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CONTINGENCY STRATEGIES

AND STRATEGIC PLAN

BY

Abuzar noumani10MBA-16/MU

E-MAIL: ABUZARNOMANI88@GMAIL.COM

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CONTINGENCY STRATEGIES

Contingency strategies are formulated in

advance to deal with uncertainties that are anatural part of the business.

Strategic choice is made on the basis ofcertain conditions, Assumptions and premises.

When there is change of condition, the

strategy chosen become irrelevant. If such changes are drastic, the chosen

strategy may have to be modified.

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If such changes are sudden, contingency

strategies are formulated in advance.

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WHY CONTINGENCY STRATEGY

Need of contingency strategies occurs due to the

change in environment. There are differentenvironment for different type of industries:

Certain industries face turbulent environment.They feel a greater need for contingencystrategies than those which exist in a relatively

placid or tranquil environment. e.g.: FMCG,

Power, Telecommunication, Informationtechnology and insurance sector.

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certain industries face placid environment or

tranquil environment. The changes in this

environment are dynamic and have time to draft

contingency strategy to cope with the change.

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ORGANIZATIONAL VIEW

Strategist in L&T developed three models by

keeping key variables in mind.

Pessimistic: Alternatives which have least

occurring possibility. Most likely: Alternatives selected keeping in

mind the current situations.

Optimistic: Alternatives which have maximumprobability of happening in future.

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Jindal the company, which was not doing well

initially and tries for the merger with M&M . In1988 the government allowed decontrol in

pricing and distribution of aluminum business.

which was the main business of the company.The policy changes caused the company to drop

its plan to invest in other areas and instead

focus on its aluminum business.

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PROCESS OF CONTINGENCY

STATEGY

Identify the contingency event: list the events

that may occur in the future which are critical

to company strategy formulation.

Establishing the trigger point: In the forms of

indicators which signals the occurrence of

these events.

Developing strategies and tactics: In

accordance with the changed situation

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STRATEGIC PLAN

Strategic plan also called corporate group or

perspective plan. It is a document which

provides information regarding the different

elements of strategic management and themanner in which an organization and its

strategic purpose to put the strategies into

action.

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INFORMATION CONTAIN IN A

STRATEGIC PLAN

A clear statement of strategic intent coveringthe vision, mission, business definition, goals

and objectives.

Results of environmental appraisal, majorstrength and weakness and core

competencies.

Strategies chosen and the assumptions underwitch the strategies would be relevant.

Contingent strategies to be used under

different conditions.

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strategic budget for the purpose of resources

allocation for implementing strategies and theschedule for implementation.

Proposed organizational structure and the

major organizational system for strategic

implementation including the top

functionaries, there role and responsibility.

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Functional strategies and the mode of there

implementation.

Measures to be used to evaluate performance

and assess the success of strategic

implementation.

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FORMATE OF STRATEGIC PLAN

A strategic plan document could run into

several pages and be treated as a formal

report.

Another possibility is that a brief document of

three to five pages could briefly cover all the

points.

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BHELS GROWTH PERSPECTIVE

A twenty four page silk document titled with thecommunication addressed to the BHELS

employees by the chief executive was

published. The content of the documentsprovide good illustration of what a corporate

plan may deal with.

1. BHELS objective

2. Business opportunities & threat:- macro

environment and sector wise

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3. Directions for business development

4. Resources mobilization

5. Research and development6. Achieving the target

7. Present activity profile of BHEL

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SURVEY CONDUCTED BY

BUSINESS TODAY

Survey conducted of 160 companies

56% of the total had published businessstrategy

Among them 77% were giant companies, 69%were large, 53% were medium sized and 45%were small companies.

Time period covered in the strategic plan wasless then three years for 44% of thecompanies, 40% planed for three to five years,while 16% did it for more than five years.

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Core public enterprise have to link there

corporate plans with the national five year plans.

Such as BHEL, SAIL, HMT.

Private sector companies too formulate strategic

plan multinational companies (MNCs).

Subsidiaries often have to prepare and plan the

documents to be submitted to there parent

companies for approval.

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CONCLUSION

With this discussion of the strategic plan we

come to end the formation of strategic plan

document provides a means not only to

formalize the efforts that goes into strategic

planning but also for communicating to insider

and outsiders what the company stand for,

and what it plans to do in a given future timeperiod

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