Examples of contingency planning in the following topics:
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- Strategists have developed a large array of tools useful in plan formulation, all of which provide unique insights and advantages.
- Scenario planning is an interesting tool with which strategists construct various scenarios to test out the potential trajectories of specific operational plans.
- Contingency planning can be simply described as the back-up plan, while participatory planning is the primary plan.
- An excellent tool for strategists pursuing a particularly risky venture is to develop the primary objectives and strategy while simultaneously constructing a contingency plan that will limit the negative effects of failure.
- It is also useful to set goals and a timeline to assess progress and ensure that each individual is achieving their segment of the plan.
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- An important and often overlooked aspect of forecasting is the relationship it holds with planning.
- Forecasting can be described as predicting what the future will look like, whereas planning predicts what the future should look like.
- While both are managerial functions, forecasting is rife with external uncertainty while planning is hindered by internal uncertainty.
- The practice helps businesses create plans for different situations, in addition to contingency plans for adapting if and when necessary.
- As the management team implements the broader strategy, it must continuously monitor the current environment for deviations and use forecasting to adapt both the primary strategy and contingency plans for potential shifts.
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- We will discuss, by way of example, a new product launch event but it's worth noting that the same general principles apply whether you are planning a new product or new service launch event.
- Events organized around a new product/service launch are typically postponed or cancelled because the new product/service does not turn out as anticipated.Build this scenario into any planned event so that you can recoup some of the costs if the event needs to be cancelled.
- What is your backup plan?
- Do you have a contingency plan if few people respond to your invitation to the new product launch event?
- Blog back: Develop a plan for your new product launch.Include the name and description of the venue you plan to showcase your new product as well as a detailed budget of the researched expenses and a forecast of the media coverage you hope to gain during the launch event.
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- Financial planning aims to ensure that a firm is properly capitalized and makes appropriate investments.
- Financial planning is important in ensuring that corporate investment is financed appropriately, as well as seeing to it that money is spent in worthwhile investments .
- There are many other forecasts that managers ask for in order to try and anticipate what the future might hold and so that they can prepare contingency plans in case of unforeseen events.
- Financial planning is important in ensuring that corporate investment is both financed appropriately, as well as seeing to it that money is spent in worthwhile investments.
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- Gain contingencies, or possible occurrences of a gain on a claim or obligation involving the entity, are reported when realized (earned).
- The disclosure of gain contingencies is affected by the materiality concept and the conservatism constraint.
- Thus, for a gain contingency, only a realized gain is accrued for and disclosed on the income statement.
- Renovation plans and projects can increase the value of a building and eventually bring about a gain.
- Explain how a company reports a gain contingency on their financial statements
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- It is often contingent on performance or results achieved.
- Equity-based compensation—A plan that uses the company's shares as compensation.
- Variable pay is contingent on discretion, employee performance, or results achieved.
- A benefit plan is designed to address a specific need and is often not offered in the form of cash.
- Equity-based compensation is a compensation plan that uses the employer's shares as employee compensation.
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- The contingency viewpoint of management proposes that there is no standard for management; instead, management depends on the situation.
- Instead, the optimal course of action is contingent or dependent upon the specific internal and external situation management may find itself in.
- Debating which one of the previous approaches to management is the "best" approach is irrelevant in contingency theory, since the heart of the contingency approach is that there is no "one best way" for managing and leading an organization.
- By its nature, contingency theory avoids static rules.
- An example of the contingency viewpoint in action is a manager facing a situation with an employee who regularly shows up late to work.
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- Contingencies are reported as liabilities if it is probable they will incur a loss, and their amounts can be reasonably estimated.
- A loss contingency is less than 50% likely to occur due to a past obligation.
- Gain contingencies are reported on the income statement when they are realized (earned).
- A probable loss contingency can be measured reliably if it can be estimated based on historical information.
- Conservative accounting principles state that companies should report loss contingencies as they occur.
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- A loss contingency may be incurred by the entity based on the outcome of a future event, such as litigation.
- A loss contingency is incurred by the entity based on the outcome of a future event, such as litigation.
- Loss contingencies can refer to contingent liabilities that may arise from discounted notes receivable, income tax disputes, or penalties that may be assessed because of some past action or failure of another party to pay a debt that a company has guaranteed.
- Unlike gain contingencies, losses are reported immediately as long as they are probable and reasonably estimated.
- Summarize how a company would report a loss contingency on their financial statements
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- It is important to stress that there is a need for realism in this, as only too frequently corporate plans are determined more by the desire for short-term credibility with shareholders than with the likelihood that they will be achieved.
- At an operational level, the national managers need to have an achievable and detailed plan for each country, which will take account of the local situation, explain what is expected of them, and how their performance will be measured.
- Ultimately, this coordination between business functions is contingent on the market entry strategy employed as well as the degree of standardization or customization deemed.