Crisis Regulation and Deregulation Stages

Imposing of regulations or deregulation has also got its impact on the economy. In India, for years, the industry was placed under a heavy licence raj which was strangulating the business society through red tapism and bureaucracy. On the other hand deregulation can also be hurtful if brought about in a sudden manner.

Thus each crisis that erupts seems to be unique and strange, yet if the origins and the sequence of events are examined, many common elements are found.

Stages of Crisis:

Regardless of their individual circumstances, crises if they are unmanaged follow a pattern.

Pre-crisis Period:

Usually there is a definite pre-crisis period, where symptoms of the problem begin to emerge. It is known that something is wrong, but it cannot be pinpointed. The initial failure is small, but repeated. Sales quotas are not met, cash flows do not meet projections, production schedules are missed, quality is not achieved, debtors are turning bad, etc are all examples of non-performance. At this stage the problems are generally overlooked by the top management. The management thinks that the problems are not really serious and will probably go away as time passes by.

Thus, the entire pre-crisis period is a classic sequence of repeated failures in the organization and the management overlooking.

Crisis Period:

For those who have not acted in time, the crisis has begun. The next phase of uncontrolled crisis is the crisis period itself and is awful, and it causes pain. The pain may be expressed in terms of money lost, career opportunity destroyed or the emotional burden borne by executives trying to cope with its effects, which cannot be measured.

Post crisis Period:

The last phase of unmanaged crisis is characterized by stock and uncertainty. The final stage of crisis leads to a radical change, which involves restructuring. So, it is during the pre-crisis period that detection and intervention will do the best. In the post crisis phase radical change will revise everything control will pass to new players who will in turn break the sequence and redirect events.

Benefits of Crisis:

We have mentioned before that there are some opportunities which are created by a crisis. So, it is a mistake to think of crisis only in negative terms. There is also a positive side to it which must be recognized and used. Crises present opportunities as well as challenges, the opportunities which are not available at any other time. When a crisis occurs, there are many gains which may emerge from it.

Emergence of New Leaders:

New Heroes are born from the aftermath of the crisis. The message is that crisis can create leaders. Talented people who get the opportunity break the bonds of bureaucracy and show what they can accomplish. Even the people at the middle or lower level management have a chance to show their worth. A crisis changes the established order, allowing talent to rise to the top.

Accelerated Change:

Crisis accelerates the things. What previously had been unfolding slowly begins to quicken as chaos is created. It can cut down the normal pace of progress by years. Those who seek change should welcome crisis, keeping in mind the side effects, which are a small price to pay for progress.

People can be changed:

In ordinary times it is difficult to make major changes in a company’s labor force and managerial staff. Attempting this would provoke anxiety, resentment and union opposition. The work environment is very much litigious and for any dispute, there is a long drawn process. So a crisis is a good environment for change.

Evolution of New strategies:

In an organization, real challenge is planning for change. There are many obstacles in the organization who resist change. Changing a strategic plan may seem to be an uphill task with umpteen number of hurdles on the way. A crisis forces reconsideration of even the most cherished plans. The treat to business prosperity, the uncertainly, the pressure and the lack of control – all boost the need to change, to evolve new strategies. Thus a crisis presents a wonderful opportunity to tear up an old strategic plan and draft a better one.