Monday, February 6, 2012

Discussion Question 7. Contingency plan

What are the uncontrollable factors that managers need to identify to develop their contingency plans? What mechanisms could managers need to use to minimize the impact of such uncontrollable factors?


  1. The basic point which must be considered by mangers is; natural disaster. For example the devastation of a nuclear blast in Japan (Fukishma), in connection with the Tsunami. Had the nuclear plant were developed underground it was possible to minimize the catastrophe.
    Observing others experience is very necessary to develop such a plan.

  2. Contingency planning is a systematic approach to identifying what can go wrong in a situation. Rather than hoping that everything will turn out OK or that "fate will be on your side", a planner should try to identify contingency events and be prepared with plans, strategies and approaches for avoiding, coping or even exploiting them
    Contingencies are relevant events anticipated by a planner, including low-probability events that would have major impacts. Contingency planning is a "What if?" skill important in all types of planning domains, but especially in contested and competitive domains. The objective of contingency planning is not to identify and develop a plan for every possible contingency. That would be impossible and a terrible waste of time. Rather, the objective is to encourage one to think about major contingencies and possible responses. Few situations actually unfold according to the assumptions of a plan. However, people who have given thought to contingencies and possible responses are more likely to meet major goals and targets successfully.
    Contingency factors may include
     social,
     economic,
     Cultural or political factors that could affect the company directly or indirectly, so Managers then forecast a range of alternative responses to the most likely high-impact contingencies, focusing on the worst case to minimize the impact of these factors.

  3. The uncontrollable factors to develop contingency plans that managers need to identify in the environment, such as possible economic downturns, declining markets, increases in cost of supplies, new technological developments, or safety accidents.
    The mechanisms are scenario building and crisis planning.
    Scenario building: is the forecasting technique about the future uncertain occurrence by looking at the current trends and discontinuities and anticipating or forecasting the future possibilities to exist and manage it properly.
    Crisis planning: it is a must for the organization to consider some time there will be Crises because; crises are the integral features of the organization. So carefully thought-out and coordinated crisis plan can be used to respond to any disaster that reduces much trouble.

  4. The Uncontrollable Factors that managers should identify to during the development of contingency plans are:
    Economic turndowns,
    Declining markets,
    Increases in costs of supplies,
    Technological developments,
    Safety accidents.
    In order to minimize the impact of such uncontrollable Factors, managers need to forecast a range of alternative responses to most-likely high-impact contingencies. Also managers in order to forecast alternative responses, they must consider and/or use Building scenario and crisis planning which enables them to develop contingency plans.
    1. Building scenario:

    It is a method of forecasting to cope with greater uncertainties. Scenario building involves looking at current trends and gaps and thinks about future possibilities. Rather than looking only at history and thinking about what has been, managers think about what could be. Managers can’t predict the future, but they can rehearse a framework within which future events can be managed. With scenario building, a broad base of managers mentally run through different scenarios based on anticipating varied changes that could impact the organization. Scenarios are like stories that offer alternative vivid pictures of what the future will be like and how managers will respond. Scenario building forces managers to mentally rehearse what they would do if their best-laid plans collapse.

    2. Crisis Management Planning:

    It is a planning for events that are unforeseen, so sudden and devastating and requiring immediate response. There are also three steps of crisis management; prevention, preparation, and containment.
     Prevention: Build trusting relationship with key stakeholders to respond more effectively
     Preparation involves
    • Designating a crisis management team and a spokesperson
    • Creating a detailed crisis management plan
    • Setting up an effective communications system
     Containment: is responding to the physical safety , and emotional needs of employees, customers and the public Providing a sense of safety and hope