Dominoes falling

Three Takeaways for Multinational Corporations to Manage Crises Around the World

October 21, 2022

Reputational crises may strike at any moment from any location and being as prepared as possible is one of the few strategies to lessen the harm. For a multinational corporation in China, APCO Worldwide recently held a crisis preparedness workshop bringing together executives from the global headquarters and the China management team. Our goal was to improve the local team’s overall crisis readiness via best practices and assess collaboration skills in a real-life crisis scenario.

Here are three takeaways that will be valuable for multinational corporations in China and internationally.

Early alignment with the global team helps to minimize the impact.

A global team in a multinational corporation deals with challenges and crises on a regular basis, gaining experience and competence that is often not available at the local level. However, most crises begin locally, whether it’s a faulty product at the supermarket or a cybersecurity weakness in a subsidiary branch. When it comes to efficiently handling a crisis in any firm, depending on its severity and escalation, the first hours are crucial. The company must ensure that they utilize the best expertise during those initial hours. This calls for timely reporting, coordination with the international team and adherence to the established protocols that may be found in the organization’s crisis manual.

Local context is crucial.

A strategy that is successful in one country may not necessarily be successful in another. Throughout the session, we assisted the team in prioritizing and identifying the most critical challenges by focusing on specific local difficulties that foreign companies in China face such as ongoing COVID-related uncertainty, geopolitical tensions or a very fast-moving social media environment. We also presented relevant case studies from China and an overview of the stakeholder ecosystem.  The case study that generated the most debate was a global crisis that began in Europe and spread to other markets, but transformed into a success story in China by the way it was handled. If the same strategy had been used in another country, the problem most likely would have been worse. This implies that each market is different, and although global alignment is essential, local best practices and on-the-ground expertise will be the deciding factors in whether the company can navigate the crisis in a way that is successful with the actual business environment it operates in.

The secret is to plan and to practice.

While there is only so much we can do after the crisis has already occurred, there are many things we can focus on in advance to reduce the uncertainty that an unexpected crisis entails. Facilitating the team’s discussion on how to react to a real-life crisis helped the workshop participants discover areas for improvement in the organization’s crisis response skills. This made it easier to comprehend and get used to stress, behaviors and problems that arise in a crisis scenario. Additionally, businesses must bridge the gap between the headquarters and the local team during crises by combining the former’s global knowledge with the latter’s local expertise. The workshop enabled them to practice this collaboration and understand how they might work more efficiently together.

Most businesses today operate in a complex and rapidly evolving commercial environment. Effective crisis management must not only react to the fast-paced environment, but also anticipate it. Companies should listen and recognize domino effects, linking cause and consequences across many different parts of the world.  To have a grasp of the several scenarios that might lead to a crisis, they must consider a wide variety of possible issues and factors at both the local and global levels.

In this context, preparation is always the first step in every successful crisis response and may take many forms, an agreed crisis response process, a detailed crisis management plan, as well as training opportunities such as workshops and simulation exercises. This preparedness may not be able to completely avert the crisis, but it could mitigate its impact.

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