Disadvantages Of Crisis Management

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The crisis management is very important during the lifecycle of a company. They will be faced to crisis and they are managing it differently from large company to SMEs. During this literature review our objective is to understand why does the SMEs have some trouble to mange crisis efficiently. In a first part, we will do an analysis of the crisis management and turnaround management and in a second part we will understand how SMEs use these different kind of management to face to a crisis.

I- Crisis Management Process

There are 3 differents kind of crisis : Strategy crises , Success crises , crises of liquidity

a. Definition of crisis

The word crisis comes from the Greek language; it means “unintentional”,”unexpected”, “a sustained obstruction”
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They represent in Europe, represents 99% of all businesses. (cf. Ec Europa, 2018). Due to their size they are very affected by economic shift. They are very often failing to do a turnaround after a crisis. So for them it’s a very important menace. The amount of company failure due to a crisis is rising around 75% for company having less than 10 employees. (Cf. Kraus, Moog, Schlepphorst, Raich, 2013)

Crisis occured more often in the pioner phases

a. Advantages in SMEs

SMEs are very performing and present a lot of advantages to success a turnaround strategy. A study of thirty SMEs, shows that these companies take care of the indicators. They are awarded and tried to detect a soon as possible the different signs. Their proximity with the customer and the market make them able to predict the customers’ reactions, and being aware of any problem quickly.
Their proximity with their employees also is an advantage; the board meets the workers every day and has a proximity relationship. This kind of relationship helps the communication inside the organization, and helps the involvement of the salaries in the crisis. They are very well placed to know how to offer ideas for turnaround management. (Cf. Kraus, Moog, Schlepphorst, Raich, 2013)

b. Disadvantages in
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They have indentified the following weakness:

- SMEs misinterpret the different signs cause of a lack of management skills. (Cf. Kraus, Moog, Schlepphorst, Raich, 2013)

- SMEs don’t allow time or money to the analysis of their environment and the different pondrome (Cf. Kraus, Moog, Schlepphorst, Raich, 2013)

- SMEs’ manager most of the time behoove the crisis to external factors but ignore the possibility that the crisis comes from the inside de company (ex : high cost of production, old fashion product,..). Managers are too deep inside the operation to understand they can do something to counter the crisis. So they are ignoring that they can do some personalized measures (Cf. Kraus, Moog, Schlepphorst, Margit Raich, 2013; Cater and Schwab, 2008 & Goltz, 2014)

- The SMEs sometimes are too confident and tried to change their core business, but they forget their commercial formula that was working before. (John Cater and Andreas Schwab, 2008)

- SMEs use simple indicators, they are not enough interesting to do a prognostics - The SMEs differentiate hardly the 3 different kind of crisis: Strategy crises , Success crises , crises of
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