Contingency Factors

Contingency factors plays a vital role in planning phase within the company/organization. These
are the factors which makes the organization well organized and prepared for the unforeseen
circumstances which may arise too often within the corporate culture. With preplanned strategy
for contingency make the organization capable for dealing in that specific time period.
These factors are taken into consideration in the planning phase of the company strategy or
activity. It plays an important in overall planning phase. During this phase the strategists will
look at specific factors that could prove as a risk to the organizations regular operations.
Contingency factors may affect the company working directly or indirectly at any point of time.
E.g. the planning may be vital for a company which deals with clients or suppliers from different
countries where there is a political instability. Getting planned for this situation before its
occurrence is important as it will potentially reduce the risk pertaining to that matter.
Following are the few factors which could affect the company:
Social factors
Cultural factors
Economic factors
Political factors
Social Factors
It is well known proverb that Change is the only constant thing in this world. Social factor in
contingency approach could be stated as the it may affect the business as liking and taste may
varies from a point of time in which strategy is being formulated. E.g. if a business which deals
with trade of fast foods most importantly the junk and the nation become more conscious for
health due to unexpected factor will affect a lot the business which ultimately draw a reasonable
fall in revenue graph of the company. So, social contingency factors must be taken care of in
planning phase.
Cultural Factors:
Cultural factors are more related with the specific region in which company is operating. For
example if a company deals will beef and planning to launch their business in some place where
cows are considered as important in religious point of view, so the company might suffer the loss
by launching their product in that region. Managers should clearly understand the cultural ethics
of the region before strategy development.
Economic and political Factors
Economic and political factor are somewhat close and as much important contingency factors for
the company and the planning managers. For example, as it is stated before, if there is political
instability in the country and company have a potential buyer or seller from that state,
management should think twice and plan wisely by having multiple supplier for instance in
pipeline. As if the situation may get worse doesnt affect the core business.
In planning phase, Contingency factors also need to be managed or reduces so as overall
reduction in potential risk to the company happened.
Getting deep into the contingency factors which influence the management of the company in
planning phase mostly deal with attitude and behavior of the individuals who draft plan for the
company and directly responsible for implementation of the activities. As it is concluded by
different practicing mangers of leading organizations that there exists a statistical relationship
between contingency planning and attitude or behavior.
Some of the important contingencies are listed below:
Suppliers and distributors
Interest Group
Government
Technology
Customers
Competitors
Government and unions
Planning is a phase in which each stakeholder of the company is involved. So, within the
organization, management should be characterized by the following approaches most
importantly.
Active listening
Cultivating
Steering role, (being a programmatic approach)
Active Listening
Listening management approaches is as very much important in the plan development for the
company. It allows to understand the quick reactions to emerging issues or problems through
internal customers. As their suggestions may provide the unforeseen issues related to production
or internal matters. Being the active listener managers will take care of those problems as well. It
also includes the suggestion and feedbacks of the stakeholders outside the company.
Cultivating
As discussed in the listening approach, cultivating approaches also rely on exploiting existing
abilities found as social factors as the basis for successful participation of internal and external
customers. It more closely to the social and economic contingency factors which affect the
business. Although listening approaches can be valued where there is an distinguishable interest
of community around the concerning issue, cultivating identifies the necessity for outside
support in encouraging participation.
Cultivation requires a number of activities:
Identification of a definable and specific social concern depends on locale (i.e. a local
community that has high levels of unemployment or crime).
Characteristics of precise problems, which may be lack of access to household or normal
living things. Etc
Steering
In contrast to the above discussed approaches, the final type of management practice steering
reflects as more contributory management approach to planning managers in identifying the
contingency factors affect the company profile for future. Steering approaches are common in
developing Engagement of every concerned party because of the prominence placed on
delivering specific, short-term, and instrumental (acceptance testing, company progress and
decision-making) outcomes.
Cultivating management approaches can yield powerful outcomes in the sense of contingency
planning for the organization will mainly deals will services industry and may be lesser in
benefit for the product oriented organization.
Steering approaches generally include partaking design elements suitable to the anticipated
stakeholder, (either through the establishment of formal reference groups, or ad
hoc consultation and cooperation), steering management approaches tend to be agency-driven.
Conclusion:
From the previous discussion following is the checklist which may be concluded as important for
the planning manager in managing the contingency factors in planning phase of the strategy.
What are the external factors should be taken into consideration?
Involvement of the internal customer is planning phase is as much important as any other
factor.
What is the organization size, structure, and industry?
What is the purpose of the specific plan?
What is the existing status of the company profile?