A basic premise of good strategic management is that firms plan ways to deal with unfavorable and favorable events before they occur. The key is developing contingency plans for the positive and negative effects of business, not just the negative ones.
Some contingency plans that a firm could establish are as follows:
- If a major competitor withdraws from a particular market as intelligence reports indicate, what actions should our firm take?
- If our sales objectives are not reached, what actions should our firm take to avoid profit losses?
- If demand for our new product exceeds plans, what actions should our firm take to meet the higher demand?
- If certain disasters occur, such as loss of patent protection, destruction of manufacturing facilities, earthquakes, etc., what actions should our firm take?
- If a new technological advancement makes our new product obsolete sooner than expected, what actions should or firm take?
About the only thing you can plan for in business, is change. What can you do to stay ahead of it?