Evaluate your client company’s contingency plan

Read your client company’s response, see whether it is consistent with lessons we learned in chapter seven and whether you can improve it by applying this week’s lessons. Elaborate at least in 200 words and cite the lessons from the Best Practices 7 assignment.

Looking at Grappone’s contingency plan it seems pretty good, making sure they have cash for the downturn is one of the main points that the book had touch on. Checking on inventory, was another lesson learned through chapter seven. This is very smart for a car dealer because depreciation occurs immediate after a car is driven off the lot or out of storage. It also has to do with the idea that a car can be sold quickly for cash if needed during the downturn. Expense limiting is a key factor in a recession, or a plan in general, because everything you do in a business costs something, you don’t want to spend money you won’t have in a few months. This is also has to do with spending on things you won’t need during the downturn, or can hold off on, only necessities should be charged and planned for. Keeping team members engaged in the business is not always easy, I think that they should expand on this idea, it is very vague, so I think keeping members happy with the status of the business, and the procedures being taken is a better way to go about this step. Available credit is very important, making sure we have strong bonds that ensure that we can keep more money and pay on it later is important for the reserve cash and reserve assets we currently own. All in all I think that Grappone has the right idea, they could expand on some of these ideas to make them more clear for workers as well.

Business response to the questionnaire

Graponne

Question Response from the company
Please, discuss your contingency plan for dealing with recession, if you have one.

Our contingency plan include:

  1. Tighter control of our inventory levels
  2. Managing our cash. Making sure we have enough liquid reserves to get us through the downturn
  3. Limiting discretionary expenses. Including delaying intensive capital type projects.
  4. Keeping our team members fully engaged
  5. Making sure we have available credit (to finance cars that are not selling as well as lines to draw down for working capital). 

Bank of New Hampshire

Question Response from the company
Please, discuss your contingency plan for dealing with recession, if you have one. As previously mentioned, we build loan loss reserves and carefully monitor for signs of economic stress that may impact our business. We have sources of emergency liquidity available, and other similar tools to ensure the viability of the bank through a very severe downturn. Furthermore, we stress test our loan portfolios and entire balance sheet to determine how the bank would perform in various economic scenarios. This allows us to determine is additional reserves, liquidity, etc. are needed.

Comptus

Question Response from the company
Please, discuss your contingency plan for dealing with recession, if you have one. We do not have a contingency plan for an extended recession.