Crisis management and its increasing importance in international Literature review - 1

Crisis management and its increasing importance in international operations - Literature review Example Crisis can also be referred to as the critical phase of a situation. It is essentially a time of instability which is soon to see a decisive change that may result into a highly undesirable outcome or an extremely positive product. Executives that are able to estimate and plan for this change in the organization increases his/her tendency to capitalize on the opportunity hidden therein in comparison to the executives that allow the crisis to approach them unprepared. Thus in contrast to the conventional understanding of a crisis, it may be an opportunity rather than a threat. Nevertheless, a crisis is always characterized by a certain level of uncertainty and risk. Crisis management deals with minimization of risk in the uncertainty with a view to providing an individual or an organization with increased control over the circumstances and exercising the function of management leadership. According to Fink (1986), a crisis consists of four distinct stages namely, the stage of prodroma l crisis, the stage of acute crisis, the stage of chronic crisis, and the stage of crisis resolution. In the anatomy of crisis, these four stages are always existent and unchanged. A business manager who recognizes each of these stages gains the competency to address issues of huge organizational significance. In order to make a proactive approach towards intervention, a manager needs to recognize the prodrome. All crises may not necessarily comprise all four stages, though they are present in a vast majority of major crises. If there is a warning stage, that is essentially the prodromal stage of crisis. A prodrome may become hard to recognize at times and may be evident at other times, though if the required action is not taken in time, it may lead to the occurrence of an acute crisis. In a vast majority of cases, when no action is taken, it is a result of obsessive decision making or analysis paralysis within the company. It is the ease with which a crisis can be managed in the st age of prodrome that makes it very important. If the problem is taken care of before its conversion into acute, the process becomes more convenient and reliable. The whole West is a warren of interconnected transmission lines. The power grid in the West is the largest machine that man has ever made – stretching from Canada to Mexico, from the Pacific Coast to the western front of the Rockies †¦ But like any machine, like your lawnmower or your computer or your car, it is susceptible to breakdown. (Hotz and Clifford cited in Mitroff and Anagnos, 2001, p. 12). There is no turning back at the acute stage of crisis in crisis management in many respects. As soon as the organization enters the stage of acute crisis from the prodromal stage and the warnings end up, the ground thus lost can almost never be recovered, though a firm can minimize additional damage by taking necessary actions in time. The key to success is controlling the crisis to the maximum extent. If it seems im possible to control the acute crisis, the management should then try to influence the origin, time, and way of eruption of the crisis. One of the most fundamental challenges that managers encounter while dealing with the crisis in the acute stage despite being ready for it is the intensity and enormity of speed that is often an essential characteristic of the acute stage of crisis. The kind of crisis determines the speed and the value of probable results determines the intensity of this stage.

Financial management of channel tunnel Essay Example | Topics and Well Written Essays - 2000 words

Financial management of channel tunnel - Essay Example Eurotunnel was mainly financed by bank loans from a large consortium of over 100 European and Japanese banks. Eurotunnel also raised substantial amounts of equity in four public offerings during the construction of the Tunnel, mainly from small shareholders in France and the UK. The marketing of the shares was pitched towards small shareholders. In the end, the Channel Tunnel costs about 10 billion to build (compared with initial estimates 8 years earlier of about 5 billion). Of this 10 billion, 8 billion was raised in debt from banks and 2 billion in equity. The last fund-raising exercise took place in May 1994, just 2 months before the new services were to begin, when 800 million of new equity and 700 million of debt was raised to get the project finished and up and running. By then the banks and many shareholders were very nervous about the costs and delays to the project and the prospects of recouping their investment. Eurotunnel shareholders have seen their investment crumble by around 90% since the company went public in 1987. Construction costs spiralled and revenues fell short of forecasts, leaving the company struggling with debts of 9bn (6.4bn). Shareholders have never been paid a dividend. The UK government has already made it clear that there can be no question of any public money for Eurotunnel, and there is no change in that position. Eurotunnel shareholders are mostly French private investors. But it said it could not afford to do so without help in cutting the burden of repayments on debts which it ran up during vast cost over-runs on the tunnel's construction in the late 1980s and early 1990s. Euro tunnel begs for rescue plan (Clark, 2004)2. 2. Andrew, Clark, (2004) Guardian, retrieved from the website on 19th Feb' 06. (http://www.guardian.co.uk/) Financial Management of Channel Tunnel Rail Link (CTRL) The Channel Tunnel Rail Link (CTRL) is the largest civil engineering infrastructure project currently being constructed in the UK with a budget of 5.3 billion (S$14.8 billion). The Project is split into two sections. Section 1, 70 km long from the Channel Tunnel to Fawkham Junction in North Kent is scheduled for completion and operational running of Eurostar trains by September 2003. Section 2, 39 km long, completes the Link from North Kent to St Pancras in central London and is programmed to be operational in January 2007 (Davies and Joy, 2004)2. The London & Continental Railways Limited (LCR) was awarded the contract to build the CTRL in February 1996 and to run the British arm of the Eurostar International train service (Eurostar UK). Initially, LCR proposed to fund the construction of the link from private finance through debt and equity raised on the back of future revenue from Eurostar, UK and from direct government grants. This overtly optimistic plan backfired and LCR abandoned its plans to raise private finance and approached the Department for additional grants in return for a share of future profits. After reviewing the options, the department of transport decided to restructure the existing deal with LCR. In 1998, the government set out the principles of a negotiated restructuring which enhanced public