Contingency Planning: a

stitch in time saves nine

 Content list

Introduction ................................................................................................................... 3

Mind Map ........................................................................................................................ 4

1. Let’s read ................................................................................................................... 5

Get in context: contingency planning .......................................................................... 5
Companies that have failed and come back ............................................................... 5

2. Let’s talk..................................................................................................................... 7
What seems to have been the problem?..................................................................... 7
Planning, contingency planning ................................................................................ 7
The importance of Contingency Planning ................................................................. 7
What’s a contingency plan? What is it made of? ...................................................... 7
How to set a contingency plan? ................................................................................ 7
Types of risks............................................................................................................ 8

3. Let’s write ................................................................................................................ 10

What is a case study and how to write it? ................................................................. 10
How to do a case study analysis? ............................................................................. 10
How to write a case study report? ............................................................................. 11

4. Grammar Focus ....................................................................................................... 12

Modal Perfect Tense: expressing regrets .................................................................. 12
Grammar Structure ................................................................................................... 13

References ................................................................................................................... 15
 Introduction

There is a common proverb in the English Culture that says “A stitch in time saves
nine”. In general terms, this proverb warns us about the importance of taking timely
action in order to avoid troubles, losses and waste of time. How many times have you
been in a situation that you could have prevented if you had taken care of it in the
proper time? Don’t you think that it is better to act sooner rather than later to avoid
problems? Well, this idiom, as well as contingency plans, has to do with the prevention
measures we need to take into action to be safer in the future.

When we take on issues head on, we have control of the situation from the beginning
and we can stop things from getting out of control. Therefore, the importance of having
a proper contingency plan. A contingency plan is a backup plan, activated in the event
of a disaster that disrupts a company's production and puts employees in danger. The
goal of the plan is to safeguard data, minimize disruption and keep everyone as safe as
possible. A company may never have occasion to use a contingency plan, but it is
important to have one, keep it updated and train employees what to do if the need
arises.

Within this material, we’ll complement what you have learnt about contingency plans in
order to evaluate and analyze the impact of having an inadequate plan when taking
care of your company and foreseeing risks.

3
 Mind Map

The following mind map will show you what the distribution of topics for this material is:

4
 1. Let’s read

Get in context: contingency planning

Hi, dear student. Welcome back!

As a Physical Distribution Student from The SENA training program, you should be
aware of the different situations you may face when being part of a company. Having
the skills to react in a difficult situation could be decisive between success and failure.
That’s is why, it is so important to be ready at all times.

Within this material, we’ll help Esteban to analyze failure cases when implementing
contingency plans or backup plans in case of disruption. This will help you to identify
possible risks in the future.

Fuente: SENA

Companies that have failed and come back

Following, some famous cases in which companies have failed, learnt and come back
to say in the market.

5
Can you imagine the Car industry
without having Ford Motor Co. in
the picture?
Nowadays Ford Motor Co. is one of
the most famous and stable
companies in the Car Industry.
However, it was not the same back in
its early years.
In 1899, during the very early years of
the company, back in the years when
it worked along with the Detroit
Automobile Co., Ford produced low
quality cars that were too expensive
for average consumers.
This had a direct impact on the
revenue of the company and almost
forced Henry Ford to close the
company. Thankfully, he and his team
reacted on time and they started to
build good quality, affordable cars.
A world without KFC?!
You surely think of Kentucky Fried Chicken or KFC
when thinking of chicken wings. Can you imagine a
world without the yummy chicken The Colonel
Sanders have fried since 1930?
Colonel Harland Sanders (Founder of the KFC
company) was many things (a sixth-grade dropout, an
army mule-tender, a locomotive fireman, an
insurance salesman and a political candidate) but
above all, he’s a great success story.
In 1955, a newly built interstate freeway bypassed
Corbin, Ky., where Sanders had cooked up chicken in
his restaurant and motel for two decades. After selling
the location and settling debts, Sanders was broke.
Thankfully, by that time Sanders had already started
franchising his chicken restaurant concept. He took to
the road full-time to sell franchises and within five
years had 190 franchises and 400 Kentucky Fried
Chicken locations.

Today we can find a KFC location around the corner

This event taught them that building a
thanks to Mr. Sander’s prevention measures. He was
brand requires more than just building
a good product. quick to sell his idea and franchise and so he could
overcome his bankruptcy. He learnt that the
execution strategy is as important, if not more, as the
business idea.
Needing to mail a package? FeDex was about not to be the solution!

Frederick W. Smith, founder of FeDex, was a pioneer when understanding the importance and
challenges of urgent shipments in logistics processes. He proposed a system specifically
designed to accommodate time-sensitive shipments such as medicine, computer parts, and
electronics.

He was eager to grow and did everything he could to grow. After revolutionizing overnight mail
delivery in the 1970s, Smith introduced an electronic delivery service, Zapmail, in 1984 to
compete with fax machines. But Zapmail didn't draw the anticipated interest and cost the
company nearly $350 million over two years.

FedEx abandoned Zapmail in 1986 and the company refocused its energy on its core delivery
business. The company generated $35 billion in revenue in 2010. In other words, Smith
understood the importance of acknowledging failure in order to abandon bad ideas and move
6
on.

2. Let’s talk

What seems to have been the problem?

Planning, contingency planning

Even though, there are some situations that are out of our control, most of the adverse
situations can be foreseen and prevented on time, if having a detailed contingency plan.

The importance of Contingency Planning

When having proactive management techniques for the development of plans for
business continuity, you will be able to prevent or minimize the effects of a range of
hazards or disasters on the operations of a company.

By instilling a contingency plan, those in charge are forced to evaluate all possible
ramifications in the event of a disaster. Creating and implementing a contingency plan
means looking at the big picture rather than a series of disconnected steps.

What’s a contingency plan? What is it made of?

Contingency planning is useful to prepare an organization to respond well to an

emergency and its potential impact. Developing a contingency plan involves making
decisions in advance about the management of human and financial resources,
coordination and communications procedures, and being aware of a range of technical
and logistical responses.

Such planning is a management tool, involving all sectors, which can help ensure
timely and response when needed. Time spent in contingency planning equals time
saved when a problem appears.

How to set a contingency plan?

Waiting for a disaster to happen before designing and implementing a contingency plan
is a big mistake. You must be proactive and put a plan in place even though chances
are minimum that you will ever need it.

Create a contingency team to activate the plan when needed. Review team members
on a regular basis and assign new employees to replace those who have left or would
no longer be the best choice to carry out the plan. Provide regular training on the
contingency plan to keep the team refreshed.

7
When implementing a contingency plan, we should:

Fuente: International Federation of Red Cross and Red Crescent (2012)

In general terms, the contingency planning process can basically be broken down into
three simple questions:

 What is going to happen? (Scanning for risks)

 What are we going to do about it? (Setting solutions for each kind of risk).

 What can we do ahead of time to get prepared? (Setting prevention measures).

Of all these questions, the most important has to do with identifying the types of risks
our company may face. Once we have identified such risks, we will be able to follow or
answer the above mentioned questions.

Types of risks

Identifying risks or possible situations that may prevent you from achieving your
business success is the first and most important part of a contingency plan. The risks
that a typical business may find are broad and include things that you can control such
as your strategy and things beyond your control such as the global economy.

Everyone knows that a successful business needs a

comprehensive, well-thought-out business plan. But,
sometimes the today strategy cannot be good anymore
tomorrow, so you need to change your strategy.

Strategic risk This type of risk has to do with the company’s strategy
becoming less effective in such way that your company
struggles to reach its goals. It could be due to
technological changes, a powerful new competitor
entering the market, shifts in customer demand, spikes in
the costs of raw materials, or any other other change.

8
 Kodak, for example, used to have a dominant position in
the film photography market that when one of its own
engineers invented a digital camera in 1975, it saw the
innovation as a threat to its core business model, and
failed to develop it. If Kodak had analyzed the strategic risk
more carefully, it would have concluded that someone else
would start producing digital cameras eventually.

Failure to adapt to a strategic risk led to bankruptcy for

Kodak. It’s now emerged from bankruptcy as a much
smaller company focusing on corporate imaging solutions,
but if it had made that shift sooner, it could have preserved
its dominance.
As a Company, you must comply with the laws of the
country where your company is located. But laws change
all the time, and there’s always a risk that you’ll face
additional regulations in the future.

For example, if you think about going global, you need to

comply with local accounting and tax rules from the
country you are coming into. You need to make sure that
Compliance risk you can comply with the law regulations for any decision
you make.

Another example of compliance has to do with the change

of regulations in the very own home-country. Think of
tobacco companies facing new advertising restrictions, for
example, or the late-1990s online music-sharing services
that were sued for copyright infringement and were
unable to stay in business.
Operational risk refers to an unexpected failure in your
company’s day-to-day operations. It could be a technical
failure, like a server outage, or it could be caused by your
people or processes.

In some cases, operational risks can also come from

events outside your control, such as a natural disaster, or a
Operational risk
power cut, or a problem with your website host. Anything
(internal)
that interrupts your company’s core operations comes
under the category of operational risk.

Imagine the risk that one of your employees writes the

wrong amount on a check, paying out $100,000 instead of
$10,000 from your account. This, could have been
prevented by having a more secure payment process.

9
 This kind of risk refers specifically to the money flowing in
and out of your business, and the possibility of a sudden
financial loss.
For example, if a large proportion of the revenue of a
company comes from a single large client, and his/her
credit is extended to 60 days and if that customer is unable
Financial risk
to pay, or delays payment for whatever reason, then your
business is in big trouble.

Financial risk is increased when you do business

internationally. Here, you must take into account the
exchange rate.
We all know that “a picture is worth a thousand words”, so
the image your company projects will determine its
reputation and therefore, its position in the market.

Reputational risk If your reputation is damaged, you’ll see an immediate loss

of revenue, as customers become wary of doing business
with you. Reputations take time to build but can be lost in a
day. In this era of social networking, a negative Twitter
posting by a customer can reduce earnings overnight.

3. Let’s write

What is a case study and how to write it?

A case study refers to both a method of analysis and a specific research design for
examining a problem. This kind of analysis examines a person, place, event,
phenomenon, or other type of subject of analysis in order to extrapolate key themes
and results that help predict future trends, illuminate previously hidden issues that can
be applied to practice, and/or provide a means for understanding an important research
problem with greater clarity.

Case Studies are especially useful for business scenarios since they provide an
understanding on specific events that can be extrapolated to similar scenarios. A case
study analysis requires you to investigate a business problem, examine the alternative
solutions, and propose the most effective solution using supporting evidence.

How to do a case study analysis?

1. Read and examine the cases thoroughly.

2. Focus your analysis:

10
 o Identify the key problems.

o Identify why those problems exist.

o Identify how they impact the organization.

o Identify who or what is responsible for those situations.

3. Find possible solutions:

o Review course readings, discussions, outside research, your experience.

4. Select the best solution:

o Consider strong supporting evidence, pros, and cons: is this solution realistic?

How to write a case study report?

After you have collected all the necessary information and you have drafted the way
you will display the information along with your findings, you should:

1. Include an introduction:

o In this section, you should identify the key problems that you will be talking about
in your analysis.

o Formulate and include a thesis statement, summarizing the results of your analysis
in one or two sentences.

2. Include a justification:

o It is important to explain the importance and relevance of the case study you’re
running.

3. Set the background:

o Illustrate the scene. Provide information about the background, relevant facts and
most important issues.

o Prove that you have researched the problems in this specific case study.

4. Describe your analysis:

o Explain by means of clear arguments the existence of the problems or issues that
you are highlighting.

11
5. Propose solutions:

o Provide specific and realistic solutions for the pointed problems or issues.

o Explain why this solution is the best one and support your claims with solid
evidence (concepts from class, outside research, personal experience, etc.).

6. State recommendations and final conclusions:

o Define specific strategies to accomplish the proposed solutions.

o If possible, recommend some other actions to avoid future similar issues.

4. Grammar Focus

Modal Perfect Tense: expressing regrets

Anytime you feel sorry about those mistakes from your past and you think about the
actions that you could have done differently, you are expressing regrets.

Fuente: SENA

12
 We can express regrets or the feeling of wishing your past to be different by means of
modals in the perfect tense. Let’s see:

Let’s suppose that this morning you arrived late to your class (you woke up late this
morning) and, sadly, the teacher did a pop-quiz. At this
moment, you are sorry about missing that quiz, so you say:

“I should have woken up earlier this morning”

With this sentence you are expressing:

1. Fact: You woke up early this morning.

2. Recommendation for your past (impossible to achieve

at this moment).

With this tense we express that something could have been, but it wasn’t. Or
something could have happened, but it didn’t.

Fuente: SENA

Grammar Structure

Fuente: Fuchs y Booner (2001, p. 162)

Fuente: Fuchs y Booner (2001, p. 163)

13
 Fuente: Fuchs y Booner (2001, p. 162)

Grammar Explanations

Grammar Explanations Example

Use Should have, ought to have, could
have or might have to talk about things
that were advisable or good to do in the
past. These modals usually express
regret or blame.
Should not have and ought not to have
are the only forms used in negative
statements. Should not have is more
common.
Should (not) have is the most common
form used in questions.
 Kodak should’ve analyzed the
strategic risk more carefully.
 (Kodak didn’t analyze the strategic
risk carefully).
Mr. Ford shouldn’t have designed low
quality cars at high prices.
Should KFC have closed after the
bankruptcy from 1955?

Pronunciation TIP

In informal conversations, have -when used with modal verbs- is usually pronounced
like the word of or a.

For example:

Could have sounds like “could of” or “coulda”. Do not write “Could of” or “Coulda”
Ought to is often pronounced like “oughta”. Do not write “oughta”.

14
 References

Fuchs, M. y Bonner, M. (2001). Grammar Express: Intermediate with Answer Key (For
Self-Study and Classroom Use). Richmond: Pearson Longman.

International Federation of Red Cross and Red Crescent. (2012). Contingency planning
guide. Recuperado de http://www.ifrc.org/

Document control

Nombre Cargo Dependencia Fecha

Centro de Gestión de
Autor Mercados, Logística y
Karen Yolima Experta Julio de
Tecnologías de la
Torres Tafur técnica 2017
Información. Regional
Distrito Capital
Andrés Felipe Guionista -
Centro Agroindustrial. Septiembre
Adaptación Velandia Línea de
Regional Quindío de 2017
Espitia Producción

15