The Luo and Xibei incident is a classic example of a boss's reckless actions leading to a public relations crisis.
First, prevention: Know your crisis point and prepare a detailed contingency plan (clearly, Xibei lacked a specific one).
Second, assessment: whether to admit your mistake, respond, or ignore it. Different approaches are used in different situations. With Luo, admitting and reconciling is the best option, ignoring and ignoring is the second best, and responding is the worst.
Other issues include inconsistent approaches (everyone chimes in); a lack of coordinated public opinion (almost no support); a complete lack of agenda-setting skills, allowing them to be led by the nose; and the choice of responding without specifically targeting Luo, which is a sign of weakness. So on and on.