AS 91381 (3.3)
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AS 91381 (3.3) Apply business knowledge to address a complex problem in a given global business context PowerPoint PPT Presentation


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AS 91381 (3.3) Apply business knowledge to address a complex problem in a given global business context. INTRODUCTION. Complex problems facing businesses. CRISES A crisis is usually an unforseen event that threatens the business in some way. Crises a business might face include:

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AS 91381 (3.3) Apply business knowledge to address a complex problem in a given global business context

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As 91381 3 3 apply business knowledge to address a complex problem in a given global business context

AS 91381 (3.3)Apply business knowledge to address a complex problem in a given global business context

INTRODUCTION


Complex problems facing businesses

Complex problems facing businesses


As 91381 3 3 apply business knowledge to address a complex problem in a given global business context

CRISES

A crisis is usually an unforseen event that threatens the business in some way. Crises a business might face include:

  • Financial~ a common financial problem is a cash flow crisis where a business does not have enough cash to cover its expenses and liabilities. More seriously, and less frequently, a business may face a financial crisis because of unforeseen events such as the sudden loss of a major customer.


As 91381 3 3 apply business knowledge to address a complex problem in a given global business context

  • Human resources ~ a sudden walkout by staff over an industrial relations issue can cause chaos within the business, as could a flu virus sweeping through the factory workforce.

  • Productioncrises are relatively common. Machinery and vehicles breaking down could cause production delays. A fire might destroy the premises or flooding may bring production to a halt for a week or more. In the construction industry, extreme weather conditions could stop work for a period.


As 91381 3 3 apply business knowledge to address a complex problem in a given global business context

  • Product quality ~ stock of finished goods may need to be scrapped because a key component is found to be faulty and unusable. Products already sold may need to be recalled because a significant fault is found.

  • Environmentalissues ~ some companies face considerable environmental challenges. For example a factory fire might release toxic chemicals into the atmosphere.


As 91381 3 3 apply business knowledge to address a complex problem in a given global business context

  • Public relations ~ a news programme may run a feature story about how a company is sourcing materials from third world producers which use cheap labour. This story could have an immediate effect on sales, with some customers boycotting the company.

  • Corporatecrises ~ a company may suddenly face a takeover bid. Major shareholders may decide to sell their shares, threatening to destabilise the share price.


As 91381 3 3 apply business knowledge to address a complex problem in a given global business context

A quantifiable risk is definite and able to be measured financially. It is an insurable risk, such as fire or earthquake damage.

An unquantifiable risk is a threat that is impossible or extremely expensive to insure against. An example would be the ‘hit’ the company feels from a public relations disaster.


Contingency planning

Contingency Planning

A contingency is an uncontrollable event that is not anticipated for in the business plan.

Contingency planning involves establishing the immediate steps to be taken by the business in the event of a crisis or emergency.

  • Identify the potential disasters that could affect the business ~ some of these will be common to all businesses, others specific to the company.

  • Assess the likelihood of these occurring.


As 91381 3 3 apply business knowledge to address a complex problem in a given global business context

  • Decide on the risk strategy: to prevent a crisis, to deal with a crisis should it occur.

  • Minimise the potential impact of crises. This involves protecting people and assets and also the company’s reputation and goodwill.

  • Establish a continuity plan, for example, relocating to alternative premises, using different supply chains, ensuring access to IT data.


As 91381 3 3 apply business knowledge to address a complex problem in a given global business context

Benefits of contingency planning

  • It reassures employees, customers and the community that concerns for safety are a priority.

  • Minimises negative impact on customers and suppliers in the event of a major disaster.

  • Public relations response is more likely to be quick and appropriate, with senior managers prepared for announcing what the company intends to do, how and by when.


As 91381 3 3 apply business knowledge to address a complex problem in a given global business context

Limitations of contingency planning

  • It can be expensive and time-consuming. Apart from the planning process, it involves training staff in what to do in the case of an earthquake, terrorist attack, fire, etc. If labour turnover is high, staff training needs to be repeated.

  • The plan needs to be updated as the range of potential disasters can change over time.


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