Tackling a Crisis Head-on This week, we will be starting our work on Assignment 2. Go to The Wall Street Journal menu item and find an article about a crisis that occurred at a specific organization in the last year. Considering the course materials for this week, answer the following: Describe the crisis faced by the organization. What communication tactics did the organization use to address its crisis? Refer to Jack and Warren's guidance for dealing with crises. To what extent, if any, was the organization's crisis communication plan effective? If you were a senior leader in the organization, would you have responded differently? Why or why not? This week and next, continue to research this specific crisis so that you can better prepare for Assignment 2. Post your initial response by Wednesday, midnight of your time zone, and reply to at least 2 of your classmates' initial posts by Sunday, midnight of your time zone.​ 1st response The Bank of America Earnings Crisis In 2020, many businesses experienced notable challenges due to the outbreak of the coronavirus. The Bank of America was no exception based on its reports of firm earnings in 2020. According to Eisen (2021), many large financial organizations in the United States withstood the recession due to COVID-19. However, the author explains that the banks have not been fully protected against the minimal rates brought about by the pandemic. For Bank of America, the outcomes of the COVID-19 outbreak have been felt in many ways, particularly the reduction of earnings by 22%. Additionally, lenders have also experienced significant challenges based on low-interest rates, and Bank of America is among them. Since the financial institution gains earnings on the difference between their lending payments and what they pay to depositors, the bank's interest rates downfall. The earnings crisis also affected the firm's operations in the last quarter of 2020 even though it made considerable profits. Communication Tactics and Addressing the Crisis Handling a crisis in organizations presents notable problems for managers and leaders that do not understand the proper ways of solving a crisis. Warren Buffet explains that there are four significant steps a leader can take to address a crisis. First, getting the crisis right and understanding why it happens and what can stop it will help address the crisis. The Bank of America leaders understood that the company needs to introduce measures that will increase the earnings. Secondly, according to Buffet, responding to the crisis fast is also a core step in managing a crisis. The Bank of America did not wait until the last quarter of 2020 to react to the earnings crisis. Rather, they resorted to ensuring the loan demands are stabilized by business consumers and focused more on investment activities (Eisen, 2021). The third and fourth steps based on Warren's advice involve getting the crisis out by dealing with it and getting over with. Th.

1. Tackling a Crisis Head-on
This week, we will be starting our work on Assignment 2. Go to
The Wall Street Journal
menu item and find an article about a crisis that occurred at
a specific organization in the last year.
Considering the course materials for this week, answer the
following:
Describe the crisis faced by the organization.
What communication tactics did the organization use to address
its crisis? Refer to Jack and Warren's guidance for dealing with
crises.
To what extent, if any, was the organization's crisis
communication plan effective?
If you were a senior leader in the organization, would you have
responded differently? Why or why not?
This week and next, continue to research this specific crisis so
that you can better prepare for Assignment 2.
Post your initial response by Wednesday, midnight of your time
zone, and reply to at least 2 of your classmates' initial posts by
Sunday, midnight of your time zone.

2. 1st response
The Bank of America Earnings Crisis
In 2020, many businesses experienced notable challenges due to
the outbreak of the coronavirus. The Bank of America was no
exception based on its reports of firm earnings in 2020.
According to Eisen (2021), many large financial organizations
in the United States withstood the recession due to COVID-19.
However, the author explains that the banks have not been fully
protected against the minimal rates brought about by the
pandemic. For Bank of America, the outcomes of the COVID-19
outbreak have been felt in many ways, particularly the reduction
of earnings by 22%. Additionally, lenders have also experienced
significant challenges based on low-interest rates, and Bank of
America is among them. Since the financial institution gains
earnings on the difference between their lending payments and
what they pay to depositors, the bank's interest rates downfall.
The earnings crisis also affected the firm's operations in the last
quarter of 2020 even though it made considerable profits.
Communication Tactics and Addressing the Crisis
Handling a crisis in organizations presents notable problems for
managers and leaders that do not understand the proper ways of
solving a crisis. Warren Buffet explains that there are four
significant steps a leader can take to address a crisis. First,
getting the crisis right and understanding why it happens and
what can stop it will help address the crisis. The Bank of
America leaders understood that the company needs to introduce
measures that will increase the earnings. Secondly, according to
Buffet, responding to the crisis fast is also a core step in
managing a crisis. The Bank of America did not wait until the
last quarter of 2020 to react to the earnings crisis. Rather, they

3. resorted to ensuring the loan demands are stabilized by business
consumers and focused more on investment activities (Eisen,
2021). The third and fourth steps based on Warren's advice
involve getting the crisis out by dealing with it and getting over
with. The Bank of America handled the crisis well by focusing
on solutions rather than wondering what it means for the
financial institution. In this sense, addressing a crisis requires
understanding every detail that comes with the crisis.
Effectiveness of the Communication Plan
Several ways can be associated with the Bank of America's
communication plan for addressing the earnings crisis. First, the
plan focused on what caused the crisis for the organization.
Managers and leaders that comprehend the causes of a problem
find easier ways to approach the issue, which becomes easier to
solve. Secondly, the plan also presented possible solutions to
the crisis, including loan demand stabilization and investments
(Eisen, 2021). An effective communication plan comes with
essential solutions to a crisis. Additionally, the communication
plan advocated a fast response to the crisis, rather than waiting
for some time. Solving a crisis with immediate effect increases
the chances of handling it well. Thus, the plan presented by the
Bank of America was effective in handling the earnings crisis.
How I would have Responded
If I were a senior leader at Bank of America, I would not have
responded differently from how the leaders did. However, there
are a few things I would have done besides the actions they took
to handle the crisis. First, I would have established significant
plans that consider any crisis in the future. The business world
is filled with uncertainty, and ensuring there is a response plan
to unexpected events puts the organization in a safe business
place. Secondly, I would have ensured that every working
member in the organization understands what the crisis means

4. to the company and how to turn the events around.
References
Eisen, B. (2021, January 19). Bank of America Earnings
Weighed Down by Low Rates. Retrieved 19 January 2021 from
https://www.wsj.com/articles/bank-of-america-quarterly-profit-
falls-22-11611058056?mod=searchresults_pos9&page=1
2nd Response
George Holobetz 2 1 21 Week 5 Discussion Case: Tackling a
Crisis Head-on
Describe the crisis faced by the organization.
JC Penney filed for bankruptcy in May 2020. It was recently
sold in November 2020 for $300 Million to the landlords of
most of its stores, Simon Property Group and Brookfield
Property Group.
The crisis was to survive through Bankruptcy and emerge to be
sold if possible. The company had about $8.0 Billion in assets
and about $8.0 Billion in debt in 2020 when it filed for
bankruptcy protection, not good. The crisis was in the making
for at least a decade and was never fully addressed until it was
too late (Kapner, Scurria, 1).
There is no question that turmoil at the top helped the company
slide into mediocrity. I once had JC Penney as a corporate
client. They were over 100 years old, as was the company I
worked for. We were their first paper supplier for catalogs,
newspapers, and ad flyers. I sold them about $30 million a year
worth of product, and at one time, it was as high as $100

5. million/yr.
The company was late to adopt an internet presence and never
really invested enough to help its sales. As mall shoppers
continued to decline, they never addressed how to deal with it.
However, online retailers and even Kohl's had a strategy. JC
Penney had none that was effective and obviously never
determined how to address it.
It went from a $500 million profit in 2011 to filing for
bankruptcy last year. There is no question the Covid Virus
Pandemic put the nail in the coffin. They had to shut down for
over a month when the pandemic hit.
What communication tactics did the organization use to address
its crisis? Refer to Jack and Warren's guidance for dealing with
crises.
Both Welch and Buffet talk about the crises being bigger than
they are. JC Penney was on a slope downward for a decade, so
the crises were growing and accelerating. In my mind, they
attempted with little forethought to the nitty-gritty of how to
stay relevant and kept bringing in outsiders with little clothing
retail experience relative to their offerings. This was a disaster
(Buffet, Welch, 2).
The company floundered aimlessly for a decade
before Covid all but killed it. Had they not been purchased, they
would have been liquidated, and about 60,000 employees would
be gone, and the remaining 650 stores closed. They once had
over 1600 stores.
There was no hiding the decline of JC Penney, Sam Walton, the
founder of Walmart, “once said that JC Penny was the Cadillac

6. of the Retail Industry,” and he started his retail career there.
The decline of the company started in about 2010 mainly due
to Kohl's and discount retailers in clothing like TJ Maxx,
Old Navy, The Gap, and the proliferation of the upcoming
offerings through retail online sales.
They wasted much time by keeping floundering stores open and
sticking to the Mall presence scenario as their
model. Kohl's built mostly independent buildings, owned them,
put them in strategic locations, and built them mostly with their
own cash. Very smart! They built them mainly in growing
suburbs throughout the US. While JC Penney was stuck in
malls, many of which were located in older, less shopped
locations. Those locations became increasingly less relevant.
They were stuck in long-term leases in increasingly undesirable
locations and did not feel the strategy to go to freestanding
stores made sense.
So they did not follow Jack’s or Warren’s advice about getting
on with what to do. The Pandemic forced their hand after they
failed to make a profit. They had no offense and their defense of
staying who they were and to become had no plan. They were
great at logistics at one time, but those facilities became less
utilized and needed modernization to stay productive with
declining sales. Their lack of profits over the 2010-2020 period
hurt their highly-touted distribution hub system because they
could no longer afford to keep them in good enough shape to
stay productive.
To what extent, if any, was the organization's crisis
communication plan effective?
None.

7. There is no doubt there was never a clear plan to alleviate their
downward spiral. They had to close stores that were losing
money, and they did not. They had to put more oomph into
their internet sales organization platform they did not. They had
to offer more cash coupons and rewards like Kohl’s. JC Penney
had them. However, when they brought in Ron Johnson from
Apple to upgrade the image and products to a more
elite clientele. He got rid of them. He fired 100’s of long-term
retail veterans upon his arrival, and he was fired 17 months
after hired. He failed miserably because upscale shoppers were
not shopping at JC Penney. He created a brain drain on what
made them profitable. Kohl’s stepped in with a bigger and
better Coupon, Rewards program after Ron Johnson stopped
them. When they got rid of Johnson, they brought them back,
but Kohl’s had become the place to shop for the best deals in
the same lines JC Penney was selling. That move alone cost the
company over $5.0 billion in sales in one year. Thus the spiral
began. I wonder how these X-CEOs of JC Penney ever got jobs
after driving JC Penney into the ground. I would have ever
hired them afterward. They ruined a good company,
Then they brought in another CEO, Marvin Ellison, from Home
Depot. Another senseless move since what the heck did he know
about the retail clothing industry. JC Penney was not selling
lumber and nuts and bolts. That was another disaster,
particularly when sales again took a slide when he started to
bring appliances back into stores to be sold. This was again a
hit against their strength in retail clothing sales, particularly to
middle-class women. He was focused on trying to make JC
Penney something they were not. Instead of strategizing to
optimize who they were. He left and went back to nuts and bolts
by becoming the leader of Lowe’s. Interestingly and predictably
enough, the losses went down after he left. So it was good he
left, and I think had he not, he was on his way out as well.

8. If you were a senior leader in the organization, would you have
responded differently? Why or why not?
I would have responded very differently than the senior
leadership did over the last 10 years in which JC Penney was in
crisis but not responded to. This crisis, along with Sears and K-
Mart, are filled with absolutely wrong decisions in so many
ways. It is tough for me to understand how poorly the boards of
these companies managed them.
I would have done the number one thing would have been to go
back to their core strength of women’s clothes. Moreover, offer
innovative new clothing lines to attract more than middle-aged
to older women. Marketing was awful. Adds did not bring
people into the stores. People shop at a place that offers them
what they want, not what the company brand managers think
they want. They have to start offering lines that would attract
all age groups, particularly the millennials. What teenager
wants to go shopping for clothes at JC Penney?
They should have noticed what was attracting shoppers to
Kohl’s, TJ Maxx, Old Navy, The Gap, and Amazon and
implemented more of their strategies versus their own.
I would have fired the board. They elected irrelevant CEOs and
did not hold them accountable and thus floundered for 10 years
before finally, out of desperation, they filed for protection
under bankruptcy. I knew 3 CEOs of JC Penney, and the
company was successful under them. Nevertheless, even they
failed to have a long-term sustainable strategic plan. Within the
first year of running my division, I created a strategic plan for
each year that folded into a five-year plan, and each year the
yearly plan was updated, and so was the five-year plan.

9. Their new owners need to force the current leaders of JC
Penney to wake up to the competitive realities of the retail
clothing industry. If they do not, they may not survive the
decline to nothingness but may just have slowed the inevitable.
I would immediately form a Cross-functional business team
across all business functional areas to ask what I did when I
turned around an $800 million division of a company losing
money into a $3.5 billion division making about $75 million in
net profit.
I asked the divisional leaders of every business function; why
do we do what we do? If you wanted to do it better, what would
you do? How much do you think we need to get from the board
to make it happen?
Once that is all assessed, come up with a new Mission and
Strategic Vision to get it done. They will not survive if all they
do is continue aimlessly. Their new CEO, Ms. Soltau, refocused
the company on apparel. It sold its headquarters in Plano, TX.
Which I had been to dozens of times. It was a palace, and at one
time itself could have been sold for over $100 million. It was
sold for far less. Furthermore, they just closed it since they
were paying $2.45 million a month just in rent! It should have
been sold the first year they lost money in the 2011-2012 time
frame. Their stock is worth about $.25/share. When I worked
with them, it was in the mid $30’s/share range.
I grew up when Penney's, Sears, K-Mart, US Steel, and
countless other major companies were successful. Their number
one failure in my mind was that they did not strategically plan
for sustainability in various market conditions. These have to be
part of the annual and five-year or longer strategic plans
with deviations to cover multiple market realities. I addressed at
least 3 of them in each plan I had to build. Moreover, that was
sufficient (JWI505, WK5 LN, 3).

10. Reference:
1. Kapner, Suzanne and Scurria, Andrew. 2020. WSJ Article.
J.C. Penney, Pinched by Coronavirus, Files for
Bankruptcy. https://www.wsj.com/articles/j-c-penney-pinched-
by-coronavirus-files-for-bankruptcy-11589582224
2. Buffet, Warren and Welch, Jack. 2021. Tips on Handling a
Crisis
Video. https://blackboard.strayer.edu/webapps/blackboard/conte
nt/listContent.jsp?course_id=_312212_1&content_id=_3442102
9_1&mode=reset
3. JWI505.2021. Week 5 Lecture
Notes. https://blackboard.strayer.edu/bbcswebdav/institution/