Contingency Plan

This risk management strategy was developed for an outcome outside the scope of the norms that are typically anticipated in an organization. Since the future is unpredictable and can jeopardize an organization’s interests in the long and short terms, it can be used as a trigger for a contingency plan.

A merger is the catalyst for the construction of a contingency plan, which protects a business from any danger that could interfere with how it operates. The contingency plan for a corporation facing a merger should include the following three elements. Mergers bring all sorts of risks and the analysis of these risks should be critical in the contingency plan to identify them early and implement solutions. Some of the common risks include poor communications, a lack of transparency and planning for the inclusion and retention of core competencies and staffing, not incorporation or building upon the branding, marketing and sales efforts, and not taking time two balance the two cultures and service standards (DePamphilis, 2013).

Risk Management

After the risks have been identified, management of these risks is essential towards minimizing their effects. Management of risks takes place at different levels which include but are not limited to: improved information systems, defining responsibility and devolution of a company’s authority, sharing the risk, designing out the risk, mitigation through suitable disciplines. All these factors determine the management capability of the plan towards creating a sustainable merger.

3. Action plan

Here the plan is focused on coming up with policies that determine when to take action, which type of action should be taken, why, who, and how these actions should be taken. Furthermore, action plan/policies often touch of sensitive sectors of the company such as budgeting, standard operating procedures, contingency planning and training, and outcome review.

References

DePamphilis, D. (2013). Mergers, acquisitions, and other restructuring activities (7th ed.). San Diego, CA: Academic Press.