CONTINGENCY STRATEGIES AND STRATEGIC PLAN

BY Abuzar noumani 10MBA-16/MU E-MAIL: ABUZARNOMANI88@GMAIL.COM

CONTINGENCY STRATEGIES
Contingency strategies are formulated in advance to deal with uncertainties that are a natural part of the business. Strategic choice is made on the basis of certain 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.

 If such changes are sudden, contingency strategies are formulated in advance.

WHY CONTINGENCY STRATEGY

Need of contingency strategies occurs due to the change in environment. There are different environment for different type of industries: Certain industries face turbulent environment. They feel a greater need for contingency strategies than those which exist in a relatively placid or tranquil environment. e.g.: FMCG, Power, Telecommunication, Information technology and insurance sector.

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.

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 maximum probability of happening in future.

Jindal the company, which was not doing well initially and tries for the merger with M&M . In 1988 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.

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

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 the manner in which an organization and its strategic purpose to put the strategies into action.

INFORMATION CONTAIN IN A STRATEGIC PLAN

A clear statement of strategic intent covering the vision, mission, business definition, goals and objectives. Results of environmental appraisal, major strength and weakness and core competencies. Strategies chosen and the assumptions under witch the strategies would be relevant. Contingent strategies to be used under different conditions.

 strategic budget for the purpose of resources allocation for implementing strategies and the schedule for implementation. Proposed organizational structure and the major organizational system for strategic implementation including the top functionaries, there role and responsibility.

 Functional strategies and the mode of there implementation. Measures to be used to evaluate performance and assess the success of strategic implementation.

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.

BHELS GROWTH PERSPECTIVE

A twenty four page silk document titled with the communication addressed to the BHELS employees by the chief executive was published. The content of the documents provide good illustration of what a corporate plan may deal with. 1. BHELS objective 2. Business opportunities & threat:- macro environment and sector wise

3. Directions for business development 4. Resources mobilization 5. Research and development 6. Achieving the target 7. Present activity profile of BHEL

SURVEY CONDUCTED BY BUSINESS TODAY

Survey conducted of 160 companies 56% of the total had published business strategy 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 was less then three years for 44% of the companies, 40% planed for three to five years, while 16% did it for more than five years.

 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.

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 time period