Download BUSS 4: Managing Change

What disasters could your house face?
Business Disasters
WHAT SCENARIOS DO DAVID LLOYD FITNESS
CENTRES PLAN FOR?
https://www.davidlloyd.co.uk/-/media/david-lloyd/files/dal-final-signedaccounts-2015-v4.pdf?la=en
• What are the two types of risk DL plan for in their Annual Report?
• Which are likely to be the worst risks, if realised, in terms of losses to the
firm? Why?
• How might the management quantify the expected value of the risk
(remember your Decision Trees!)
• Having identified the big risks above, what would be management’s next
steps?
• DL doesn’t mention Natural Disasters or Key Man Risk in its annual
report…Why not?
THE DIFFERENCE
Contingency
• Planning for unexpected events
Crisis Planning
• Responding to a sudden event
What’s the difference?? Are they both needed?
A CRISIS RARELY GOES AS PLANNED!
Clarification
• Contingency planning is the process of
preparing for potential emergencies, while
crisis management is the overall management
of emergencies when they do occur.
Planning for Contingencies
Business Continuity Procedures (“BCP”) –
Prepare, Plan, Practice
• Example: Denial of Office Location
• Example: Succession Planning (Wise words for
SHS!)
Contingency Planning has to ensure
business continuity in the long term
• All key services/functions of the business must
be covered
• Consideration of what will be the impact on ALL
sectors of the business…ie
• HRM
• Operational Management
• Marketing
• Finance
CONTINGENCY PLANNING
“CRITICAL” SUCCESS FACTORS
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Strong leadership
Quick decision making
Correct action by responsible teams on behalf of any people affected
Action to mitigate any environmental impact
Clear and continuous communication
Clear roles and robust (tested) plans
Well trained teams
Good stakeholder relationships
Active media management; effective spokespeople.
Not being afraid to say "sorry"
BUSS4.8 Planning for Change
CRISIS MANAGEMENT
Can you think of any businesses that have had
to deal with a ‘crisis’ recently?
Environmental disaster
Hostile takeover
Faulty/dangerous
products
Strikes by workforce
What other types of
crisis might a business face?
Major customer
withdrawing
orders
Physical destruction e.g. bombing /
earthquakes / Physical destruction
e.g. bombing / earthquakes / fires
Personnel:
- Leadership style …crisis usually requires
direct authoritarian leadership;
- Internal and external communication that is
rapid and direct; external communication that
is informative and truthful
Finance:
Budgeting for Crisis Management
- ad campaigns;
- environment clean up;
- compensation
- Prevent exit of key staff
What areas of a business
could a crisis affect?
Operations:
particularly if JIT
Storage/warehousing
Machinery
Marketing:
public image under threat – PR
Ad campaigns
Promotions to maintain sales
Scenario Planning & Strategy –
what issues do we accept / what issues
do we mitigate?
• Profit margins – what will the impact be?
(short term less important than the LONG TERM!)
• Risks & uncertainty
– what is the business’ attitude to risks?
• Opportunity costs
• Business objectives
• Constraints – internal & external
• Ethics
• Business culture
• Ansoff matrix & Boston matrix
Issues for Evaluation
• Change is normal, not abnormal
• Firms need to be alert to cause of change and quick to devise a strategic plan
for coping
• Many successful businesses do not have a formal strategic planning process,
and prefer to be flexible (Why?)
• Setting aside time for strategic planning is useful, in that managers’ minds
are concentrated on the key questions facing the firm in the future. Then the
actions decided upon can be more closely integrated/tested.
• Essay planning:
Assess how a fitness centre might deal with the serious injury of a celebrity
client?