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-signed-accounts-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 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?

crisis might a business face? What other types of crisis might a business face? Environmental disaster Hostile takeover Faulty/dangerous products Major customer withdrawing orders Physical destruction e.g. bombing / earthquakes / Physical destruction e.g. bombing / earthquakes / fires Strikes by workforce

What areas of a business Finance: Budgeting for Crisis Management - ad campaigns; - environment clean up; - compensation 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 - 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?