lowest person operating in the field of effect. Decisions made should be in line with social norms and should be arrived at through a consensus taking as little time as possible. Individual willingness and ability should come into action with every member of the team is giving relevant and accurate information on the problem without compromising the information supplied previously. Among the people who may be interested in information are media personnel, consumers, civil society, or even authorities. Any misinformation may have adverse and irreversible negative effects. Tesco crisis almost brought the company to a standstill. The company struggled with publicity issues but to no avail. The company tried apologizing on Facebook, Twitter, and its website, but it gave little results. As a result, in a final attempt to rescue its image the company created a new food website to try to explain different procedures and reassured consumers of a better future of its products. These efforts brought no result as well.

To what Extent did the Scale of the Crisis Limit the Damage to Tesco’s Reputation?

  The reputation of an organization largely depends on how stakeholders can evaluate the ability of an organization to meet the expectations they have for treating stakeholders. A crisis suddenly threatens to interfere with operations of an organization, which poses a financial and reputation threats. Any form of crisis can cause harm to stakeholders either physically, financially, or emotionally. After the crisis, the reputation of the industry was damaged. Tesco, being the leading chain supermarket in the UK, seems to be in a situation when it currently receives close attention of the media. There are other supermarkets in the region that are involved in similar illegal practices. However, due to the fact that Tesco was the first company noticed to be involved in such practices and had its reputation damaged all the attention from the media was directed to the leading supermarket chain. Although Tesco is considered to be the largest offender, other three supermarkets should receive equal treatment from the media and consumers association. The crisis occurred when Tesco was making an attempt to build its reputation around its food and fighting to keep its market share. Tesco became viewed from a different perspective by its customers and shareholders following the crisis, which was a negative perspective. Daily customers in the region lost faith and trust in the organization, which made them shift to other companies. After Tesco’s reputation was spoilt, some organizations decided to take advantage that people were turning away from the company and advertised their products more. Among these organizations was McDonald’s which advertised its beef saying that it was free from horse meet. This was the reason they did not face scrutiny like Tesco was facing. McDonald’s claimed that they got their beef directly from farmers in the UK, which made it clear that they were receiving pure beef. This further damaged Tesco’s reputation since people were beginning to be suspicious as to where the company was getting its beef from. As the reputation was getting damaged, many customers decided to shift, opting for McDonald’s since they lost trust in Tesco. If the scale of the crisis was larger, TESCO may suffer badly from the cost of living which is going up and the lower income that is available to the public. This is due to the economic conditions in current that would result to less demand of their products. So as to continue attracting customers, the organization may have to lower their prices and reduce their profit margin. The reputation of the supermarket was destroyed to a point of the supermarket promising its customers that it would introduce an industry leading benchmarking to ensure that every food is tested to get to the bottom of the crisis. However, regaining the trust of the customers would be a hard thing for the supermarket, as there would be more revelations of foods being contaminated. This has resulted to a drop in their sales.

What was the Impact of Competitors’ Action on Tesco’s Image?

  After discovery of horse meat in food products, customers and other consumers lost the trust they had in food chain supply. After the crisis, a lot of food suppliers in the region marketed their beef claiming that it was free from horse meat. Most organizations claimed that they got their meet direct from the farmers and the were sure it had no horsemeat, and that was the reason they were not undergoing a lot of scrutiny.  This had a lousy reputation of the image Tesco had. The competition had a lousy taste on the image Tesco’s had. It led to the supermarket losing ground in the UK food market to other organizations such as Sainsbury. It led to fans believing that Tesco was doing foul business and they only care about money. The image of the supermarket was damaged with their customers claiming that Tesco’s was doing that deliberately, stacking up horse meet in their shelf and claiming that it was 100% beef. As the chief executive commented on the issue claiming that the organization would bring in new tests that would not cost the customer, most customers questions the idea claiming to know where the cost will go. They still consider this to be foul play. If Tesco would think of putting up their beef price, it would lead to everyone claiming that they were selling horse meat intentionally. Competition has led to many people organization due to the negative publicity that resulted from the crisis. This has made the organization to create a new website, so as to increase their connection either the consumers through their collaboration and transparency with the suppliers. This is made to make sure that the customers believe they are innocent. This made management reconsider how they were running things and the first thing to do was to assure consumers that from the month of July they would be getting every supply from UK farms. In order to preserve its image among the consumers, the company decided to create a new website, “the farm and factory website”, the purpose of which was to make sure that customers who were regulars in the stores would trust supply chains again. The company announced that it was going to launch a website that would allow customers to see what they were getting and also to ensure that the supply chain was the best in the world. The new digital website allowed customers to see who the farmers are and how they provide meat for the company.

  Even though the competition had ruined the image that Tesco had, if there was proper management of the crisis, then Tesco would not be viewed as negatively as it is now.

The Role of Social Media in Crisis Management Process

  In this case, social media has played an influential role in spreading the crisis in the organization. A lot of people have posted a lot of negative opinions on Facebook concerning the crisis that the organization was going through. In most cases, people always find it fun to post negative comments about a situation rather than advising the organization on what they think should be done. The management of the crisis has been hindered by the impact of social media. This can be clearly seen as managers try to lessen wrath of people on social sites such as Facebook and Twitter. Instead of getting some support messages from the public and the “we understand you, and we hope this is the last time” kinds of responses, the organization is attacked from every verge. Social media have gradually accelerated the velocity that any information concerning a crisis spread. The viral effect that social media such as Facebook and Twitter have means that stakeholders can break any form of news faster that it could have been done by the traditional media. This, however, has not helped in managing the crisis, but it has made management of any form of crisis harder whenever it has been posted in the social media. The social media gives the team managing the crisis access to real information about the impact that the crisis has on the company, stakeholders, and also on the issues that concern them most.

  The Internet and social media pose high risk to the organization and other companies. The sooner the organization properly responds to social media and online attacks, the sooner the organization will be in a pole position to regain control over the situation they are in and slowly minimize unhealthy and damaging impact that threatens the reputation of the brand. Online and social media crisis usually have an extremely high potential to cause damage to the reputation of an organization. This can have a long term effect, which tends to be happen over a remarkably short time. The only way to avoid this is by reacting quickly, which must be done in a clever manner. In case of social media crisis, the management team should develop a strong and proactive plan of action that should be used to address the problem of social media negativity that the organization faces. Crisis management team should develop and communicate their key message points to all the targeted social media. The crisis management team should identify all possible risks that the social media may create to the organization or company in case there is a crisis. The team should also assess current and potential weakness areas that the social media can attack in the organization if not dealt with in a proper manner. Due to high speed with which news travel the Internet and the social media, if an organization fails to use a proper planning method, the crisis in the organization may not be solved but rather flared.

What is the most likely Long Term Impact of this Crisis on Tesco’s Reputation?

  The crisis that Tesco is facing may end up having a long-term impact on the reputation of the company. The long-term effect on company’s reputation may be avoided if there is proper crisis management in the organization. After company’s reputation got damaged by the discovery of horse meat in its beef burgers, most customers and shareholders reported losing faith and trust in the company. People began to see that what they were seeing and expecting was not what they actually got. When retailers got alarmed and surprised just as much as the consumers did, they wondered whom they could trust. Crisis usually significantly impacts the degree and the speed of shareholders' reaction and how long it would take them to recover. If not managed properly, Tesco would see most of its customers being taken by other organizations, and it would be a mountainous task for a company to recover. Tesco would also face economic and financial crisis, legal costs, and a lot of disruptions in business. Some of the employees in the company may totally lose trust of their employers, which may also see the company lose employees. Employees lost may be employed by the main rivals of Tesco, which may lead to leakage of business ideas that Tesco had. This would result to the failure of a company to be on business limelight anymore. This can, however, be prevented by proper management of the crisis.

  Crisis management is the process through which a corporation or organization deals with significant outcomes that threaten the organization, its stakeholders, or the general public as well as the government. Crisis may affect health of the public, economy, or even relations between nations. The study and introduction of crisis management procedures was encouraged by viewing of the consequences of large scale industrial and environmental disasters of 1980’s. Factors considered include the threat posed to the organization, the element of surprise introduced, and decision making time available, which is usually short. A crisis creates the need for change in the way the system runs and operates. It differs from risk management in that it deals with the issue before, during, and after it has emerged. Crisis management is the term used to refer to crisis management methods or plans in an organization or business. Some organizations refer to it as incident management practice. It requires that persons involved are able to make quick but critical decisions dealing with the problem via different approaches. Trial and error measures are widely accepted as means of solving certain problems before a concrete solution can be attained. It entails a rapid response from the selected team of experts and the management. Reputation and credibility of organizations are heavily dependent on the capacity and ability to take any situation under control, especially during a crisis that has gone public. Open, systematic, and consistent communication system in a horizontal circle of the organization is vital to make the process complete and effective.

About the author: Kate Rome is a writer at https://writinghelpessay.net, a company that provides great tips to students when they need to write an essay in college.