Agriculture Reference
In-Depth Information
Contingency planning
is the development of alternative plans for various possible
business conditions. It is part of the strategic and tactical planning process for a fi rm. A
contingency plan provides guidance when something unexpected happens. Some contin-
gency planning is conducted to prepare for potential crises that may occur. For example, a
seed company markets varieties specifi c to the growing conditions of a particular geographic
region of the country. However, a prolonged wet period during the planting season would
cause the seed company to implement a contingency plan based on delayed planting,
which may result in providing an additional supply of short-season varieties. On the other
hand, a food company may need a contingency plan for the best-case scenario. What do they
do if demand for their new organic frozen entrée grows at ten times the initial forecast? How
will they handle the extra production and distribution? Thus, both bad and good outcomes
can create the need for a contingency plan.
Levels of planning
Table 2.1
illustrates the three levels of planning. As the level of planning moves from
the chief executive to the line worker, several changes occur. At top management levels,
plans are strategic and have a tendency toward fl exibility, are longer range, are usually
written, are more complex, and are broader in nature. At the lower levels, plans are specifi c
in nature, are for immediate action, are usually unwritten, and tend toward simplicity.
Although plans tend to be unwritten at the lower levels, almost all managers benefi t
from having written plans. Upon writing down a plan, the plan becomes more focused
and any inconsistencies or gaps are likely to be made visible. Written plans tend to organize
and consolidate thoughts, are easier to communicate, and provide a source for further
reference.
Depending on the structure of the fi rm, another reason the nature of planning changes
from the top management level to lower levels is the allocation of resources. Top executives
develop strategic plans that generally add or subtract resources from the agribusiness, while
those plans made at the lower levels are operational and generally relate to using the existing
resources in the most effi cient manner.
Table 2.1
illustrates the need for all these plans to
mesh in a consistent manner so that the long-range goals of the organization can be achieved.
The challenge is to help those at all levels of the organization understand the long-range
goals and how the short-range performance objectives are intermediate steps for accom-
plishing those goals.
Table 2.1
Levels and nature of planning in the agribusiness
Strategic Level
Tactical Level
Operational Level
Top Management
Middle Management
Line Employees
Very Flexible
Long-term
Written Analyses
Complex, Detailed
Broad
Somewhat Flexible
Intermediate-term
Written Reports
Less Detail, Outlined
General
Infl exible
Immediate
Unwritten
Simple
Very Specifi c
